Illinois real estate exam glossary
The appraisal process
An office building has a long lease below market rent. The assignment asks for the owner’s leased fee interest, but the analysis starts with a different property interest. Even flawless arithmetic can answer the wrong question. A sound appraisal begins by defining what is being valued, why, for whom and as of when.
Last reviewed:
The short answer
The appraisal process is the research and reasoning used to develop and communicate a credible value opinion for an identified property interest, intended use and effective date. It moves through problem identification, scope, reliable evidence, market and highest and best use analysis, applicable approaches, reconciliation and reporting, with a supporting workfile. New information can require revisiting an earlier decision; the process is not a rigid one-way checklist.
Reviewed October 27, 2026. Appraisal process and valuation concepts appear in national III, Valuation. The entire domain has 8 of the 100 scored national broker questions across several subjects, not eight questions on this process alone. These are original teaching questions, not recalled PSI items or a validated readiness score.
Define the question before choosing the method
- Identify the assignment. Establish the client, intended users, intended use, subject and relevant characteristics, property rights, value type and definition, effective date and assignment conditions. A borrower, fee payer, owner and intended user are not automatically the same person. Possessing a report or paying its fee alone does not establish the engagement relationship.
- Check authority, independence and the ability to complete the work credibly. Apply the actual Illinois credential and scope rules, professional standards and any client or program requirements. Resolve competency needs under the applicable standards rather than accepting a job simply to deliver a target number. A broker’s permitted CMA or BPO is a different product; a label does not turn it into an appraisal.
- Design the research and analysis. Scope of work concerns what is needed for credible assignment results: relevant information, observation or data collection, verification, market coverage, methods and other necessary work. It is not the shortest report a client will accept. Reporting requirements are related but distinct. A client’s preference cannot justify omitting work needed for a credible result.
- Collect and verify evidence. Investigate the relevant title, lease, site, zoning, improvements, condition, measurements, income, expenses, contract, listing history and comparable transactions. A database entry supplies a source to evaluate, not a guarantee of accuracy. In the cited Fannie Mae purchase-appraisal policy, the lender supplies the complete ratified contract; the appraiser analyzes its relevant terms rather than treating its price as the answer.
- Use the observation method the assignment actually permits. Traditional residential programs can require the appraiser’s interior and exterior visit. Eligible desktop and hybrid assignments use different data-collection arrangements. A permitted desktop example is not permission to skip a required visit on another file. Identify who collected data, when, how and with what limitations. Appraisal observation is not the buyer’s independent home inspection.
- Analyze the market and highest and best use. Identify the competitive market through relevant property and economic evidence. Test legal permissibility, physical possibility, financial feasibility and maximal productivity. Legal and physical constraints screen the financially possible choices; do not invent a universal rule about which of those first two tests must always be discussed first. Distinguish a site-as-vacant question from the property-as-improved question when relevant. Current use and zoning alone do not settle the result.
- Develop the applicable approaches with supported inputs. Sales comparison needs relevant transactions and supported adjustments. Cost analysis separates supported site value from current depreciated improvements. Income analysis needs consistent income, expense, rights, period and rate definitions. Develop work needed for credibility and any applicable program requirement; do not use “not all three are always required” to excuse a required approach. Explain significant exclusions.
- Reconcile the indications. Consider each method’s applicability, data quality, verification and reliability. Choosing the largest number or automatically giving every method equal weight does not explain the evidence. An approach result is not automatically the final opinion. Do not infer an exact final value merely because two indications are close. The cited Fannie Mae policy permits a weighted-average technique with a proper explanation; that is different from mechanically averaging unrelated or unequally reliable numbers. Its final reconciled value must remain within the range of the approaches used. Apply the relevant program rather than declaring all use of weights impermissible.
- Communicate the supported result. Explain the rights, definition, date, work, relevant conditions, analyses, conclusion and limitations for the intended use and users. The cited OCC federally related transaction standards require written support and appropriate review. That scope is not proof every appraisal for every purpose uses the same written mortgage form. A form organizes the report; it does not cap the analysis or the supporting exhibits needed.
