THE FORMAL APPRAISAL PROCESS Real Estate Appraisal Principles & Procedures Betts & Ely

WHAT WE WILL LEARN: The Appraisal Process Types of Value The Classical Approaches to Value

The Appraisal Process Identify the appraisal problem to be solved. Identify appropriate solutions. Execute the appropriate scope of work. Report the findings and conclusions reached.

Identify the appraisal problem to be solved Identification of the client and any other intended users. The intended use of the appraiser’s opinions and conclusions. The type and definition of value. The effective date of the appraisal. The subject property and its relevant characteristics. Assignment conditions.

Identify appropriate solutions The extent of identification of the property The extent of property inspection The extent of property of data researched The type and extent of analysis employed to reach a conclusion

Execute the appropriate scope of work Data → Cost Approach/Sales Comparison Approach/Income Approach → Conclusion Reconciliation process: Review the appropriateness of each approach. Consider the adequacy and reliability of the data. Consider the range of indicated values.

Report the findings and conclusions reached Oral Report Written Report

Types of written report Self-Contained Appraisal Report Summary Appraisal Report Restricted Use Appraisal Report

Formats of appraisal reports The Letter Report The Form Report The Narrative Report

Types of Value Generally value means worth of a thing. Assessed value Book value/Capitalized value Cash value Depreciated value Economic value Exchange value Face value Fair value

Going concern value Inheritance tax value Insurance value Leased value/Rental value Liquidation value Listing value Loan value Market value Nuisance value Potential value Salvage value

Use value Value in foreclosure Value in place

The Classical Approaches to Value The Sales Comparison Approach The Cost Approach The Income Approach