Certified Residential Appraiser Practice Exam

Which scenario typically does NOT require an appraisal?

1. Property sale

2. Mortgage application

3. Life insurance

4. Tax assessment

The correct answer is: Life insurance

In the context of scenarios that typically do not require an appraisal, life insurance policies often do not necessitate an appraisal of the insured's property. This situation differs from others like property sales, mortgage applications, and tax assessments, where appraisals are typically required to determine the market value. When someone applies for life insurance, it primarily concerns the evaluation of risk related to the individual’s health and life expectancy rather than the valuation of real estate or property assets. The underwriting process focuses more on the demographic and health-related information of the applicant, rather than the valuation of physical properties. In contrast, appraisals are critical in scenarios like property sales, where the accurate value is necessary for both the buyer and seller to ensure a fair transaction. Similarly, in mortgage applications, lenders require appraisals to assess whether the property value aligns with the loan amount being requested, protecting their investment. Tax assessments often utilize appraisals to determine the value of property for taxation purposes, ensuring that property taxes are levied fairly based on the current market value. Thus, life insurance stands out as the scenario where an appraisal of property value is not typically required.