Restricted Appraisal Report Guide: What You Need to Know

This article will teach you about the Restricted Appraisal Report.

  • What is a Restricted Appraisal Report?
  • What is the main difference between a Restricted Appraisal Report and a Narrative Appraisal report?
  • How much does a Restricted Appraisal Report cost? How does that compare to a Narrative Commercial Appraisal report?
  • What does a Restricted Appraisal Report consist of (minimum requirements)?
  • Who Can Perform a Restricted Appraisal?

And so much more let’s dive in.

What is a Restricted Appraisal Report?

A Restricted Appraisal Report is a condensed type of appraisal report that is limited in content. It is commonly used when a client or intended user has a sufficient level of knowledge about the property being appraised and local market conditions and does not require the level of detail provided in a narrative appraisal report. The report type may not be understood without additional information contained in the workfile that is not transmitted in the report. The Restricted Appraisal Report is often used when the appraisal is intended for a client’s internal use only. It is typically not used for mortgage lending.

A Restricted Appraisal Report must be prepared in compliance with the applicable content standards of USPAP. In developing the appraisal, the appraiser must still conduct a thorough analysis of the relevant market data and property information.

The primary benefit of this report type is the price of the appraisal- due to the fact that only minimal details are presented in the report, it takes less time for an appraiser to develop, and conversely, costs less than a full Appraisal Report.

What is the main difference between a Restricted Appraisal Report versus a Narrative Appraisal report?

In a Restricted Appraisal Report the appraiser states the facts and findings. While a narrative appraisal report summarizes and contains comprehensive details and analysis so the reader can understand the facts and findings without additional explanation

What is the cost for a Restricted Appraisal Report versus a Narrative Commercial Appraisal report?

A Restricted Appraisal Report can range from 15 to 30 pages with typical fees that range from $2,000 to $3,000.

A Narrative Commercial Appraisal reports can range from 75 to +100 pages and typical fees range from $3,000 to $5,000.

What does a Restricted Appraisal Report consist of?

Restricted Appraisal Reports must include certain elements such as:

  1. State the identity of the client and any intended users.
  2. Statement about a prominent use restriction that limits use of the report to the client/intended users and warns that the rationale for how the appraiser arrived at the opinions and conclusions set forth in the report may not be understood properly without additional information contained in the appraiser’s workfile.
  3. State the intended use of the appraisal
  4. State information sufficient to identify the real estate involved in the appraisal.
  5. State the real property interest being appraised.
  6. State the type and definition of value and cite the source of the definition.
  7. State the effective date of the appraisal and the date of the report.
  8. State the scope of work used to develop the appraisal.
  9. State the appraisal methods and techniques employed, state the value opinion(s) and conclusion(s) reached, and reference the workfile; exclusion of the sales comparison approach, cost approach, or income approach must be explained.
  10. State the use of the real estate existing as of the date of value and the use of the real estate reflected in the appraisal.
  11. When an opinion of highest and best use was developed by the appraiser, state that opinion.
  12. Clearly and conspicuously state all extraordinary assumptions and hypothetical conditions, and, state that their use might have affected the assignment results.
  13. Include a signed certification

Who Can Provide a Restricted Appraisal?

Certified Licensed Real Estate Appraisers can provide Restricted Appraisal? Please make sure that the appraiser has experience with complexity of the appraisal assignment and geographic competency.  Further, make sure that the appraiser has the appropriate license level. For example, only appraisers with a certified general license are allowed to appraise commercial properties. Licensed residential and certified residential appraisers are not allowed to appraise commercial real estate.

About the Author

Matthew Reynolds, MAI is a commercial real estate appraiser with Vanguard Realty Advisors. He has been appraising commercial real estate for +20 years. He has done simple and complex appraisal assignments, including land appraisals. He can help you navigate and understand the commercial appraisal process. Please contact him for any appraisal services or to request a quote.