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Complex vs. Non-Complex Appraisals

Only state certified residential and state certified general appraisers may undertake "complex" residential appraisal assignments in federally related transactions. Many appraisers and potential appraisers are uncertain what constitutes a "complex" residential appraisal assignment. Some believe it is synonymous with multifamily housing. It is not.

While there is no precise definition of a "complex" residential appraisal, the federal financial regulatory agencies presume that an appraisal of a one-to-four family residential property is not complex unless the property itself, the form of ownership in which it is held, or market conditions are atypical.

"Atypical" means that specific characteristics of the property being appraised differ from what is the norm in the neighborhood or market area in which the property is located. Although this list is not exhaustive, examples of what federal financial institutions consider atypical factors that may make an appraisal "complex" include: * the architectural style, the age, or the size of the improvements;

* the size of the lot;

* the use of the property when contrasted with other land uses in the neighborhood;

* the presence of potential environmental hazard liability; and

* the existence of leasehold interests. An appraisal assignment in one locale may involve "atypical" factors and thus be "complex" (for example, a condominium unit in a rural area). In another locale (an urban area) that same property may not involve "atypical" factors and thus is "non-complex." Therefore, the Board has not expressly defined a "complex residential assignment" nor compiled a list of real property characteristics that may be atypical. However, the Board generally concurs with the assumptions of the federal regulatory agencies as to what constitutes a complex residential appraisal.