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Valuation & Market Analysis term

Appraisal

A professional, unbiased opinion of a property's value performed by a licensed or certified appraiser.

Why Appraisal matters on the exam

This term belongs to Valuation & Market Analysis. The questions below are real items from Freehold's bank that use it - each one cites its source.

Exam questions using Appraisal

Every Freehold question shows why the right answer is right — and cites its source.

A broker price opinion (BPO) is best described as:

  1. An estimate of a property's value prepared by a licensed real estate broker or agent, often for pricing or lending-support purposes
  2. A formal appraisal performed strictly under USPAP rules by a state-certified appraiser personally engaged by the lender for the transaction
  3. A legally binding sale price that the seller must accept from any qualified buyer who offers it in writing
  4. A government-issued property tax assessment used by the county to allocate the annual ad valorem tax burden among all property owners
Show answer & explanation

An estimate of a property's value prepared by a licensed real estate broker or agent, often for pricing or lending-support purposes — A BPO is a broker's professional estimate of value, distinct from a formal appraisal, and is commonly used for pricing listings or in limited lending contexts.

Source: PSI National Real Estate Exam Content Outline — Broker Supplement

Which professional is authorized to perform a formal appraisal required for a federally related mortgage transaction?

  1. Any licensed real estate salesperson
  2. A state-licensed or certified appraiser
  3. An entirely unlicensed transaction coordinator
  4. The buyer's real estate agent, regardless of license type
Show answer & explanation

A state-licensed or certified appraiser — Federal appraisal regulations require formal appraisals for federally related mortgage transactions to be performed by a state-licensed or certified appraiser, not a real estate licensee.

Source: PSI National Real Estate Exam Content Outline — Broker Supplement

A broker prepares a broker price opinion for a lender considering a short sale and labels it an 'appraisal.' Is this labeling appropriate?

  1. Yes, the terms are essentially interchangeable
  2. Yes, as long as the broker has many years of experience
  3. No, calling a broker's value estimate an 'appraisal' is misleading
  4. No, but only because BPOs are always illegal to prepare
Show answer & explanation

No, calling a broker's value estimate an 'appraisal' is misleading — Using the term 'appraisal' for a broker's price opinion misrepresents its nature, since formal appraisals require a licensed or certified appraiser under applicable law.

Source: PSI National Real Estate Exam Content Outline — Broker Supplement

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