Illinois real estate exam glossary

When Is a Licensed Appraiser Required in Illinois?

The licensed appraiser requirement determines who may perform an appraisal and when a transaction requires one. Illinois licensing law and federal lending rules answer different parts of that question.

Last reviewed: October 24, 2026

When does Illinois require an appraisal license?

Generally, a person needs an Illinois appraisal license to develop a real estate appraisal, practice or advertise as an appraiser, or use protected appraisal titles. Section 5-5 contains specific exceptions. A real estate broker license alone does not grant appraisal authority.

Separate two decisions: Must this transaction have an appraisal? Then, who is qualified to prepare it? A lending exception may change the required product without changing who may practice as an appraiser.

A seller asks, “What should I list it for?”

A broker can provide permitted pricing advice and a compliant CMA. Calling the same work a “certified appraisal” is a different claim. The data source, a separate fee or the seller's consent does not supply an appraisal credential.

Which exceptions matter in a valuation question?

Broker CMA or BPO: Section 5-5(c) exempts a validly licensed broker or managing broker preparing one in compliance with 225 ILCS 454/10-45. That section requires a written report with its specified information and a disclaimer that the work is not an appraisal and the broker is not acting as a state-certified appraiser.
Financial-institution evaluation: Under 5-5(g), the evaluation must be for the institution's sole use in a transaction for which federal Title XI regulations do not require a licensed or certified appraiser. Employment or engagement by the institution alone is not enough.
Own-property work: Section 5-5(f) covers property owned by the person or entity and work for that owner's sole use. A person already licensed under the appraiser Act must still comply with it.
AVM procurement: Section 5-5(h) exempts obtaining an automated valuation model. It does not grant someone an appraiser credential.

These are selected exceptions, not a replacement for every condition in Section 5-5. For broker pricing work, watch the intended use: Section 10-45(a)(4) excludes using a CMA or BPO as the primary market-value basis for a financial institution's mortgage origination secured by the property.

What are the federal appraisal thresholds?

The following table uses 12 CFR 34.43, the OCC rule. Section 34.41 identifies its scope. Do not apply these numbers automatically to every lender, credit union, FHA or VA loan, or investor program.

Use transaction value. Under 34.42(o), a loan or extension of credit uses its amount. Sales and other listed property transactions use the market value of the interest involved. The asking price is not a universal substitute. In this framework, a residential transaction is secured by a single one-to-four-family residential property; “commercial” covers the other real estate-related financial transactions.

First: does an exception permit an evaluation?

Selected OCC appraisal exceptions that require an evaluation
OCC category and transaction value	Rule and result	Fact that changes the answer
Residential: $400,000 or less	Threshold exception in 34.43(a)(1); appropriate evaluation required by (b).	Exactly $400,000 qualifies for this exception.
Commercial: $500,000 or less	Threshold exception in 34.43(a)(13); appropriate evaluation required by (b).	Exactly $500,000 qualifies for this exception.
Qualifying business loan: $1 million or less	Exception in (a)(5) only if repayment is not primarily dependent on sale of, or rental income from, real estate; evaluation required.	A business borrower alone does not satisfy the repayment condition.

Then: if an appraisal is required, must the appraiser be certified?

OCC state-certified appraiser requirements after exceptions are checked
Federally related transaction	Certification rule	Boundary to keep
Federally related transaction: $1 million or more	State-certified appraiser required by (d)(1).	Apply transaction exceptions first. This is not a rule requiring an appraisal for every $1 million loan.
Commercial federally related transaction: over $500,000	State-certified appraiser required by (d)(2).	The commercial certification rule starts above $500,000.
Complex residential federally related appraisal: over $400,000	State-certified appraiser required by (d)(3).	Atypical property, ownership or market conditions can make it complex. The institution makes the final determination.

Check exceptions before certification. Under 34.42(g), a federally related transaction is a covered real estate-related financial transaction that requires an appraiser. For example, a qualifying business loan of exactly $1 million can be exempt. A nonexempt federally related transaction of exactly $1 million requires certification. The amount alone does not decide which rule applies.

Below the threshold does not mean no valuation

Section 34.43(b) requires an appropriate evaluation for the listed threshold and qualifying business-loan exceptions. The OCC can also require an appraisal for safety and soundness. Other applicable program, investor or lender requirements may still call for an appraisal.

Section 34.43 includes other exceptions, including specified existing-credit and government or government-sponsored transactions. Their conditions and the applicable program's own requirements matter. Being outside an OCC appraisal requirement is not a universal waiver.

Which Illinois appraisal credential fits?

IDFPR regulates the appraisal credentials separately from broker licensing. Read the classification definitions together with Section 10-5.

Illinois appraisal classifications and practical scope limits
Credential	Scope	Limit to check
Certified residential	One-to-four-unit residential real property, without a transaction-value or complexity ceiling in the Illinois definition.	Federal transaction restrictions, USPAP, AQB criteria and state rules still apply. Other property requires a valid Illinois certified general appraiser's co-signature under 10-5(c), as well as compliance with the other applicable standards.
Certified general	All types of real property.	The appraiser must have related experience or competency and follow the applicable standards. General certification does not establish competence for every assignment.
Associate real estate trainee	Entry-level appraisal work within the required supervision and credential structure.	The supervising appraiser co-signs. A trainee cannot independently solicit clients or enter appraisal engagements.