- Evaluate legitimate corrections. A verified easement, accurate measurement or relevant additional comparable can matter. Correct the facts and rework affected analysis while preserving independent judgment. A revised report date does not automatically establish a new effective date or a new current value. “Make the loan work” is not substitute evidence.
- Keep the supporting workfile. Preserve the required communications, data, verification, calculations, analysis, reports and revisions under Illinois law and the applicable standards. Delivery is not permission to erase the earlier evidence or report version. The report communicates the result; the workfile supports how the appraiser reached and reported it. Illinois Section 1455.205 requires retention for at least five years, or at least two years after final disposition of an administrative or judicial proceeding in which the appraiser gave testimony related to the assignment, whichever period expires last. Its scope includes the specified client communications and transmitted services, digital images and workfile. Do not reduce this to five years after every delivery or to judicial proceedings only.
- Keep client identity, copy rights and permitted reliance separate. Regulation B gives covered first-lien dwelling applicants rights to copies of developed appraisals and other written valuations, including in business-purpose applications. A required copy is free; reasonable reimbursement for the valuation service can still be permitted unless another law prohibits it. Neither payment nor receiving a copy automatically changes the client or intended-use relationship.
| Decision | Question to ask | Evidence of a sound answer |
|---|---|---|
| Problem | Which rights, use, users, definition and date? | A correctly identified assignment |
| Scope | What research and analysis are needed? | Work suited to the actual problem and requirements |
| Evidence | Which facts are reliable and relevant? | Verified subject and market information |
| Analysis | Which methods and inputs fit? | Supported indications and explained exclusions |
| Conclusion and record | Why this opinion, and how is it explained and supported? | Reasoned reconciliation, appropriate report and retained workfile |
The distinctions that matter
| Distinction | How it works | What to notice |
|---|---|---|
| Problem identification vs. scope | The problem defines the value question. Scope identifies the research and analysis needed to answer it credibly. | What must be solved versus what work is needed. |
| Client vs. fee payer | The engagement identifies the client. Paying the bill alone does not establish that role. | Payment is not the whole relationship test. |
| Intended user vs. report recipient | A person can receive a report or have a specific right to rely on it without automatically becoming a newly identified intended user. | Read the actual assignment and applicable reporting rules. |
| Collection vs. verification | Collection obtains information; verification tests its accuracy, terms, context and reliability. | A record is evidence to evaluate. |
| Appraisal observation vs. home inspection | Valuation-related observation and data collection differ from an independent condition-and-systems inspection. | Neither service should be misrepresented as the other. |
| Extraordinary assumption vs. hypothetical condition | The former concerns an uncertain fact treated as true that could affect the result if false. The latter uses a condition contrary to known fact for the analysis. | Uncertain versus known contrary, with legitimate use and disclosure. |
| Approach indication vs. final conclusion | One method produces an indication. The final opinion follows supported reconciliation of the relevant evidence. | Do not automatically pick the highest method result. |
| Effective date vs. report date | The effective date is the time of the opinion. The reporting event can occur later. | A later report does not silently update market conditions. |
| Correction vs. pressure | A correction supplies reliable information or identifies an analytical error. Pressure demands a desired result instead of independent analysis. | Evidence can justify change; a target alone cannot. |
| Report vs. workfile | The report communicates assignment results. The workfile preserves the supporting development and reporting record. | Delivery is not the end of recordkeeping. |
| Mechanical average vs. explained weighting | Giving each figure equal weight merely because it exists ignores its quality. The cited lender policy permits a properly explained weighted technique. | Judge the support for the weights, not just the arithmetic. |
Work through the facts
Correct the interest before refining the math
The client requests the owner’s leased fee interest in an office building with a long below-market lease. The initial analysis instead answers a fee-simple question without addressing the requested rights.
- The same address does not make the interests identical.
- Revisit problem identification, scope, lease analysis and relevant evidence before concluding.
Answer: Correct the appraisal problem. This does not assert that every leased fee must have a particular discount or supply a private value.
