Uw Training - Appraisal Review Quiz

An appraisal report is a document that provides an estimate of the value of a property. In order to accurately determine the value, the report must include a detailed physical description of the property, including its surroundings. Additionally, the report should outline the methods that were used to estimate the property value, such as comparable sales or income approach. Therefore, the statement that an appraisal report needs to state the property's value based on a detailed physical description of the property, its surroundings, and the methods used to estimate the property value is true.

SPM utilizes Appraisal Management Centers (AMCs) to ensure compliance with the Appraiser Independence Requirements (AIR) regulations. These regulations are in place to maintain the independence and impartiality of appraisers, ensuring that their assessments are unbiased and accurate. By using AMCs, SPM can effectively manage the appraisal process and ensure that it is conducted in accordance with these regulations, thereby upholding the integrity of the appraisal process.

The statement is false because the underwriter is responsible for reviewing the appraisal report regardless of the rating issued by CoreLogic. The underwriter's role is to assess the risk associated with the loan and ensure that the property's value is accurately determined. Therefore, they need to review the appraisal report to make an informed decision.

Red Flag issues in an appraisal report should always be addressed, regardless of the loan-to-value (LTV) ratio. These issues could indicate potential risks or problems with the property, such as structural issues or environmental hazards. Ignoring these issues could lead to future complications and financial losses for the lender. Therefore, it is important to address any red flags, regardless of the LTV ratio.

The Sales Comparison Approach is the most commonly used approach to evaluate residential property because it involves comparing the property being appraised to similar properties that have recently sold in the same area. This approach takes into account factors such as location, size, condition, and amenities to determine the fair market value of the property. By comparing the subject property to recent sales, appraisers can make adjustments for any differences and arrive at an accurate valuation. This approach is widely accepted and used by real estate professionals and lenders in determining property values.

The appraisal report must be an impartial opinion because it needs to provide an unbiased evaluation of the market value. This ensures that the report is fair and accurate. Additionally, stating the market value on the exact date of the inspection is important because market values can fluctuate over time, so it is crucial to provide an up-to-date assessment.

The statement is false because both underwriting the borrower's creditworthiness and reviewing the appraisal report are equally important in the lending process. Underwriting involves assessing the borrower's ability to repay the loan based on their credit history, income, and other factors. On the other hand, reviewing the appraisal report is crucial to determine the value of the property being used as collateral for the loan. Both aspects are essential in evaluating the risk and making informed lending decisions.

The "owner of record" section of the appraisal report is not an optional field for refinance transactions. It is necessary for the appraiser to complete this section to provide accurate information about the current owner of the property being appraised. Failing to complete this section could result in incomplete and inaccurate appraisal reports, which could affect the outcome of the refinance transaction.

The neighborhood boundary section of the appraisal report should be typical to its surroundings and the comps used in the appraisal report should be within the same neighborhood as it describes neighborhood characteristics, housing trends, price and age ranges, and land uses. This is important because it provides an accurate representation of the neighborhood and helps the underwriter understand the market conditions and value of the property being appraised. The 1004MC may provide some information, but it may not capture all the necessary details about the neighborhood. Therefore, the neighborhood boundary section is necessary for a comprehensive appraisal report.

The statement is false because the appraiser is required to use the USPS postal address for the subject property. The USPS postal address is the official address recognized by the postal service and is necessary for accurate identification and location of the property. The appraiser cannot simply rationalize or provide a reason for not using the USPS postal address.

The correct answer is to reconcile the discrepancies through the applicable AMC or VA appraiser. This means that when appraisal discrepancies are found, the underwriter (UW) should work with the appropriate appraisal management company (AMC) or the Department of Veterans Affairs (VA) appraiser to resolve the differences and come to a consensus. This is the best course of action as it allows for a thorough review and resolution of the discrepancies before making a decision on the loan file. Ordering a second appraisal report, declining the loan file, or ordering a desk or field review may not be necessary or appropriate in this situation.

The statement is true because in an appraisal report, the 3 main comps refer to the three comparable properties that are used to determine the value of the subject property. These comps are typically recent closed sales of similar properties in the same area. Only closed sales can provide accurate and reliable data for comparison purposes, as they represent actual transactions and reflect the market value at the time of sale. Therefore, only closed sales can be used as the main comps in an appraisal report.

