Uniform Standards of Professional Appraisal Practice (USPAP) Practice Exam

Which of the following actions should an appraiser avoid during a transaction with a borrower?

1. Engaging with the lender before the borrower.

2. Providing unofficial estimates of property value.

3. Documenting the appraisal process.

4. Informing the lender of borrower communications.

The correct answer is: Providing unofficial estimates of property value.

Providing unofficial estimates of property value during a transaction with a borrower can lead to significant misunderstandings and ethical violations. Appraisers are required to adhere to strict guidelines outlined in the Uniform Standards of Professional Appraisal Practice (USPAP), which emphasize the necessity of providing unbiased and reliable valuations based on comprehensive analysis and established methodologies. When an appraiser provides an unofficial estimate, it may convey a sense of authority or assurance that is not grounded in the thorough appraisal process. This could mislead the borrower into forming expectations that aren't supported by the formal appraisal, potentially damaging the appraiser's credibility and the integrity of the appraisal profession overall. In contrast, engaging with the lender before the borrower, documenting the appraisal process, and informing the lender of borrower communications are actions that can be appropriate under certain circumstances and keep the appraisal process transparent and compliant with industry standards. Proper documentation and communication maintain clarity, ensuring that all parties involved in the transaction are on the same page and adhere to ethical obligations.