Resolve conflicting area data
Assume the assignment is lawfully permitted as a desktop appraisal. Public records show 1,850 square feet, the listing 2,150 and a third-party floor plan 1,970. No source is stipulated to be correct.
- Investigate measurement definitions, included areas, dates and source reliability.
- Neither selecting the middle number nor averaging the figures verifies the house.
Answer: Obtain adequate reliable evidence and address material unresolved uncertainty under the actual assignment rules. The desktop permission does not remove the need for credible information.
Commercial zoning is not the entire use analysis
A small house occupies commercially zoned land in a redeveloping corridor. The exercise supplies credible evidence that an assemblage and redevelopment proposal could be financially feasible, but does not establish every other highest-and-best-use condition.
- Test actual legal and physical constraints and the supported alternatives.
- Consider the site and existing improvements rather than automatically choosing ordinary house comparables.
Answer: Complete the relevant use analysis. Do not declare commercial redevelopment the final answer solely from zoning or one favorable feasibility fact.
Verify the terms behind a $500,000 sale
A comparable closes at $500,000 with a substantial seller-paid rate buydown. The database shows only the price and closing date. No concession price effect is supplied.
- Verify financing, concessions, transaction conditions and relevant dates.
- Use supported market reaction rather than inventing a dollar adjustment from an incomplete entry.
Answer: Investigate before deciding comparability and adjustment. A completed price alone does not disclose every relevant term.
A weak cost indication does not win by being largest
For a general special-purpose-property exercise, cost indicates $6 million using uncertain depreciation; two verified sales indicate $4.4 million, and strong applicable lease evidence indicates $4.5 million. This is not a stipulated Fannie Mae eligible residential file.
- Assess the methods’ reliability, relevance and the adequacy of the whole evidence.
- The arithmetic mean is about $4.97 million, but giving the weak cost figure equal weight has not been justified.
Answer: Give reasoned weight to the better supported evidence and explain the limitations. The exercise does not establish a compulsory final $4.45 million or prove two sales satisfy every lending program.
A recorded easement changes the evidence
After delivery, a verified recorded easement missing from the report is found to materially restrict development of the rear third of the site.
- Evaluate the actual rights, use, scope, comparables and other affected analysis.
- Revise the supported assignment results when warranted and preserve a clear record of the correction.
Answer: Analyze the material evidence. Do not automatically raise or lower value by an invented amount or change the effective date merely because the report is revised.
The form has too little space
An otherwise appropriate residential report form cannot adequately explain an accessory unit, legal nonconforming status, a solar lease and their actual market effects.
- Use the additional explanations and exhibits the assignment requires.
- Check the applicable form and program rules rather than hiding material facts in vague wording.
Answer: Expand the supporting report appropriately. An addendum is not permission to rewrite standard certifications or disregard prohibited additional conditions.
Uncertain and known contrary are different premises
Assume a legitimate, properly disclosed assignment condition is allowed by the actual standards and program. One scenario concerns an uncertain material physical fact treated as true. Another values known unfinished improvements as though completed on the current effective date.
- If the uncertain fact were false, it could affect the analysis: that is the extraordinary-assumption distinction.
- Treating improvements known to be unfinished as complete at that same date is contrary to known fact: that is the hypothetical-condition distinction.
Answer: Choose the correct concept and apply its actual permitted-use and disclosure rules. Neither label authorizes ignoring reliable evidence or inserting an incompatible premise into a mortgage form.
The five-year minimum is not always the last period
Assume the ordinary five-year minimum has correctly been determined to have elapsed. The appraiser testified about this assignment in an administrative proceeding whose final disposition was only one year ago. Apply the reviewed Illinois rule; do not supply a contrary rule or another fact that ends the retention duty.
- The rule expressly includes qualifying administrative proceedings, not only judicial ones.
- Only one year has passed since the stated final disposition, so the applicable two-year minimum has not yet expired.
Answer: Retain the required records. The ordinary five-year minimum does not override the later testimony-related period. This is not a private deletion-date calculation or permission to ignore other applicable retention duties.
