What is a Restricted Appraisal Report?
A Restricted Appraisal Report is a type of appraisal document that provides a brief evaluation of a property’s value. This report includes minimal detail and analysis and is intended exclusively for the client’s use. As such, it is not suitable for other parties that may require detailed information or verification of the property value. This type of report stands in contrast to more extensive reports such as the Appraisal Report, which offers comprehensive information about the property under consideration.
Key Characteristics:
- Minimal Details: Contains only the essential information needed for the client’s specific purpose.
- Client-Exclusive: Designed exclusively for the client’s use, and not intended for third-party reliance.
- Brief Analysis: Provides a shortened form of analysis, usually without the level of detail found in more extensive appraisal types.
Examples
Example 1
Cheeseburgers of America: Cheeseburgers of America has 2,000 outlets nationally and aims to get an estimate of the value of all the real estate it owns for internal decision-making. They request a state-certified general appraiser to create a restricted appraisal report for their purposes. The report includes a brief analysis of the building and land at each location for exclusive use by Cheeseburgers of America.
Example 2
Solo Real Estate Investor: A solo real estate investor wants a quick value estimate of a newly acquired rental property. The investor contacts an appraiser for a restricted appraisal report which offers valuation insights with limited details purely for the investor’s investigative purpose.
Frequently Asked Questions
What differentiates a Restricted Appraisal Report from an Appraisal Report?
A Restricted Appraisal Report provides minimal details and is intended only for the client’s use. An Appraisal Report, however, includes detailed analysis and information, making it suitable for broader distribution and reliance by other parties.
When might a Restricted Appraisal Report be most useful?
This type of report is most useful when the client needs a quick, confidential valuation for internal decision-making and does not require the extensive detail and accuracy suitable for major financial transactions or third-party reliance.
Can a Restricted Appraisal Report be shared with lenders?
No, as it is intended solely for the client’s use and does not meet the comprehensive details typically required by lenders or other stakeholders.
Are Restricted Appraisal Reports compliant with USPAP standards?
Yes, they comply with the Uniform Standards of Professional Appraisal Practice (USPAP) as long as they meet the requirement for restricted documentation and disclosure, honoring the confidentiality and detail limitations.
How do appraisers determine the value in a Restricted Appraisal Report?
Appraisers use similar methods as they would in more comprehensive reports but summarize their findings and analysis to suit the restricted nature of the document.
Related Terms
Appraisal Report
A detailed valuation report that includes comprehensive analysis and information about a property, meant for use by the client and potentially other stakeholders.
Self-Contained Appraisal Report
An extensive version of an appraisal report that includes all the elements considered in the appraisal process in full detail.
Uniform Standards of Professional Appraisal Practice (USPAP)
These are the established standards guiding the ethical and performance duties of appraisers in the United States.
Market Value
The estimated amount for which a property should exchange on the date of valuation between a willing buyer and seller.
Online Resources
References
- The Appraisal of Real Estate, 14th Edition – The Appraisal Institute
- Uniform Standards of Professional Appraisal Practice (USPAP)
- Real Estate Appraisal: From A to Z by Lisa Desmet
- Valuation: Measuring and Managing the Value of Companies by McKinsey & Company Inc.
Suggested Books for Further Studies
- “The Appraisal of Real Estate, 14th Edition” by The Appraisal Institute – A core reference material for understanding the complete scope of real estate appraisals.
- “Fundamentals of Real Estate Appraisal” by William L. Ventolo Jr. – A great resource for grasping the basics and intermediary concepts in real estate appraisal.
- “Real Estate Valuation Theory” by Manya Muge – Offers theoretical perspectives and methodologies pivotal in the practice of real estate evaluation.
- “Mastering Real Estate Appraisal” by Dennis S. Tosh and Judith N. Flora – A guide for mastering practical real estate appraisal knowledge and skills.
