Property Valuation
A Massachusetts appraiser values a property for a private party (non-federally-related transaction). The appraiser:
AIs not required to follow USPAP
BMust still follow USPAP and state licensing requirements✓ Correct
CMay use any methodology they choose
DDoes not need a license for private transactions
Explanation
Massachusetts-licensed appraisers must comply with USPAP and state regulations for all appraisal assignments, not just federally-related transactions. USPAP is the professional standard for all appraisals.
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Key Terms to Know
Appraisal
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
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