What must be explained in a Restricted Use Appraisal Report?

In a Restricted Use Appraisal Report, it is essential to explain the exclusion of any of the valuation approaches. This is important because a Restricted Use report is tailored for a specific client and a specific purpose, which often means not all standard approaches to value are warranted or applicable for the assignment. By addressing which approaches were not used, the appraiser provides transparency about their decision-making process and ensures that the client understands the limitations of the report. This can help the client in their understanding of the final value conclusion, as well as position them to use the report appropriately for its intended purpose.

While the methods of valuation, the appraiser's opinion, and the financial background of the client can all be relevant in various types of appraisal reports, in a Restricted Use report, the exclusion of approaches is particularly vital because it directly affects how the value opinion should be interpreted, given the narrower focus of the report.