Certified Residential Appraiser cheat sheet

The valuation process sequence is: define the problem; determine scope of work; collect and analyze data; analyze highest and best use; apply the approaches; reconcile; report the value opinion.

The problem definition includes subject identification, property rights, intended use and users, value definition, effective date, and assignment conditions.

Scope of work must be sufficient for credible assignment results and is driven by intended use, complexity, and data availability; it is disclosed in the report.

General data describe market-wide forces; specific data describe the subject and comparable properties, including sales, listings, and expenses.

An effective date fixes the date of value; the report date is when the opinion is communicated and may be later.

Market value assumes a willing buyer and seller, both acting prudently and knowledgeably, with no undue stimulus and reasonable exposure.

Exposure time is backward-looking from the effective date; marketing time is forward-looking from the report date.

A workfile must contain the data, analysis, and documentation supporting the report and be retained under record-keeping rules.

In the sales comparison approach, compare each comparable to the subject; if the comparable is superior, subtract the adjustment; if inferior, add it.

Adjustment sequence is typically transactional (financing, concessions, conditions, time) then property (location, site, GLA, condition, amenities).

Cost approach formula: value = current cost new minus accrued depreciation plus site value.

Accrued depreciation components: physical deterioration, functional obsolescence, and external (economic) obsolescence.

Income approach direct capitalization: value = net operating income divided by capitalization rate; cap rate = NOI divided by sale price.

Gross income multiplier: value = gross income times multiplier, where multiplier = sale price divided by gross income.

Reconciliation weighs approach indications by relevance, data reliability, and quantity and quality of evidence; it is not a mechanical average.

A property's land value in the cost approach should reflect its highest and best use, not necessarily its current use.

USPAP sets minimum ethical and performance requirements; the Ethics Rule requires impartiality, objectivity, independence, and avoidance of misleading reports.

The Competency Rule requires the appraiser to have the knowledge and experience, or acquire it, disclose the deficiency, and complete the assignment competently.

The Scope of Work Rule requires identifying the problem, determining and performing the scope, and disclosing it in the report.

The Record Keeping Rule requires a workfile retained for at least five years after the report date or two years after final legal disposition, whichever is later.

An appraiser may not accept compensation contingent on a predetermined value, a direction in value, or a desired outcome.

The Jurisdictional Exception allows compliance with conflicting law while performing all USPAP requirements not superseded by that law.

An Appraisal Report must summarize the information and analysis; a Restricted Appraisal Report may state conclusions with less detail and has restricted use.

Supplemental standards apply when a client, regulator, or assignment condition imposes additional requirements beyond USPAP.

Gross living area (GLA) for single-family homes is finished, heated, above-grade area measured to exterior dimensions; ANSI Z765 is a common standard.

One acre equals 43,560 square feet; one square mile equals 640 acres; one foot equals 0.3048 meter.

Basement area, finished or unfinished, is typically reported separately from GLA and adjusted separately.

Gross building area includes all enclosed floor area; GLA excludes below-grade and unfinished areas.

Functional utility considers layout, room count, ceiling height, access, and design; poor utility can create functional obsolescence.

Condition and quality ratings, such as C1 through C6 and Q1 through Q6, describe maintenance and construction quality relative to market expectations.

Site improvements include driveways, landscaping, utilities, and grading; they contribute value separately from land and improvements.

Boundary encroachments and easements can affect title, marketability, and value and require legal description review.

Highest and best use tests: legally permissible, physically possible, financially feasible, and maximally productive, applied in that order.

Analyze highest and best use as if vacant and as improved; the as-improved use may be continued use, modification, or demolition.

Absorption rate = units sold per period; months of supply = active listings divided by monthly sales rate.

The four market forces are social, economic, governmental, and environmental; they drive supply, demand, and value trends.

Excess land can be separately developed or sold; surplus land cannot be separately developed and adds little or no value.

Market conditions adjustments reflect changes in prices between the comparable sale date and the effective date.

Financial feasibility requires that the use produce a market-supported return after costs, risk, and entrepreneurial incentive.

Market segmentation groups properties by type, price, location, and buyer motivation to select relevant comparables.

Federal Fair Housing Act protected classes include race, color, religion, sex, national origin, familial status, and disability; state and local laws may add classes.

Appraisers must not consider protected characteristics in valuation; doing so can violate fair housing, equal credit, and appraisal independence laws.

Redlining is denying or limiting services in a neighborhood based on protected characteristics; steering is directing buyers toward or away from areas.

Blockbusting is inducing panic selling by representing that protected-class entry will harm property values; it is illegal.

FIRREA established appraiser licensing and regulatory oversight; Dodd-Frank added appraisal independence and consumer protection provisions.

Zoning, deed restrictions, easements, and encroachments are legal encumbrances that can limit use and affect highest and best use.

The ADA addresses accessibility in public accommodations and commercial facilities; it generally does not mandate accessibility inside private single-family homes.

Appraiser compensation cannot be contingent on reaching a predetermined value or on loan approval.

Mean = sum of observations divided by number of observations; median = middle ordered value; mode = most frequent value.

Standard deviation measures dispersion around the mean; variance is the square of standard deviation.

Coefficient of variation = standard deviation divided by mean, allowing comparison of relative variability across data sets.

Paired sales isolate one difference between two otherwise similar sales to estimate a market adjustment.

Regression analysis estimates the relationship between a dependent variable (price) and independent variables such as size, location, and time.

Gross rent multiplier = sale price divided by gross monthly rent; value = gross monthly rent times multiplier.

Direct capitalization value = NOI divided by cap rate; if cap rate rises, value falls for a given NOI.

Price per square foot = sale price divided by square footage; use consistent measurement standards when comparing units.