A properly explained weighted calculation
An exercise under the cited Fannie Mae reconciliation policy supplies applicable indications of $600,000 cost, $440,000 sales and $450,000 income, and expressly supplies properly explained, defensible weights of 10%, 45% and 45%. Assume the other applicable requirements are met for this calculation.
- The supplied weights total 100%.
- $600,000 × 0.10 + $440,000 × 0.45 + $450,000 × 0.45 = $460,500.
- The result is within the $440,000 to $600,000 range of the approaches used.
Answer: The stipulated weighted result is $460,500. The policy permits a properly explained weighted technique; it does not prescribe these weights for real files or approve an unexplained arithmetic mean.
Mistakes to avoid
- “Choose the comparables first.” Their relevance depends on the defined rights, date, value and assignment.
- “The payer is always the client.” Identify the engagement; payment alone does not establish every role.
- “Scope means the shortest acceptable form.” Scope concerns the research and analysis needed for credibility.
- “A desktop appraisal needs no reliable property data.” The observation model changes; the evidence still must support the assignment.
- “The average database area must be correct.” Investigate definitions and reliability rather than substituting arithmetic for verification.
- “Current use or commercial zoning proves highest and best use.” Apply all relevant use tests and alternatives.
- “Not every appraisal needs three approaches, so any required approach can be skipped.” Credibility and actual program requirements still control.
- “The highest indication is final value.” Reconcile the applicable evidence and explain its weight.
- “A correction is forbidden value influence.” Proper factual and analytical review differs from coercing a result.
- “A revised report automatically has a new value date.” Report timing and effective date are different.
- “The workfile can be deleted after delivery.” Recordkeeping continues under the actual retention requirements.
- “A contrary fact is just an extraordinary assumption.” Distinguish uncertainty from a known contrary premise and apply the proper rules.
- “Reconciliation can never use a weighted calculation.” The cited Fannie Mae policy permits a properly explained weighted technique.
- “Five years always ends Illinois appraisal recordkeeping.” Apply the later qualifying administrative-or-judicial-testimony period and other actual retention duties.
- “A free copy means the appraisal service must always be free.” Copy charges and legally permitted valuation-service reimbursement are different.
- “A 2026 reference manual automatically replaces 2024 USPAP.” The publisher’s current standards and separate guidance manual have different editions; Illinois incorporation follows its actual rule.
Check your understanding
These are original teaching questions, not recalled or predicted PSI questions. Answer first, then explain why the other choices fail.
1. What should establish the basis for choosing comparable sales?
- An average of three online estimates alone
- The identified appraisal problem and scope
- Final proofreading alone
- A promise to match the contract
Show answer and explanation
Answer: B. The identified appraisal problem and scope
Rights, definition, date, use and relevant characteristics determine what evidence is comparable. The workflow can return to earlier decisions when facts change.
2. Which item is part of problem identification?
- Effective date
- Only the seller’s preferred price
- Only the final page count
- Loan approval
Show answer and explanation
Answer: A. Effective date
The effective date fixes the time of the opinion. It is not automatically the date the report is later sent.
3. Which best describes appraisal scope of work?
- Exactly three comparable addresses in every case
- Research and analysis needed for credible assignment results
- A mandatory interior visit for every possible assignment
- The shortest form the client accepts
Show answer and explanation
Answer: B. Research and analysis needed for credible assignment results
Choose the actual work needed for the identified assignment and applicable requirements, not a universal shortcut or fixed report length.
4. Why is a recorded completed-sale price insufficient by itself for comparable analysis?
- Terms, concessions, rights, motivation and condition can matter
- Recorded transactions can never be used
- Every recorded price proves market value
- Only asking prices matter
Show answer and explanation
Answer: A. Terms, concessions, rights, motivation and condition can matter
Verification gives the amount its context. It does not require discarding every recorded sale or assuming every price reflects the relevant definition.
5. Which highest-and-best-use issue must be considered before treating an alternative as financially feasible?
- Loan underwriting approval
- Physical possibility
- Final report delivery
- Final proofreading
Show answer and explanation
Answer: B. Physical possibility
Physical and legal constraints screen the alternatives before financial feasibility and maximal productivity. The question does not prescribe a universal first-two-test presentation order.
