Edward J. Batis & Associates, Inc.

Frequently Asked Questions
• How do I know if the appraiser I am hiring is qualified for the assignment?
• Are appraisers regulated by the State of Illinois?
• Are there professional rules of conduct applicable to appraisers?
• How are appraisal fees determined?
• Once the appraisal is complete, who is permitted to see the appraisal report?
• What are the options for an appraiser to communicate the opinion of value to the client?
• What is a Letter of Value?
• Is the appraiser’s opinion of value affected by the report format chosen by the client?
• How do I know which report type is best for me?
• What is a drive-by appraisal?

How do I know if the appraiser I am hiring is qualified for the assignment?
State licensed appraisers are ethically bound to have the experience necessary to prepare an appraisal of real estate. The appraiser should be qualified in two areas: the market area (familiarity with the location of the property) and specific property type (residential v. commercial). Interviewing appraisers on the telephone will enable the client to explore the appraiser’s knowledge and experience. Ask for references (list of banks, attorneys and individuals) and request a copy of the appraiser’s qualifications (including status of state license and any professional memberships/affiliations).

Are appraisers regulated by the State of Illinois?
Yes, Illinois has licensing/certification for real estate appraisers. The department which is responsible for the regulation of real estate appraisers is the Illinois Department Of Financial And Professional Regulation, Division Of Banks And Real Estate. Click here for the Division’s website.

Are there professional rules of conduct applicable to appraisers?
Yes, all appraisers licensed in the State of Illinois must adhere to the Uniform Standards Of Professional Appraisal Practice (USPAP). USPAP is the framework for conduct for appraisals of all property types. For information about USPAP, please refer to this site.

How are appraisal fees determined?
The fees for appraisal assignments are estimated by the appraiser based upon a number of factors: property type (size, age, condition); property location; scope of the assignment; purpose and function of the appraisal; intended use of the appraisal; experience and knowledge of the appraiser; availability of market information, etc. There should be a correlation between the appraisal fee and the complexity of the assignment. Appraisers may charge additional fees (hourly or flat rate) for consultation and meetings with the client after the appraisal is completed.

Once the appraisal is complete, who is permitted to see the appraisal report?
The party identified as the client is the only party privy to the report. Not only is the appraiser prohibited from showing the report to anyone other than the client, the appraiser may not share any part of the analysis or any confidential information about the assignment with anyone other than the client. If the client authorizes the appraiser to release the report to a third party, the appraiser may oblige.

What are the options for an appraiser to communicate the opinion of value?
There are three (3) different report formats for an appraiser to use to communicate the opinions and conclusions to the client:

1) SELF-CONTAINED APPRAISAL REPORT -
The Self-Contained Appraisal Report contains to the fullest extent possible and practical explanations of the data, reasoning, and analyses that were used to develop the opinion of value. It also includes thorough descriptions of the subject property, the property's locale, the market for the property type, and the appraiser's opinion of highest and best use.

2) SUMMARY APPRAISAL REPORT -
The Summary Appraisal Report contains summary discussions of the data, reasoning, and analyses that were used to develop the opinion of value. It also includes summary descriptions of the subject property, the property's locale, the market for the property type and the appraiser's opinion of highest and best use. Any data, reasoning, and analyses not discussed in the Summary Appraisal Report are retained in the appraiser's work file.

3) RESTRICTED USE APPRAISAL REPORT -
The Restricted Use Appraisal Report contains statements of the appraiser's findings with virtually no explanation of the data, reasoning and analyses that were used to develop the opinion of value. All of the data, reasoning, and analyses in support of the appraiser's findings are retained in the appraiser's work file.

What is a Letter of Value?
There is no such report or document. An appraisal prepared by a state licensed or certified appraisal must be prepared in compliance with one of the three report types discussed above.

Is the appraiser’s opinion of value affected by the report format chosen?
No, the report format has no bearing on the analysis or the value conclusion.

How do I know which report type is best for me?
Once the appraiser and the client discuss the specifics of the appraisal assignment, the appraiser should be able to offer some advice on which type of report is appropriate. Typically, Restricted Use Appraisal Reports are appropriate for internal business decisions, estate planning, buy/sell decisions, etc. Summary Appraisal Reports are appropriate for a wide range of uses, including those above. However, the Summary Appraisal Report is normally required when there will be third party reliance on the report.

What is a drive-by appraisal?
Terms such as “drive-by appraisal” and “windshield appraisal” are no longer recognized in the industry. There are appraisal assignments which call for something less than a “complete appraisal”. A “limited appraisal” is an appraisal in which the appraiser invokes the Departure Rule of USPAP. Before the appraiser prepares a limited appraisal, the client and the appraiser should discuss the limitations of the assignment and the appropriateness of a “limited appraisal” based upon the purpose of the appraisal.