State-certified does not automatically mean certified general. A high-value one-to-four-unit residential assignment is not excluded from the certified residential classification solely because of its dollar amount. For property outside that category, Illinois 10-5(c) expressly requires the certified general co-signature.

For an OCC federally related transaction that does not require certification, 34.43(e) permits a state-certified or state-licensed appraiser under that federal framework. A noncomplex residential federally related appraisal above $400,000 but below $1 million illustrates that federal distinction, assuming no other certification requirement. This does not create an additional Illinois credential. IDFPR also lists temporary practice; an out-of-state license alone does not establish Illinois practice authority.

Check the person as well as the license. 34.46(b) says certification or licensing alone does not establish competency; the person's experience and education must relate to the assignment. 34.45 separately addresses independence, including the fee appraiser's lack of a direct or indirect interest in the property or transaction.

Five original appraiser-requirement questions

Choose an answer before opening the explanation. Then ask whether the changed fact would change your decision. These examples are original study material, not actual or recalled PSI questions.

Question 1 of 5 · Broker pricing or appraisal

An Illinois broker with no appraisal credential prepares a written CMA for a seller's listing decision. May the broker describe it as a certified appraisal?

Yes, if the broker used recent comparable sales.
No. A compliant CMA is permitted broker pricing work, not a certified appraisal.
Yes, if the seller pays a separate fee.
No Illinois broker may prepare a CMA.

Show answer and explanations

Answer: B. No. A compliant CMA is permitted broker pricing work, not a certified appraisal.

Why this misses: Comparable sales do not convert a brokerage credential into an appraisal credential.
Correct. The broker exception depends on compliance with Section 10-45, including the written report and required disclaimer.
Why this misses: Payment does not authorize an appraisal title or change the professional credential.
Why this misses: Section 10-45 permits broker and managing broker pricing work for the stated purposes.

Change the facts: If a financial institution wants the CMA as the primary market-value basis for originating a mortgage secured by the property, Section 10-45(a)(4) does not permit that use.

Source: 225 ILCS 454/10-45(a)-(b); 225 ILCS 458/5-5(c)

Question 2 of 5 · Which dollar amount

A covered OCC institution considers a $390,000 loan secured by a single home priced at $520,000. Assume no stricter requirement or other relevant exception. Which fact controls the residential dollar-threshold test?

The $520,000 purchase price automatically requires an appraisal under this threshold.
The borrower's down payment is the transaction value.
No valuation is needed because the loan is below the threshold.
Use the $390,000 loan amount; the residential threshold exception applies and an evaluation is required.

Show answer and explanations

Answer: D. Use the $390,000 loan amount; the residential threshold exception applies and an evaluation is required.

Why this misses: For a loan, the cited definition uses the amount of the loan or extension of credit as transaction value.
Why this misses: The definition does not substitute the down payment for the loan amount.
Why this misses: The residential threshold exception still carries an appropriate evaluation requirement.
Correct. The transaction value is at or below $400,000 under the facts stated. This is an OCC appraisal exception, not permission for unlicensed appraisal work.

Change the facts: At a $410,000 loan amount, the residential dollar-threshold exception no longer applies. Check the other exceptions and requirements before deciding the required product and credential. If the appraisal is complex, the cited rule requires certification above $400,000.

Source: 12 CFR 34.42(o)(1); 34.43(a)(1), (b)

Question 3 of 5 · The repayment condition

A covered institution makes a $900,000 business loan secured by commercial real estate. Repayment depends primarily on rent from that property. Assume no other exception. Does the business-loan exception remove the appraisal requirement?

No. The repayment condition fails, and this commercial federally related transaction requires a state-certified appraiser.
Yes, because every loan to a business under $1 million is exempt.
Yes, because rent is business income.
Only the property's listing price matters.

Show answer and explanations

Answer: A. No. The repayment condition fails, and this commercial federally related transaction requires a state-certified appraiser.

Correct. Being below $1 million satisfies only the amount condition of the business-loan exception. Primary rental repayment fails its second condition; the amount also exceeds the commercial threshold.
Why this misses: This omits the independent restriction on the primary source of repayment.
Why this misses: Rental income from real estate is specifically part of the repayment restriction.
Why this misses: The loan's transaction value and the stated repayment facts control these tests.

Change the facts: If repayment primarily comes from the borrower's operating business rather than real estate sale or rental income, and the other conditions remain satisfied, the $1 million-or-less business-loan exception can apply. An evaluation is still required.

Source: 12 CFR 34.43(a)(5), (a)(13), (b), (d)(2)

Question 4 of 5 · Credential and co-signature

A certified residential appraiser proposes to issue a stand-alone appraisal report on an eight-unit apartment building in Illinois. Which statement fits the cited Illinois scope rule?

Any building used as housing falls within independent one-to-four-unit practice.
Experience alone removes the co-signature requirement.
A certified general appraiser must co-sign; the certified residential appraiser cannot issue this report alone.
A broker's signature supplies the required appraisal co-signature.