6. Applicable income evidence is strong while a cost indication has weak depreciation support. What is the best reconciliation response?
- Discard every lease
- Choose the largest number regardless of support
- Give reasoned greater weight to the stronger applicable evidence
- Give every number equal weight automatically
Show answer and explanation
Answer: C. Give reasoned greater weight to the stronger applicable evidence
Evaluate applicability and evidence quality, explain weight and limitations, and avoid inferring a compulsory exact final value.
7. How does the cited Fannie Mae guide treat its appraisal forms?
- They govern every appraisal for every purpose
- They eliminate needed addenda
- They organize the work without limiting needed analysis and support
- They replace the appraisal problem
Show answer and explanation
Answer: C. They organize the work without limiting needed analysis and support
Additional support can be necessary. The actual program’s rules still constrain form certifications and conditions.
8. A verified recorded easement omitted from a delivered report materially affects possible development. What is the sound response?
- Ignore all evidence received after delivery
- Analyze its material effect and revise when warranted
- Delete the earlier report and evidence
- Raise value to keep the loan
Show answer and explanation
Answer: B. Analyze its material effect and revise when warranted
Revisit affected rights, scope, use and valuation analysis while retaining the required record. A correction is not an arbitrary new value or date.
9. Which is primarily a reporting task?
- Choosing comparable evidence
- Communicating the conclusion and support to intended users
- Verifying a concession
- Analyzing highest and best use
Show answer and explanation
Answer: B. Communicating the conclusion and support to intended users
Development supports the opinion; reporting communicates assignment results. The record must also support what was done.
10. Which record supports the assignment’s development and reporting path?
- The tax bill alone
- The workfile
- The buyer’s preapproval alone
- The list price alone
Show answer and explanation
Answer: B. The workfile
The workfile supports the evidence, verification, analysis, communications, report and revisions required by the applicable rules.
11. A borrower pays the appraisal fee. What does that fact alone establish about being the client?
- Payment alone does not establish the engagement’s client
- Every later holder becomes a client
- The lender cannot be a client
- The borrower is always the only client
Show answer and explanation
Answer: A. Payment alone does not establish the engagement’s client
Identify the actual engagement and intended use and users. Copy and specified reliance rights are separate from payment and client identity.
12. An assignment is expressly lawful and eligible as a desktop appraisal. Which statement is correct?
- No property information is needed
- All measurement conflicts may be ignored
- Every future file can skip an interior visit
- The permitted model still needs adequate reliable evidence
Show answer and explanation
Answer: D. The permitted model still needs adequate reliable evidence
The exercise supplies permission, not automatic credibility. Other assignments can have required visits or different data-collection standards.
13. At the current effective date, improvements are known to be unfinished but analyzed as completed under a legitimate permitted premise. Which concept fits?
- An automatic loan approval
- Hypothetical condition
- A property-tax bill
- An uncertain fact mislabeled as always true
Show answer and explanation
Answer: B. Hypothetical condition
The premise is contrary to known fact at that date. Proper applicability and disclosure are part of the exercise, not permission to ignore real evidence.
14. A report issued October 27 gives a September 30 effective date. When does the value opinion apply?
- Every future sale date
- Whatever date a broker later writes
- Automatically October 27
- September 30
Show answer and explanation
Answer: D. September 30
The report event does not silently move the opinion into a later market.
15. What does the OCC’s cited minimum written-appraisal rule establish?
- Every opinion for every purpose must use a Fannie Mae form
- Every loan always requires an appraisal
- Its written-support requirement applies within its federally related transaction scope
- An oral discussion always approves a loan
Show answer and explanation
Answer: C. Its written-support requirement applies within its federally related transaction scope
Keep that federal lending scope separate from other appraisal purposes, Illinois definitions and particular reporting requirements.
