NMLS Quiz: Apply Appraisal Review Standards

What this quiz covers

This quiz focuses on Apply Appraisal Review Standards, giving you a quick way to practice the rules, question types, and explanations that matter most for NMLS.

How to use this quiz

Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

Question 1

1. Subjective adjustment not supported by market evidence or documentation (correct answer)
2. Use of narrative commentary instead of a form report
3. Including agricultural market context in the neighborhood section
4. Using multiple approaches to value when applicable

Question 2

1. Adjustments that are consistently supported by market data and fall within a reasonable range for the local market
2. Small adjustments made for minor differences in square footage, lot size, and property condition between comparables
3. Large, unexplained adjustments that consistently favor the subject property without documented market support (correct answer)
4. Adjustments that reflect typical market preferences for specific features like updated kitchens or additional bathrooms

Question 3

1. A potential issue with the relevance of the market data and valuation conclusion for the intended transaction (correct answer)
2. That the appraiser has properly followed standard industry practice for establishing effective dates
3. That the appraisal will automatically be more accurate due to the additional time for market analysis
4. That the borrower has requested a delayed effective date to take advantage of changing market conditions

Question 4

1. Accept the appraisal since exterior-only inspections are standard practice for all residential mortgage lending
2. Determine if the inspection type meets the lender's requirements and loan program guidelines for the specific transaction (correct answer)
3. Automatically reject the appraisal since interior inspection is always required for mortgage lending purposes
4. Request that the borrower provide interior photographs to supplement the appraiser's exterior-only inspection

Question 5

1. The appraisal automatically meets federal distance requirements for comparable sales in all market areas
2. The appraiser has likely violated appraisal standards by using comparables that are too distant from the subject
3. The appraisal may require additional scrutiny to ensure the distant comparables are truly representative of the subject's market (correct answer)
4. The comparable sales are acceptable as long as they were sold within the required six-month timeframe

Question 6

1. The appraiser used the sales comparison approach as the primary method for valuing a typical residential property
2. The property condition is described as average with normal wear and tear appropriate for the property's age
3. The appraiser noted significant deferred maintenance issues but did not make adjustments to the final value (correct answer)
4. The neighborhood analysis includes information about local schools, shopping, and transportation accessibility

Question 7

1. The comparable sales show a range of values that reflects normal market variation for similar properties
2. One or more comparable sales occurred between related parties or involved non-arm's length transactions (correct answer)
3. The comparable sales include properties with slightly different square footage that required appropriate adjustments
4. The appraiser provided detailed descriptions of each comparable sale including sale date and property characteristics

Question 8

1. The appraiser is licensed in multiple states and regularly appraises properties in different market areas
2. The appraiser has previously appraised other properties for the same lender within the past year
3. The appraiser has a financial interest in the subject property or a business relationship with the borrower (correct answer)
4. The appraiser specializes in residential properties and has extensive experience in the subject property's market area

Question 9

1. A red flag because it suggests the appraiser lacks knowledge of the broader market area and comparable properties
2. An acceptable practice that demonstrates the appraiser found truly comparable properties with similar construction quality and features (correct answer)
3. A violation of appraisal independence rules that require diversity in comparable sale sources and locations
4. An indication that the appraiser was influenced by the builder to use only properties from their development

Question 10

1. The appraiser used three comparable sales from within the last six months in the same neighborhood
2. The subject property's estimated value is significantly higher than all comparable sales without adequate justification for the adjustment (correct answer)
3. The appraiser included detailed photographs of the subject property's interior and exterior condition
4. The appraisal report contains a complete description of the neighborhood characteristics and market conditions

Question 11

1. Overlooking legal/HOA restrictions affecting use and marketability (correct answer)
2. Using sales from within the same building
3. Including a neighborhood description section
4. Adjusting for view premium in a high-rise

Question 12

1. Comparable sale selection and adjustment fail to reflect transaction conditions (correct answer)
2. Use of a sales comparison approach for retail property
3. Inclusion of a discussion of exposure time
4. Reporting the parcel size in square feet

Question 13

1. Misstated occupancy/ownership profile affecting marketability and eligibility (correct answer)
2. Use of a comparable from the same ZIP code
3. Inclusion of a prior sales history section
4. Reporting a view adjustment for a higher floor

Question 14

1. Failure to consider current market volatility and relevant listings/pendings (correct answer)
2. Use of closed sales as the primary data source
3. Adjusting for garage parking availability
4. Reporting the subject's HOA fee amount

Question 15

1. Unsupported capitalization rate selection inconsistent with market data (correct answer)
2. Use of direct capitalization instead of DCF modeling
3. Inclusion of a site sketch and building layout
4. Reporting the property as fee simple interest

Question 16

1. Market narrative inconsistent with observable supply-and-demand indicators (correct answer)
2. Use of demographic data within a five-mile radius
3. Inclusion of a highest and best use conclusion
4. Using both sales and income approaches

Question 17

1. Directional adjustment error that inflates indicated value (correct answer)
2. Use of view adjustments in a high-rise market
3. Selecting sales within the past six months
4. Reporting the building's amenities list

Question 18

1. Failure to analyze market conditions and apply warranted time adjustments (correct answer)
2. Use of closed sales rather than active listings
3. Presence of a final reconciliation narrative
4. Selection of three comparables instead of four

Question 19

1. Supportability of adjustments with market evidence and clear rationale (correct answer)
2. Requirement to include exactly three comparables
3. Prohibition on using older sales in any market
4. Requirement to exclude distressed sales in all cases

Question 20

1. Insufficient use of available closed sales without explanation (correct answer)
2. Inclusion of listings to support market trends
3. Use of a land-to-building ratio discussion
4. Reporting acreage in whole numbers