Show answer and explanations

Answer: C. A certified general appraiser must co-sign; the certified residential appraiser cannot issue this report alone.

Why this misses: Eight units is outside the one-to-four-unit residential classification.
Why this misses: Competency matters, but it does not erase the specific Illinois co-signature rule.
Correct. Section 10-5(c) requires a valid Illinois certified general appraiser's co-signature on properties other than one-to-four-unit residential real property.
Why this misses: A brokerage credential alone is not the certified general appraisal credential specified in the law.

Change the facts: For a four-unit residential property, this outside-property co-signature condition does not arise. Still check competency, standards and the transaction's federal or program requirements.

Source: 225 ILCS 458/10-5(a)-(c); 1-10 credential definitions

Question 5 of 5 · Supervised work or independent engagement

An associate real estate trainee appraiser wants to advertise an independent appraisal business and contract directly with clients. Does the trainee credential alone authorize this?

Yes, if each assignment is below $400,000.
No. The trainee credential does not permit independent solicitation or appraisal engagements.
Yes, if clients agree to call the work an evaluation.
Yes, once the trainee has a real estate broker license.

Show answer and explanations

Answer: B. No. The trainee credential does not permit independent solicitation or appraisal engagements.

Why this misses: A federal transaction threshold does not grant independent client-engagement authority to a trainee.
Correct. Section 5-5(a-5) requires certified residential or certified general licensure for that activity, subject to the registered-AMC provision.
Why this misses: Relabeling the work does not establish the conditions for an evaluation exception or authorize an independent appraisal business.
Why this misses: A brokerage license does not substitute for the appraisal classification required for independent appraisal engagements.

Change the facts: A trainee may gain appraisal experience within the required supervised structure, with the supervising appraiser co-signing the report. That differs from independently obtaining clients and accepting engagements.

Source: 225 ILCS 458/5-5(a-5); 1-10 supervising-appraiser definition

Illinois appraiser requirement FAQ

Does every Illinois home sale require an appraisal?

The Illinois appraiser licensing rule controls who may do appraisal work; it does not itself order an appraisal for every sale. A lender, loan program, contract or other applicable requirement may call for one. Paying cash does not exempt someone who actually offers appraisal services from Illinois licensing law. A cash purchase is not an OCC lending transaction merely because real estate is being sold.

Can a broker do an appraisal if it is free?

A broker license and the absence of a fee do not themselves authorize appraisal practice. Use a valid, applicable exception for the actual task. Permitted broker pricing work must stay within its legal purpose and report requirements, without claiming appraisal status.

Does an appraisal waiver mean an unlicensed person can appraise?

No. A transaction's eligibility for a waiver or evaluation addresses the required valuation product. Illinois separately regulates appraisal practice. An AVM result, CMA or evaluation is not interchangeable with an appraisal just because it produces a number.

At exactly $400,000 or $500,000, which side of the OCC threshold applies?

The residential exception includes $400,000 and the commercial exception includes $500,000. Both use 'or less.' Under the cited rule, those exceptions still require an appropriate evaluation. Other applicable requirements must also be checked.

Does a $1 million home require a certified general appraiser?

Price alone does not answer that question. For a loan, OCC transaction value is the loan amount. The Illinois certified residential definition covers one-to-four-unit residential real property without a value or complexity ceiling, subject to the applicable restrictions. State-certified does not automatically mean certified general.

How do I check an Illinois appraiser's license?

Start with IDFPR's Real Estate Appraisal page and its License Lookup link. Confirm current credential status and classification. Then check the assignment's scope, required supervision or co-signature, competency and independence. A search result showing a name is not the entire qualification review.

How many appraiser-requirement questions are on the Illinois broker exam?

PSI includes licensed or certified appraiser requirements and unauthorized appraisal practice in national III.A.2. The entire national valuation area is 8%, about 8 of 100 scored national questions. PSI does not publish a separate count for this glossary topic. The five questions here are original practice, not PSI items.

Choose the next review from the mistake

If the product names caused the mistake, use the Illinois CMA, BPO and appraisal comparison. For report requirements, read Illinois CMA and BPO requirements. To review valuation methods, continue to the valuation study guide.

If short phone sessions help you revisit these distinctions, you can download Pass Illinois. You can keep using the explanations and questions on this page for free.

Official sources and October 2026 review

Reviewed October 24, 2026. PSI places appraiser requirements and unauthorized appraisal practice in national III.A.2. The whole valuation area is 8% of the national broker portion, about 8 of 100 scored questions. That is not a quota for appraiser licensing.

2026 legal-status update: SB 3897 became Public Act 104-0746, effective July 31, 2026. The appraiser Act's scheduled sunset is now January 1, 2032. The final bill removed the proposed changes to Section 5-5 waiver valuations, so the enacted law should not be read as adopting those proposals. The law's effective date is separate from this page's review date.

This glossary explains exam concepts. It does not decide a live assignment, a particular loan program's eligibility or a specialized statutory exemption. Check the current law, regulator, loan or investor requirements and the appraiser's qualifications for the actual work.

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