Property Valuation
A Kentucky appraiser performing a drive-by (exterior-only) appraisal provides a report that:
AReflects the same level of accuracy as an interior inspection
BIs limited in scope and may not capture all value-affecting conditions✓ Correct
CIs prohibited by USPAP
DIs required for all refinances
Explanation
A drive-by or exterior-only appraisal is a limited-scope engagement that does not allow the appraiser to observe interior conditions, making the value estimate potentially less reliable than a full inspection.
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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.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
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.
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