16. Must every appraisal always develop all three approaches?
- Yes, even if irrelevant
- Develop what credibility and actual applicable program requirements call for
- Only the highest method is required
- No approach ever needs support
Show answer and explanation
Answer: B. Develop what credibility and actual applicable program requirements call for
Relevant approaches and required program analyses cannot be omitted just because another assignment would use a different method.
17. Three area sources report 1,850, 2,150 and 1,970 square feet, with none proven correct. What should occur?
- Automatically use the median
- Investigate the definitions, dates and reliability
- Automatically choose the largest
- Automatically average them as verification
Show answer and explanation
Answer: B. Investigate the definitions, dates and reliability
A calculation cannot resolve inconsistent measurement standards or data quality. Obtain reliable evidence and address material uncertainty.
18. Which request focuses on evidence rather than a predetermined result?
- Ignore the lease to reach the price
- Promise $500,000 regardless of the evidence
- Raise the value so the closing succeeds
- Please review this verified missing easement and explain its effect
Show answer and explanation
Answer: D. Please review this verified missing easement and explain its effect
A proper correction or request for explanation can preserve independent judgment. A desired number alone supplies no valuation support.
19. Does an online automated estimate alone establish that the full appraisal process was completed?
- Yes, if it is the highest estimate
- Yes, because no valuation rules apply to technology
- No; evaluate the actual product, evidence and assignment requirements
- Yes, because every tool is an appraiser
Show answer and explanation
Answer: C. No; evaluate the actual product, evidence and assignment requirements
Automation can supply information without proving a complete appraisal or eligibility for a particular lending alternative. Do not infer that technology is unregulated.
20. Can a broker’s permitted CMA automatically replace a required appraisal?
- Yes, if the owner likes the price
- Yes, if called premium
- No; the product and actual legal and program requirements differ
- Yes, if there are three addresses
Show answer and explanation
Answer: C. No; the product and actual legal and program requirements differ
Apply the permitted-use and licensing rules. A disclaimer or label alone does not make a CMA an appraisal or approve its use for every loan.
21. The exercise supplies defensible weights of 10%, 45%, 45% for applicable indications $600,000, $440,000, $450,000. What is the weighted result?
- $600,000
- $496,666.67
- $460,500
- $440,000
Show answer and explanation
Answer: C. $460,500
The products are $60,000, $198,000 and $202,500, totaling $460,500. The cited policy requires proper explanation; the exercise does not prescribe private-file weights.
22. The ordinary five-year minimum has elapsed, but a qualifying administrative proceeding with the appraiser’s related testimony ended only one year ago. Which statement fits Illinois Section 1455.205?
- A report fee ends all retention
- The later applicable two-year period has not expired
- The file can always be destroyed
- Administrative proceedings never count
Show answer and explanation
Answer: B. The later applicable two-year period has not expired
The rule includes administrative or judicial proceedings with the stated testimony condition, whichever period expires last. Other actual duties can also matter.
23. A covered first-lien dwelling applicant receives a required appraisal copy. Which fee statement is accurate?
- The creditor may always charge extra copy postage
- The required copy is free; lawful reasonable valuation reimbursement can be a separate charge
- Every appraisal service must be free
- Copy rights automatically make the applicant the only client
Show answer and explanation
Answer: B. The required copy is free; lawful reasonable valuation reimbursement can be a separate charge
Regulation B distinguishes the required copy from the underlying service. Apply the actual fee restrictions; a copy does not determine the engagement’s client.
24. Which standards statement is accurate for the October 2026 review?
- The publisher lists 2024 USPAP as current; the 2026 guidance manual is separate and Illinois incorporation must be checked
- A current form alone proves full compliance
- Any later publication automatically becomes Illinois law
- The 2026 manual automatically creates 2026 USPAP
Show answer and explanation
Answer: A. The publisher lists 2024 USPAP as current; the 2026 guidance manual is separate and Illinois incorporation must be checked
The current Illinois rule incorporates 2024 USPAP with no later amendments or editions. Current-edition verification does not claim a fresh reading of paid books or every assignment’s compliance.
Common questions
What are the steps in the appraisal process?
