Under which circumstance is it unlawful for a real estate licensee to prepare an appraisal?

A real estate licensee is typically not authorized to prepare appraisals for transactions that fall under federally regulated requirements unless they are a licensed appraiser. This is because federally regulated transactions, such as those involving FHA or VA loans, require an appraisal to be performed by a licensed appraiser in order to ensure compliance with federal standards and regulations. The purpose of such regulations is to protect the integrity of the financial system, guarantee the accuracy of property valuations, and ensure that borrowers receive fair treatment.

In contrast, preparing appraisals for personal property transactions, cash transactions, or commercial property transactions does not necessarily invoke the same stringent regulations. While each of these types of transactions has its own considerations and may still require evaluation, they do not have the same legal restrictions imposed by federal oversight designed to protect borrowers in federally regulated transactions. Therefore, the necessity for a licensed appraiser in this context highlights why this option is the correct one in identifying circumstances that render it unlawful for a real estate licensee to prepare an appraisal.