Chapter 3 - Ethics

Question 1

True or False? The mere fact that an appraiser has previously appraised property is typically NOT considered confidential information under USPAP.

Answer 1

True

Question 2

True or False? An appraiser who selects only the data that supports the contract sale price in an appraisal has violated USPAP.

Answer 2

True

Question 3

True or False? USPAP permits an appraiser to be biased in certain appraisal assignments, as long as the bias is properly disclosed.

Answer 3

False

Question 4

What term is defined as “relating to what is good or bad; having to do with moral duty and obligation”?

• Morality
• Moral
• Ethics
• USPAP

Answer 4

Ethics

Question 5

USPAP requires an appraiser to be

• advocate
• objective
• biased
• self-interested above all

Answer 5

Objective

Question 6

An appraiser pays a fee for the procurement of an assignment. Where in the appraisal report does this payment have to be disclosed?

• In the certification and any transmittal letter where conclusions are stated
• The reconciliation section
• The scope of work section, or in an addendum if a form report is used
• Anywhere, as long as it is prominent

Answer 6

In the certification and any transmittal letter where conclusions are stated

Question 7

An appraiser states to a client that the appraisal fee will be $100 higher than the standard fee because the appraiser’s value opinion is for the property is over $500,000. Is it a violation of USPAP for the appraiser to quote the fee in this manner?

• Yes
• No

Answer 7

Yes

Question 8

True or False? If an appraiser does not charge a fee for an appraisal, he is not required to comply with USPAP in completing it.

Answer 8

False

Question 9

When an appraiser discloses that she paid a fee for the procurement of an assignment, does USPAP require her to disclose the AMOUNT of the fee?

• Yes
• No

Answer 9

No

Question 10

Is it ethical for an appraiser to offer a reduced fee on an appraisal if the client’s loan does not close?

• Yes
• No

Answer 10

No

Question 11

An appraiser finds out after completing an appraisal that the lender/client’s loan did not close. What should the appraiser do regarding the appraisal fee?

• Charge the agreed-upon fee regardless of whether the loan closed
• Reduce the fee by 50% because the loan did not close
• Waive the fee entirely as a show of good faith
• Discount the fee, and make up for it by charging more for the next appraisal for this client

Answer 11

Charge the agreed-upon fee regardless of whether the loan closed

Question 12

USPAP addresses an appraiser’s ethical obligations in:

• the ETHICS RULE
• the SCOPE OF WORK RULE
• the COMPETENCY RULE
• the RECORD KEEPING RULE

Answer 12

The ethics rule

Question 13

The ETHICS RULE is the _____ of the Rules found in USPAP.

• last
• least important
• first
• shortest

Answer 13

First

Question 14

May an appraiser disregard her USPAP obligations if she does not charge a fee for the assignment?

• Yes
• No
• It depends on whether the client is a non-profit organization.
• USPAP is silent on this issue.

Answer 14

No

Question 15

An appraiser finds that the pending sale price of the subject residential property is not supported by market data. To avoid causing a problem for the buyer and seller, the appraiser reconciles the value conclusion to meet the sale price anyway. Which statement is true regarding this situation?

• The appraiser is helping the buyer purchase an otherwise unaffordable house.
• The appraiser has done what he was hired to do, and has earned his fee.
• The appraiser has violated his ethical obligations by doing this.
• The appraiser is helping the local market by making sure the appraisal meets the sale price.

Answer 15

The appraiser has violated his ethical obligations by doing this.

Question 16

An appraiser paid a referral fee in conjunction with an assignment. Which statement is TRUE regarding this situation, according to USPAP?

• The appraiser must disclose that a fee was paid, but does not have to disclose the amount paid.
• The appraiser has violated USPAP by paying a referral fee.
• USPAP does not address this issue.

Answer 16

The appraiser must disclose that a fee was paid, but does not have to disclose the amount paid.

Question 17

“A preference or inclination that precludes an appraiser’s impartiality, independence, or objectivity in an assignment” is the definition of which USPAP term?

• Certification
• Competency
• Ethics
• Bias

Answer 17

Bias

Question 18

Webster’s Dictionary defines ethics as relating to:

• income versus debt obligations
• what is good or bad
• an individual’s mental health and well-being
• how an individual conducts himself or herself in a social situation

Answer 18

What is good or bad

Question 19

When should an appraiser’s compensation be dependent on reporting of a predetermined value conclusion?

• Never
• When the client requests it in writing
• When doing so causes no harm to any party
• At the appraiser’s sole discretion

Answer 19

Never

Question 20

Is an appraiser permitted to base his or her appraisal fee on the owner’s estimate of value of the subject property?

• Yes, this is permissible
• No, this is a violation of the ETHICS RULE
• Yes, but the appraiser must first obtain permission from the ASB.
• No, but it is only a violation if the appraiser gets caught.

Answer 20

Yes, this is permissible

Question 21

Appraiser Bill pays a $150 fee to be included on a lender’s “approved appraiser” list. When Bill prepares appraisal reports for this lender:

• he must disclose the amount of the fee paid to be on the lender’s approved list
• he must disclose that a fee was paid, but he does not have to disclose the amount
• he may avoid disclosing the fact that a fee was paid if the lender waives the disclosure requirement
• he has violated USPAP for paying a fee for inclusion on this list

Answer 21

He must disclose that a fee was paid, but he does not have to disclose the amount

Question 22

True or False? Webster’s Dictionary defines ethics as relating to the principles established by the world’s most common religions.

Answer 22

False

Question 23

Appraiser Amy agrees to pay a fee to be included on Lender B’s “approved appraiser” list. Which statement is TRUE regarding this situation?

• This is permissible under USPAP as long as it is disclosed.
• This is a violation of USPAP, and Amy is subject to disciplinary action.
• This is permissible under USPAP and does not require disclosure.
• USPAP does not address this issue.

Answer 23

This is permissible under USPAP as long as it is disclosed.