Appraisal Practice and Professional Standards

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Questions and Answers

Who can access confidential information as per the established guidelines?

  • Anyone interested in the appraisal
  • Only approved third-party evaluators
  • All members of the appraisal association
  • The client and authorized persons only (correct)

For how long must appraisers retain written records after preparation?

  • At least two years
  • At least five years (correct)
  • At least three years
  • At least one year

What action is generally prohibited by the Competency Rule for appraisers?

  • Maintaining a financial interest in a property
  • Accepting assignments for which they are not qualified (correct)
  • Appraising properties under direct lender request
  • Conducting appraisals for qualified properties

Which organization requires that appraisers be selected directly by the lender?

<p>Freddie Mac and Fannie Mae (B)</p> Signup and view all the answers

What is a requirement for membership in professional associations for appraisers?

<p>Demonstrated competence through education and/or testing (C)</p> Signup and view all the answers

What was the status of licensing or certification requirements for appraisers prior to the 1980s?

<p>Few states had licensing or certification requirements (B)</p> Signup and view all the answers

Which is NOT a typical requirement for professional appraisers?

<p>Regular attendance at social events (D)</p> Signup and view all the answers

What types of appraisals are appraisers not required to provide records for?

<p>Pro bono appraisals (D)</p> Signup and view all the answers

What must members of a professional association agree to?

<p>Be bound by standards of professional conduct (C)</p> Signup and view all the answers

What kind of interest must appraisers avoid in the properties they appraise?

<p>Financial interest (B)</p> Signup and view all the answers

What is the primary purpose of the Uniform Standards of Professional Appraisal Practice?

<p>To ensure appraisers conduct valuations according to established standards (C)</p> Signup and view all the answers

Who can provide factual information to an appraiser without attempting to influence the appraisal outcome?

<p>Real estate agents (C)</p> Signup and view all the answers

What is explicitly prohibited in compensation agreements for appraisals?

<p>Contingent compensation based on predetermined results (C)</p> Signup and view all the answers

What is required for an appraisal to be valid under Title XI standards?

<p>It must be conducted by a state-certified or state-licensed appraiser (B)</p> Signup and view all the answers

What do advisory opinions provided by the Appraisal Standards Board reflect?

<p>They are suggestions with no formal authority (C)</p> Signup and view all the answers

What is meant by 'continuing education requirements' for appraisers?

<p>Ongoing training to maintain professional competence (B)</p> Signup and view all the answers

Which of the following is NOT a basic requirement for an appraisal?

<p>Must include property inspection (A)</p> Signup and view all the answers

What is the potential consequence of appraisers accepting bribes to influence their reports?

<p>Penalties and loss of licensure (C)</p> Signup and view all the answers

What is the primary role of the Appraisal Standards Board?

<p>To create and maintain standards for appraisal practice (C)</p> Signup and view all the answers

What can lead to the invalidation of an appraisal?

<p>Insufficient documentation (A)</p> Signup and view all the answers

Flashcards

Appraisal Requirements

Specific standards and regulations for conducting real estate appraisals, including licensing, standards, and written documentation.

Uniform Standards of Appraisal Practice

A set of rules and guidelines for professional real estate appraisals, enacted by law.

Appraisal Compensation

The fees or payment for conducting a real estate appraisal.

Financial Institutions

Organizations that provide and manage financial services and products to individuals and businesses.

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Licensing Requirements

The process of obtaining a license from a state or governing body to practice real estate appraisal.

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Title requirements

The requirements for real estate appraisals when involving property transactions, including an appraisal report.

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State-Certified Appraiser

A real estate appraiser who has met the specific qualifications and licensing requirements set by a state.

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Appraisal Accuracy

The correctness and precision of a real estate appraisal, adhering to professional standards.

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Appraisal Standards

Procedures and principles established for property valuations

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Bias in Appraisal

Prejudice or favoritism in an appraisal report that can lower the accuracy of value analysis.

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Appraisal Qualifications

Appraisers must meet minimum qualifications established by the Appraiser Qualifications Board.

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Appraiser Confidentiality

Confidential information is limited to the client, authorized individuals, and a peer review committee.

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Appraisal Records Retention

Written appraisal records must be kept for at least five years.

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Appraiser Financial Interest

Appraisers are prohibited from having a financial interest in the property they are appraising.

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Appraiser Selection

Appraisers for loans, such as those in Fannie Mae and Freddie Mac programs, are often selected and hired directly by lenders.

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Appraiser Qualifications

Appraiser must have demonstrated competence through prior education, experience, and/or testing.

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Professional Associations

Professional associations set industry standards and enforce them; membership requires demonstrated competence and adherence to professional conduct.

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Appraisal Professional Designation

Members of professional associations receive corresponding professional designations.

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Prior Appraisal Regulations

Licensing or certification standards for appraisers were less common before the 1980s compared to later periods.

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Appraisal Competency

Appraisers should only take on assignments they're qualified to handle, apart from exceptions outlined.

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Study Notes

Professional Associations

  • Professional associations regulate member conduct through membership requirements
  • Requirements include demonstrating professional competence and meeting continuing education

FIRREA

  • FIRREA is the Financial Institutions Reform, Recovery and Enforcement Act
  • The Uniform Standards of Professional Appraisal Practice were enacted by FIRREA

Appraisal Practice Requirements

  • Appraisals must be conducted by a state-certified or state-licensed appraiser
  • Must meet specified standards
  • Must be in writing

Licensing Standards

  • Individual states set appraiser licensing standards
  • Must meet minimum requirements set by the Appraiser Qualifications Board

Pro Bono/Reduced Fee Appraisals

  • Appraisers are not required to provide pro bono or reduced fee appraisals

Financial Interests

  • Appraisers must not have a financial interest in the property being appraised

Fannie Mae and Freddie Mac Requirements

  • Fannie Mae and Freddie Mac require lenders to select and hire the appraiser directly, rather than the transaction parties

Advisory Opinions

  • Advisory opinions from bodies, like the Appraisal Standards Board, are not legally binding

Uniform Standards of Appraisal Practice (USPAP)

  • The preamble outlines the document and the rationale behind the Uniform Standards of Appraisal Practice
  • Compensation agreements contingent on results or predetermined values are not permitted

Confidentiality

  • Disclosure of confidential information is limited to the client, authorized individuals from the client, and relevant peer review committee members

Record Keeping

  • Written records must be maintained for at least five years after appraisal preparation

Competency Rule

  • A general rule that prevents appraisers from handling assignments for which they lack the appropriate qualifications
  • Exceptions exist where the appraiser takes the necessary actions.

Real Estate Appraisal Profession

  • A vocation needing specialized knowledge, regulated by industry standards
  • Memberships require demonstrated competence through prior education, experience or testing, and agreement to comply with professional conduct standards
  • Members usually gain professional designations

Standards for Appraisers

  • Prior to the 1980's, there were few state-level certifications for appraisers

  • The collapse of Savings and Loan industry in the late 80s prompted the need for industry-wide standards

  • USPAP (Uniform Standards of Professional Appraisal Practice) formed by nine professional associations

  • USPAP was adopted in 1989

  • Appraisal Foundation was established to update and encourage stringent educational requirements for appraisals

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