The Appraisal Process Flashcards
What is an appraisal?
It’s an unbiased estimate of the nature, quality, value, or utility of an interest in real estate
Explain the 7 steps of an appraisal
- Define the problem and the amount of work
- Collect, record, and verify the data
- Determine the property’s highest and best use as determined by market forces
- Estimate land value via direct sales comparison, allocation, extraction, subdivision development analysis, land residual, and ground rent capitalization
- Use the cost, income, and sales comparison approaches to estimate value
- Reconcile the estimated values to determine the final value estimate
- Communicate the final value estimate
What 2 types is data broken down into?
Specific data and General data
What is specific data?
Info and details about the property, as well as data about comparable properties’ costs, income and expenses, sales, and other relevant info
What is general data?
Info about the property’s location (country, region, neighborhood, etc)
What does “highest and best use” mean?
Means that all elements of the property are legally and physically possible, financially feasible, and maximally productive
What are the different appraisal reports?
Short- or Long-Form Narrative reports, Form reports, and Letter/Oral reports
What are short- or long-form narrative reports?
Where the appraiser provides all the info needed to support the value conclusions, estimates, and opinions he expresses in that report to convince the client that his value estimate is sound
What are form reports?
Single-family appraisals. Most are made on the URAR, Uniform Residential Appraisal Report
What are letter/oral reports?
When an appraiser keeps and maintains all related notes, records of fact, and all info regarding each value analysis, opinion, and conclusion reached and expressed within the report
