8.4 Reconciliation, Appraisal Report Types & Florida Appraiser Licensing
Key Takeaways
- Reconciliation is the appraiser's reasoned weighting of the three approaches to value; the approaches are never averaged.
- The sales comparison approach is normally given greatest weight for single-family residences, the income approach for income-producing property, and the cost approach for new, special-purpose, or unique improvements.
- USPAP recognizes two written report options for an appraisal: the Appraisal Report and the Restricted Appraisal Report, the latter being for a single identified client and not for third-party reliance.
- Florida regulates appraisers through the Florida Real Estate Appraisal Board under Chapter 475, Part II, with four credential levels: registered trainee, licensed, certified residential, and certified general.
- A federally related transaction requires a state-certified or state-licensed appraiser under FIRREA; a real estate licensee's CMA or BPO can never substitute for that appraisal.
8.4 Reconciliation, Appraisal Report Types & Florida Appraiser Licensing
Core Principle: Content Area II, Valuing Real Property (9%), ends where an appraisal ends — with reconciliation into a single opinion of value and delivery of a compliant report. A broker who understands reconciliation can read an appraisal critically instead of merely receiving a number.
1. Reconciliation: Weighting, Never Averaging
After completing the applicable approaches, the appraiser reconciles them into a single point value opinion (or a range or relationship to a benchmark, if the assignment so provides). Reconciliation is an exercise of reasoned judgement, and its cardinal rule is negative:
The three approaches are never averaged.
Averaging assumes that each approach is equally reliable for this property, which is almost never true. The appraiser instead weighs each approach by three criteria.
| Criterion | Question asked |
|---|---|
| Appropriateness | Is this approach suited to this property type and this assignment? |
| Accuracy | How reliable and verifiable was the data used? |
| Quantity of evidence | How many good comparables, cost figures, or income records supported it? |
Which Approach Ordinarily Governs
| Property type | Approach given greatest weight | Why |
|---|---|---|
| Single-family residence | Sales comparison | Abundant arm's-length sales of similar properties |
| Apartment building, retail centre, office | Income capitalization | The buyer is purchasing an income stream |
| New construction | Cost | Costs are current and depreciation is minimal |
| Church, school, library, fire station | Cost | Rarely sold and rarely rented, so the other approaches have no data |
| Vacant land | Sales comparison | No improvements to cost, no income to capitalize |
| Historic or highly unique improvement | Cost, with heavy support from the others | Comparables are scarce |
Worked Reconciliation
An appraiser valuing an owner-occupied Florida single-family home derives:
| Approach | Indicated value | Data quality |
|---|---|---|
| Sales comparison | $438,000 | Five closed sales within 0.4 miles in the past 4 months, minor adjustments |
| Cost | $461,000 | Cost figures current; depreciation on a 22-year-old improvement is an estimate |
| Income | $409,000 | Only two rentals in the neighbourhood; owner-occupied market |
The reconciled opinion is $438,000 or very near it. The sales comparison approach is the most appropriate for an owner-occupied residence, rests on the best data, and has the greatest quantity of evidence. The average of the three, $436,000, looks superficially similar here — but it would be reasoning by arithmetic rather than by judgement, and in a case where the income approach was wildly off it would corrupt the answer.
2. USPAP Report Options
The Uniform Standards of Professional Appraisal Practice provides two written report options for a real property appraisal.
| Appraisal Report | Restricted Appraisal Report | |
|---|---|---|
| Level of detail | Summarizes the information analysed and the reasoning supporting the opinion | States the conclusion with minimal explanation; the support lives in the workfile |
| Intended users | May have more than one intended user | A single identified client and no other intended users |
| Third-party reliance | Appropriate for lenders and other users | Not intended for anyone other than the client; must contain a prominent use restriction |
| Typical use | Mortgage lending, litigation, estate work | An owner's internal decision-making |
Regardless of option, the appraiser must retain a workfile documenting the data and analysis supporting the conclusion.
[!IMPORTANT] A Restricted Appraisal Report is not a lesser appraisal. The analysis behind it must be complete; only the reporting is abbreviated. An appraiser cannot cure an inadequate analysis by choosing the shorter report format.
3. Florida Appraiser Credentials
Appraisers in Florida are regulated by the Florida Real Estate Appraisal Board (FREAB) under Chapter 475, Part II, and by the FREAB's rules in F.A.C. Chapter 61J1 — a separate chapter from the 61J2 rules that govern brokers. The credential structure follows the federal Appraiser Qualifications Board criteria.
| Credential | Scope of practice |
|---|---|
| Registered Trainee Appraiser | May assist and appraise only under the direct supervision of a certified supervisory appraiser; the report is issued in the supervisor's name |
| Licensed Real Estate Appraiser | Non-complex one-to-four residential units and certain vacant land, within stated transaction value limits |
| Certified Residential Appraiser | One-to-four residential units without regard to transaction value or complexity |
| Certified General Appraiser | All types of real property, including commercial and industrial |
[!NOTE] The exemption that connects the two chapters. F.S. 475.011(9) exempts from the broker licensing requirements any person registered, licensed, or certified under Part II as an appraiser or trainee appraiser performing appraisals in accordance with that part. Appraisal and brokerage are separate regulatory tracks under the same statute.
4. Federally Related Transactions and the Broker's Boundary
FIRREA — the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 — requires that appraisals in federally related transactions be performed by a state-certified or state-licensed appraiser in conformity with USPAP. A federally related transaction is broadly one involving a federally regulated financial institution or a federal agency.
This is where the broker's own valuation work stops.
| Appraisal | CMA | BPO | |
|---|---|---|---|
| Who prepares it | State-certified or licensed appraiser | Real estate licensee | Real estate licensee |
| Governing standard | USPAP | Brokerage practice | Client's requirements; not USPAP |
| Typical purpose | Lending, litigation, estate, tax | Advising a seller on list price or a buyer on offer price | Servicer, lender, relocation, or insurer decision-making |
| May support a federally related transaction | Yes | No | No |
| Compensation | Paid to the appraiser | Fee, if any, must be paid to the employing broker | Fee must be paid to the employing broker |
| Naming | May be called an appraisal | Must never be called an appraisal | Must never be called an appraisal |
[!IMPORTANT] A licensee performing a CMA or BPO for compensation must ensure the fee is paid to their employing broker under F.S. 475.42(1)(d), must never characterize the product as an appraisal, and should include a prominent statement that it is not an appraisal and does not conform to USPAP. Charging for a valuation and calling it an appraisal is unlicensed appraisal activity, regardless of how carefully the analysis was done.
An appraiser valuing an owner-occupied single-family Florida residence derives $438,000 by sales comparison, $461,000 by the cost approach, and $409,000 by the income approach. What is the correct reconciliation practice?
A lender making a loan in a federally related transaction asks a Florida sales associate to provide a Broker Price Opinion to support the loan file in place of an appraisal. What is the correct response?
Which Florida appraiser credential permits appraisal of one-to-four residential units without regard to transaction value or property complexity?
Under USPAP, which statement correctly describes a Restricted Appraisal Report?