Property Valuation
An appraiser conducting a Texas appraisal review finds that the original appraisal failed to consider a contaminated neighboring property. This oversight is:
AAcceptable since external factors are not part of the cost approach
BA potential material flaw since environmental contamination can be external obsolescence affecting value✓ Correct
CPermitted since USPAP does not require environmental analysis
DCorrected automatically by the lender's underwriter
Explanation
Proximity to environmental contamination can cause external (economic) obsolescence, reducing property value. Failing to consider this material factor in the appraisal could be a significant error that affects the reliability of the value opinion.
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