Appraisal Practice and Report Writing Under Standards 2 and 4
Appraisal Practice and Report Writing tests whether your report communicates the assignment so a reader can understand it without asking questions, and whether the report option you chose matches the intended users. Expect items on required report content, certifications, extraordinary assumptions, and workfile obligations, plus review assignments under Standards 3 and 4.
Two report options
Standard 2 permits an Appraisal Report or a Restricted Appraisal Report. The difference is intended users and disclosure, not analytical depth: development under Standard 1 is identical. A Restricted Appraisal Report may be used only when the client is the sole intended user, and it must contain a use restriction stating that it may not be relied on by anyone other than the client.
Required content
An Appraisal Report states the identity of the client and intended users, the intended use, the type of value and its definition, the effective date, the scope of work, the relevant property characteristics, the highest and best use (stated and supported), each approach applied or a statement of why it was not, the reconciliation and final opinion, the exposure time, and any extraordinary assumptions or hypothetical conditions. Every report needs the Standard 2-3 certification and a signature; the certification also discloses whether you provided services on the subject property in the three years before accepting the assignment.
Workfiles
Retain the workfile for five years after delivery, or two years after final disposition of a related proceeding. It must contain the data and analysis that support every figure, including items not delivered to the client.
Worked example
A private investor hires you to value a small office building for internal buy/sell planning and will not share the report. The client is the only intended user, so a Restricted Appraisal Report is permissible; it must carry the use restriction warning and still rests on the same scope of work and market support. If the same owner later needs the report for a Fannie Mae multifamily loan, additional intended users exist, the Restricted option is unavailable, and an Appraisal Report with UAD-consistent content is required.
Traps
- Treating a Restricted Appraisal Report as license for a thinner analysis.
- Omitting exposure time, the effective date, or the type-of-value definition.
- Using a hypothetical condition without labeling it, or misusing an extraordinary assumption.
- Submitting a boilerplate certification that does not match the assignment conditions.