The appraisal form used depends on the property type, and each brings different methodology, cost, and timeline. Knowing which applies helps you plan.
These questions cover the main types and when each is used.
Quick answer
Single-family investment properties use a standard residential form with a rent schedule addendum. Two-to-four unit properties use a small residential income property report. Five or more units moves to commercial appraisal methodology.
Frequently Asked Questions
What appraisal is used for a single-family rental?
A standard residential appraisal report, typically with a rent schedule addendum documenting the appraiser's market rent opinion.
What about a duplex or fourplex?
A small residential income property appraisal, which analyses each unit's rental income alongside comparable sales.
What about five or more units?
Commercial appraisal methodology, where value is derived primarily from net operating income and a market capitalization rate rather than comparable sales.
How does commercial appraisal differ?
It emphasises the income approach, analyses operating expenses in detail, and typically produces a longer, more expensive report with a longer turnaround.
What is a desktop appraisal?
A valuation completed without a physical inspection, using available data. Less common on investment property, though some programs permit it in limited circumstances.
What is a drive-by or exterior-only appraisal?
An inspection limited to the property's exterior. Occasionally used on refinances with strong equity, though full interior inspections are standard on purchases.
What is a broker price opinion?
A value estimate from a real estate broker rather than a licensed appraiser. Generally not accepted as a substitute for an appraisal on a mortgage transaction.
Which type is fastest?
Desktop and exterior-only where permitted, then standard residential. Small residential income takes longer, and commercial longest.
Which costs most?
Commercial appraisal by a substantial margin, followed by small residential income, then standard residential. Rural and unusual properties cost more within each category.
Can I choose the appraisal type?
No. The lender determines it based on the property type and their program requirements.
What about mixed-use properties?
Typically commercial or a hybrid methodology depending on the residential-to-commercial split. These are among the more complex and expensive appraisals.
Does a condo use a different form?
Condos use a residential form specific to individual condominium units, which includes project information alongside the unit valuation.
What is included in a small residential income report?
Comparable sales analysis, a unit-by-unit rent analysis, an operating income statement in some cases, and a value conclusion supported by both sales and income approaches.
Do all appraisal types include a rent schedule?
Investment property appraisals generally address rent in some form, whether as a separate addendum or integrated into the income analysis.
Which type is most likely to produce surprises?
Commercial and small residential income, since income analysis introduces more variables than comparable sales alone.
Does the property type affect appraisal timeline?
Substantially. A standard single-family may complete in a week in an active market; a commercial multi-family appraisal can take several weeks.
Can a residential appraiser value a mixed-use property?
Generally not. Mixed-use and commercial property require appraisers with appropriate certification and experience, which can limit availability in some markets.
What is a restricted-use appraisal?
A report prepared for a specific limited purpose with reduced content. Generally not acceptable for mortgage lending, which requires full reporting.
Does appraisal type affect my loan terms?
Indirectly. Property types requiring commercial appraisal generally also carry commercial loan terms, which differ from residential DSCR structures.
How do I know which applies to my property?
Unit count is the primary determinant: one unit is standard residential, two to four is small residential income, five or more is commercial. Mixed-use follows its own rules.
