An Appraisal Case Example

Question 1

CASE STUDY DESCRIPTION:
Appraise a Rural Residential 20 acreage dwelling.
-10 acres leased to local farmer (agricultural income)
-5 acres rented out (Recreational income)
The remaining 5 acres residential
The Bank wants you to appraise the market value of the residential property.

Answer 1

No Answer

Question 2

Is this assignment within a CRA’s scope of Practice? What does it depend on?

Answer 2

It all depends on the property’s HIGHEST AND BEST USE.
If it is primarily residential and has some bonus income then that can be adjusted. However for this case study the residential is the minority which makes it questionable if indeed it is primarily residential. In this case it is not.

Question 3

If a CRA Appraiser invoke’s a HYPOTHETICAL CONDITION and an EXTRAORDINARY ASSUMPTION
then what does the Appraiser need to do?

Answer 3

Find SALES
1)Single family dwellings with commercial zoning or 2) single family dwelling on residential zoning

to support a Residential only Valuation.

Question 4

Can this property be appraised by a CRA-designated appraiser?

Answer 4

1) Need to determine Highest and Best Use first. OR Invoke a HYPOTHETICAL CONDITION AND EXTRAORDINARY ASSUMPTION for Residential only it it is reasonable to do so.

Question 5

If a CRA Appraiser invoke’s a HYPOTHETICAL CONDITION and an EXTRAORDINARY ASSUMPTION
then what does the Appraiser need to do?

Answer 5

1)Find sales in the area of single family dwellings with commercial zoning or single family dwelling on residential lots to support a Residential only Valuation.

Question 6

What is a CRA’s SCOPE OF PRACTICE (what you can do based on your qualifications) when looking at possibly taking on an assignment.

Answer 6

They need to see 3 things….

1) Accept the assignment because it is within scope.
2) Have the report co-signed by an AACI
3) Decline the assignment Altogether.

Question 7

What does SCOPE OF PRACTICE mean?

Answer 7

What you can do based on your qualifications as a CRA.

Question 8

What happens if an Appraiser accepts an assignment that is out of SCOPE OF PRACTICE?

Answer 8

A CRA CANNOT appraise it unless they can get it co-signed by an AACI.

Question 9

What determines the CRA’s limitations when accepting an assignment?

Answer 9

HIGHEST and BEST USE