For those not as well-versed in the appraisal industry, it might come as a surprise that there are many types of appraisals and appraisal reports. We’ve covered the property appraisal methods in the past, however, different reports are ordered for different types of properties as well as different needs. By knowing which types of appraisal reports exist, you’ll be better equipped to order exactly what your client or property type requires.
First, determine the type of appraisal that best fits your property’s needs.
Note: a complete appraisal is different from a limited use appraisal.
Don’t let the name fool you. Contrary to the way it sounds, a complete appraisal does not cite one of USPAP’s departure provisions. Essentially, an appraisal might utilize one or two of the property appraisal methods, but not all of them. For example, the sale of a church might use the cost approach method and the sales comparison method but not income capital method. In most loan transactions and court cases, a complete appraisal will be used.
Unlike a complete appraisal, however, a limited-use appraisal is generally for internal appraisals ordered by owners for quick purchase agreements. Because they are not as thorough as complete appraisals, some experts say they are less reliable.
Once an appraisal has been completed, it’s time for the appraisal report. What’s the difference between the types of appraisal reports?
What is a self-contained appraisal report?
In a self-contained appraisal report, all of an appraiser’s conclusions, rationale, and data sources are fully disclosed. The contents of the report are thorough and information sources are cited. These reports are often used in appraisals for commercial properties but are rarely used for residential home appraisals due to the amount of information presented.
What is a summary report?
A summary report, unlike a self-contained report, summarizes the findings rather than thoroughly describing them. As a result, summary reports are much shorter but are considered equally as reliable and acceptable. These are commonly and often used for simple commercial real estate transactions because they are both cost-effective and timely.
What is a restricted report?
As we’ve cautioned before, according to USPAP Advisory Opinion 11 a restricted report is strictly for client use. These reports are often brief and only include the appraiser’s conclusions. No explanation of how those conclusions were derived is included.
For an in-depth look at the different types of appraisals, take a look at our previous blog post on the matter. As always, don’t hesitate to let us know if you have any questions. We’re always ready to chat more.