Identify the problem and requirements, choose sufficient research and analysis, collect and verify evidence, analyze the market and use, develop applicable approaches, reconcile, report and retain the supporting workfile. Books group these jobs into different numbers of steps. There is no reason to turn this teaching sequence into a mandatory count or a one-way path when new facts require reconsideration.
What belongs in identifying the appraisal problem?
Identify the client and intended users, intended use, property and relevant characteristics, rights, value type and definition, effective date and assignment conditions. A leased fee is not automatically the same problem as fee simple at the same address. Wrong rights or dates can make otherwise correct calculations answer the wrong question.
What is scope of work?
It is the research and analysis needed for credible assignment results, including the necessary data, observation, verification and methods. A short form or client preference does not decide credibility. Reporting communicates the work and result under its own requirements; scope is not simply the report’s page count.
Does every appraisal require an interior visit?
No universal rule applies to every purpose and program. Traditional mortgage assignments can require the appraiser’s interior and exterior visit; eligible desktop and hybrid assignments have different permitted data processes. The appraiser still needs reliable relevant information. A permitted model does not authorize a different ineligible file or replace a buyer’s independent home inspection.
When does highest and best use analysis happen?
It informs the valuation analysis and can be revisited as evidence develops. Test legal permissibility, physical possibility, financial feasibility and maximal productivity. Distinguish the relevant as-vacant and as-improved questions. Zoning, current use or feasibility alone is not all four tests, and an unsupported redevelopment assumption should not decide the comparables.
Are all three approaches always required?
No. Develop the approaches needed for credible results and those required by the actual program. The cited Fannie Mae guidance has particular cost and income requirements for particular property types; it is not a universal rule for every appraisal client. Explain meaningful exclusions instead of selecting the easiest method or calculating all three solely to fill a form.
What is reconciliation?
It is the reasoned assessment of the applicable approaches, data and indications to support the final opinion. Applicability, reliability and verification matter. The highest result does not automatically win, and equal arithmetic weight needs more than the existence of three numbers. Explain why the evidence supports the conclusion rather than inventing an exact value from proximity alone.
What if a new fact appears after the visit or report?
Evaluate whether it affects rights, scope, data, assumptions, use, methods or the conclusion. A verified lease or easement can warrant correction. Retain a clear record of the evidence and changes. A later report date does not automatically give an old analysis a new effective date or establish today’s value.
Is an appraisal complete when the appraiser calculates a number?
A number is not the whole process. Communicate a supported result in the appropriate reporting form and retain the required workfile. The OCC’s cited federally related transaction standards require a written appraisal with sufficient support and appropriate review. Different purposes and laws can have different reporting requirements; do not turn one mortgage form into the rule for all appraisal services.
Does a standard form limit the analysis?
No. The cited Fannie Mae policy expects additional explanation and exhibits when needed to support the property analysis and opinion. Its form rules still matter: adding support is not permission to delete or rewrite standard certifications or add prohibited limiting conditions. The appraiser must satisfy both the assignment’s evidence needs and the applicable reporting requirements.
Is an extraordinary assumption the same as a hypothetical condition?
No. An extraordinary assumption concerns uncertainty treated as true that could affect the result if false. A hypothetical condition is contrary to a known fact for the analysis. Use a premise only when legitimate under the applicable assignment rules and properly disclosed. Neither label cures an incompatible scope or justifies ignoring reliable material information.
Is the person paying the fee always the client or intended user?
No. Identify the actual engagement, intended use and intended users. The cited Fannie Mae certifications also recognize specified reliance by some parties who are not the lender/client or identified intended user. Copy rights, payment and permitted reliance should not be treated as identical to client identity, or as proof every reader can use the report for a different purpose.
Can asking for a correction improperly influence the appraiser?
A request for appropriate additional property information, explanation or correction differs from demanding a target. In covered consumer principal-dwelling credit transactions, Regulation Z permits the identified evidence requests while prohibiting specified coercion and mischaracterization. Follow the actual review channel and scope. Unhappiness with the number alone does not establish an error.
