Property Valuation
An appraisal for a federally related transaction in Colorado must be performed by:
AA. Any licensed real estate broker
BB. A state-licensed or state-certified appraiser, as required by FIRREA (Financial Institutions Reform, Recovery and Enforcement Act)✓ Correct
CC. The lender's in-house staff, regardless of credentials
DD. Any person with 5 years of real estate experience
Explanation
FIRREA (1989) requires that appraisals for federally regulated transactions (loans by federally chartered or insured lenders) be performed by state-licensed or state-certified appraisers. In Colorado, the Board of Real Estate Appraisers licenses and certifies appraisers and enforces USPAP compliance.
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Key Terms to Know
Appraisal
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
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