Property Valuation
In Michigan, an appraiser who discovers evidence of an illegal activity on the property during an inspection should:
AReport it to law enforcement immediately before completing the appraisal
BNote it in the appraisal report and potentially decline to complete the appraisal; consult USPAP and legal counsel as appropriate✓ Correct
CIgnore it as it is outside the scope of the appraisal
DAdjust the value downward by 50% automatically
Explanation
If an appraiser discovers evidence of illegal activity (such as a former drug lab, which creates environmental and safety concerns), USPAP guidance and ethical obligations may require noting it in the report and potentially declining to complete the assignment, with legal consultation.
People Also Study
Related Michigan Questions
- In Michigan, properties located near former industrial areas (such as parts of Detroit) may require environmental investigation for contamination from:Environmental
- In Michigan, an appraisal report that provides a brief presentation of the appraiser's findings is called a(n):Property Valuation
- In Michigan, a property near a former dry-cleaning facility would most likely contain which environmental concern?Environmental
- In Michigan, a seller who accepts an offer while a contingency (such as a home inspection) is still pending has:Contracts
- In Michigan, an appraiser's 'reconciliation' at the end of an appraisal report involves:Property Valuation
- In Michigan, a 'property condition report' or annual inspection by a property manager serves to:Property Management
- In Michigan, a 'restricted appraisal report' under USPAP is intended for:Property Valuation
- In Michigan, an appraiser preparing a 'desk review' of another appraiser's report:Property Valuation
Key Terms to Know
Appraisal
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
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.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
Study This Topic
Practice More Michigan Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Michigan Quiz →