Certified Residential Appraiser Practice Exam

Which type of report must an appraiser prepare when evaluating business property?

1. An informal summary

2. A review report

3. An appraisal report or restricted appraisal report

4. A financial statement

The correct answer is: An appraisal report or restricted appraisal report

When evaluating business property, the appraiser is required to prepare either an appraisal report or a restricted appraisal report. This requirement is primarily due to the comprehensive nature of the appraisal process for business properties, which often involves determining the market value based on various financial and operational factors. An appraisal report provides an in-depth analysis and thorough documentation of the appraisal process, findings, and conclusions. It is intended for a broader audience, including lenders, investors, and other interested parties who may require a detailed understanding of the property's value. This type of report typically includes information about the property, the methodology used in the valuation, comparable sales data, and the appraiser's qualifications. On the other hand, a restricted appraisal report is more concise and tailored to a specific client or intended user. It includes less detail compared to a full appraisal report, yet it still delivers the essential value conclusion based on the appraiser's analysis. In the context of appraising business properties, these reports are crucial, as they help stakeholders make informed decisions regarding their investments, financing options, and other business considerations. The other choices, such as an informal summary, a review report, or a financial statement, do not fulfill the professional requirements necessary for business property appraisals.