Property Appraisal and Valuation Flashcards
7 cards from real CMC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Property Appraisal and Valuation flashcards as text
What is the primary purpose of a property appraisal in a mortgage transaction?
Answer: To establish an objective estimate of the property's market value
An appraisal provides an independent, objective estimate of market value to protect both the lender and borrower by ensuring the loan amount is appropriate relative to the property's worth.
Which of the following best defines 'market value' in real estate appraisal?
Answer: The most probable price a property would bring in a competitive, open market under fair conditions
Market value is defined as the most probable price a property would sell for in a competitive and open market under all conditions requisite to a fair sale between a willing buyer and willing seller.
What is the Uniform Residential Appraisal Report (URAR)?
Answer: The standard form (Fannie Mae Form 1004) used for single-family residential property appraisals
The URAR, also known as Fannie Mae Form 1004, is the standard appraisal form required for single-family residential properties used as collateral for conventional mortgages.
Which federal law established the framework for state licensing and certification of appraisers for federally related transactions?
Answer: Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA)
Title XI of FIRREA, passed in 1989, established the framework for state licensing and certification of appraisers and requires qualified appraisals for federally related mortgage transactions.
What does 'highest and best use' mean in the context of property appraisal?
Answer: The reasonably probable and legal use that is physically possible and results in the highest value for the property
Highest and best use is the reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, financially feasible, and results in the highest value.
What is an appraisal review in the context of mortgage lending?
Answer: A process where a qualified reviewer examines an appraisal report to determine its quality and accuracy
An appraisal review is a systematic process in which a qualified reviewer examines the work of an appraiser to determine if the appraisal meets applicable standards, is supported by data, and produces a credible value conclusion.
Which organization publishes the Uniform Standards of Professional Appraisal Practice (USPAP)?
Answer: The Appraisal Foundation
The Appraisal Foundation, authorized by Congress through FIRREA, publishes USPAP, which sets the minimum ethical and performance standards of professional practice for appraisers in the United States.