When an appraisal indicates very few adjustments in the sales comparison analysis, it indicates that the comps are similar to the subject property. This means that the properties used for comparison in the appraisal are similar in terms of size, location, condition, and other relevant factors to the subject property being appraised. The fewer adjustments needed to make the comps comparable to the subject property, the more accurate and reliable the appraisal is considered to be.

The first three comps on the comparable sales grid must be closed sales because they provide the most accurate and reliable information about the market value of a property. Current listings may not reflect the actual selling price, and pending sales are not yet finalized. Closed sales, on the other hand, represent completed transactions with actual sale prices, making them the most suitable comps for determining the value of a property.

Rural properties may be difficult to comp because they typically have a large site, which can make it challenging to find comparable properties with similar characteristics. Additionally, the distances of comps to the subject property are often greater in rural areas, especially when acreage is involved. Lastly, very small towns or sparsely populated areas may not have any recent sales available or properties that are truly similar to the subject property. Therefore, all of the above reasons contribute to the difficulty of comparing rural properties.

The appraiser needs to receive a full and complete copy of the purchase contract because they are responsible for ensuring that the Seller of the property matches public records. They also need to review the terms of the contract, concessions, financing assistance, and the type of sale to accurately assess the value of the property. This information is crucial for the appraiser to make an informed decision and provide an accurate appraisal.

USPAP compliance is not optional for federal, state, and local agencies, appraisal services, and appraisal trade associations. These entities are required to adhere to the Uniform Standards of Professional Appraisal Practice (USPAP) in order to ensure ethical and professional appraisal practices. Failure to comply with USPAP can result in disciplinary actions and penalties.

The correct answer is "Refer to and evaluate the appraiser’s comments for the comps’ extended market time." This is because extended days on the market (DOM) for comparables can indicate potential issues with the properties or the market itself. By referring to and evaluating the appraiser's comments on the extended market time, the underwriter can gain a better understanding of the factors that may have contributed to the extended DOM and make a more informed decision on the loan application.

Functional obsolescence refers to features or characteristics of a property that make it less desirable or less functional compared to other properties. In this case, all the examples listed - a house with only 1 bathroom located on a different floor, lack of a master bedroom, and tandem or captive bedrooms that can only be accessed through another room without a hallway - can be considered as instances of functional obsolescence. These features may decrease the overall appeal and functionality of the property, making it less desirable in the market.

Rural properties tend to have slower appreciation rates compared to urban or suburban properties. This is because the demand for rural properties is generally lower, resulting in less competition and slower price growth. Additionally, rural properties are more susceptible to economic downturns or declines in value due to their limited appeal and market size. Therefore, the statement that rural properties do not significantly increase in value like urban or suburban properties and are more sensitive to economic downturns is true.

The correct answer is "Using comps with higher as well as lower sales prices than subject property." When an appraiser "brackets" a property, it means they are considering comparable properties with both higher and lower sales prices than the subject property. This helps to establish a range of values and provide a more accurate appraisal. By including both higher and lower comps, the appraiser can account for any unique features or deficiencies in the subject property and ensure a fair evaluation.

The statement is true because the DOMs, which stands for Days on the Market, refers to the number of days a property has been listed for sale before it is sold. Therefore, it is relevant only in the context of purchase transactions, as it helps potential buyers gauge the popularity and demand of a property. For rental transactions, the concept of DOMs is not applicable, as it is not a measure of the property's availability for rent.

The statement is false because Fair Market Value (FMV) is not solely based on the price someone is willing to pay. It is determined by the current market conditions, supply and demand, and the agreed-upon value between a willing buyer and a willing seller, both of whom are knowledgeable about the item being sold. It is not solely dependent on an individual's willingness to pay a certain price.

The correct answer is "None of the above" because the question is asking for a description of the adjustments made to the subject property, and none of the options provided (None, Typical, Average, All of the above) accurately describe the adjustments.

Appraisers are no longer able to rate the property's quality against the standards for that neighborhood. This means that appraisers are no longer allowed to compare the property being appraised to the quality standards of the surrounding neighborhood. This could be due to changes in regulations or guidelines for appraisers. As a result, the appraisers may have to rely on other factors and criteria to determine the value of the property.