Appraisal regulations are ever-changing; reminds me of the saying, “Just when I learned the answers, they changed the questions!”
Currently, there are two commercial appraisal report types and it is advantageous to understand which one works for you. Here are the highlights for the two options:
Appraisa Report – An “Appraisal Report” at minimum summarizes the analysis and reasoning for the conclusions presented in the report. This report contains sufficient information for the client to understand the appraiser’s rationale for the conclusions. An Appraisal Report is appropriate when a third party (someone other than the client) may be using the report (lending, litigation, estates, tax matters, etc.).
Restricted Appraisal Report – A “Restricted Appraisal Report” simply states the findings and conclusions and is restricted to use by the client. No other intended user is allowed for this report format. A Restricted Appraisal Report might not include sufficient information for the client to understand either the appraiser’s analyses or rationale for the appraiser’s conclusions.
Given the reduced time required to complete a Restricted Appraisal Report, the fee is typically lower than for an Appraisal Report of the same property. Restricted Appraisal Reports are often ordered by individuals or brokers who want a third-party opinion of a property’s value for listing purposes. Additionally, a lender may order a Restricted Appraisal Report to monitor an existing loan.
Understanding the options in commercial appraisal reporting will help expedite the process and ensure that the most appropriate appraisal type is ordered. It is the appraiser’s obligation to discuss the scope with the client and determine the appropriate report format at the time of engagement. However, understanding your options before placing the appraisal order call is always a good idea.
John Fisher CCRA, LEED AP
Managing Director, Appraisal Services
O’Connor & Associates