In a real property appraisal assignment prepared for a mortgage lender, an appraiser is permitted by USPAP to base his compensation for an appraisal assignment on:

Study for the McKissock 15hr National USPAP Test. Use flashcards and multiple-choice questions with hints and explanations. Get ahead in your appraisal career!

Multiple Choice

In a real property appraisal assignment prepared for a mortgage lender, an appraiser is permitted by USPAP to base his compensation for an appraisal assignment on:

Explanation:
The key idea is that compensation for an appraisal must not be tied to the appraiser’s opinion of value or the outcome of the assignment. It can, however, reflect objective aspects of performing the work. Linking part of the fee to delivering the report by a specified due date is permissible because it measures performance and timeliness, not the valuation itself. This keeps the appraisal independent while ensuring the lender receives the report on the needed schedule. In practice, the engagement can specify that meeting deadlines influences compensation, provided the fee is not contingent on arriving at a particular value. The other factors listed—the appraiser’s experience, the client’s sophistication, or simply relying on the written terms of the agreement—do not tie the fee to the fulfillment of a concrete deliverable in the same direct, performance-based way, and thus aren’t the focus of this particular allowance.

The key idea is that compensation for an appraisal must not be tied to the appraiser’s opinion of value or the outcome of the assignment. It can, however, reflect objective aspects of performing the work. Linking part of the fee to delivering the report by a specified due date is permissible because it measures performance and timeliness, not the valuation itself. This keeps the appraisal independent while ensuring the lender receives the report on the needed schedule.

In practice, the engagement can specify that meeting deadlines influences compensation, provided the fee is not contingent on arriving at a particular value. The other factors listed—the appraiser’s experience, the client’s sophistication, or simply relying on the written terms of the agreement—do not tie the fee to the fulfillment of a concrete deliverable in the same direct, performance-based way, and thus aren’t the focus of this particular allowance.

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