What does a broker need to know about this process?
Understand the identified rights, date, evidence and reasoning well enough to spot the issue and provide accurate relevant information through the proper process. A permitted CMA or BPO has different legal and program limits from an appraisal. These original questions teach concepts; they are not official PSI items, professional appraisal instructions or a validated readiness score.
Can reconciliation use a weighted average?
The cited Fannie Mae policy allows a weighted-average technique with proper explanation. That exception does not authorize mechanically averaging the numbers or inventing weights to reach a target. Assess applicability, data and reliability, explain the weighting and satisfy the actual program’s requirements. The cited policy also requires final value within the range of the approaches used. The example supplies defensible weights; it does not choose them for a private property.
How long must an Illinois appraiser retain the workfile?
Section 1455.205 requires the specified records for at least five years, or at least two years after final disposition of an administrative or judicial proceeding in which the appraiser gave testimony related to the assignment, whichever period expires last. It includes the stated client communications, transmitted written, oral or electronic appraisal-related services, digital images and workfile. Section 10-20 of the Act refers to USPAP and rules; do not quote a deleted historical statutory sentence as the current rule. Apply actual retention duties rather than automatically deleting a delivered or superseded report.
Can the borrower get a copy without being the appraiser’s client?
For a covered application secured by a first lien on a dwelling, Regulation B gives rights to copies of developed appraisals and other written valuations, whether the credit is business or consumer purpose. The required copy is free, while a reasonable fee for the valuation may be permitted unless otherwise prohibited. The actual delivery and waiver conditions still apply. Receiving a copy or paying a fee does not by itself make the borrower the client or authorize using the report for an unrelated purpose.
Which USPAP edition applies in October 2026?
The publisher lists 2024 USPAP as current, with a separate 2026 Guidance and Reference Manual. Illinois Section 1455.240 incorporates 2024 USPAP with no later amendments or editions. A publisher update, form or technology tool does not itself establish compliance with the actual assignment rules. The April 2026 technology guidance is a guidance development, not proof of a new 2026 edition of the standards. This page relies on identified public materials; it does not claim a fresh reading of the paid standards, manual or full technology advisory opinion.
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Official sources and scope
Reviewed through October 27, 2026. Federal lending, Illinois professional practice and particular lender programs have different scopes. The sources below identify the governing standards and the residential-lending examples. For a live assignment, apply its actual law, program and conditions. These examples use supplied facts, not private property findings, market quotes or file-deletion approvals.
- PSI June 24, 2026: national III.A appraisal process and III.B value approaches
- 225 ILCS 458/1-10: appraisal, reports and AVM definitions
- 225 ILCS 458/5-5: appraisal licensing and selected exceptions
- 225 ILCS 454/1-10: CMA, BPO and ordinary-course compensation exclusion
- 225 ILCS 454/10-45: permitted uses and complete written-report contents
- California DRE chapter 15: basic appraisal process, approaches and reconciliation
- Appraisal Institute Guide Note 15: uncertain information and contrary-to-fact conditions
- IDFPR: individual appraisal credentials, temporary permits and separate AMC registration
- CFPB: appraisal and home inspection serve different purposes
- The Appraisal Foundation: current USPAP and separate reference manual
- OCC: appraisal and market-value definitions, 12 CFR 34.42
- Fannie Mae: cost and income approach to value
- Fannie Mae: concessions, market reaction and timing
- Fannie Mae UAD 3.6 supplement: September 2026 income policy
- Fannie Mae B4-1.3-03, June 4, 2025: predominant price and over-improvements
- Fannie Mae: appraisal forms, scope and certifications
- Fannie Mae: subject rights, contract and assistance
- Fannie Mae: site and highest and best use
- Fannie Mae: reconciliation and explained weighting
- OCC minimum appraisal standards, 12 CFR 34.44
- 225 ILCS 458/10-20: retention through standards and rules
- Illinois rules 1455.205 and 1455.240: records and adopted standards
- CFPB Regulation Z: independence and permitted evidence requests
- CFPB Regulation B: valuation-copy rights and fees
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