1. The Student Handbook to T HE A PPRAISAL OF R EAL E STATE 1 The Valuation Process Chapter 7

2. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 7 2 The Valuation Process

3. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 7 3 Identification of the Appraisal Problem Identifying the client and intended users of the appraisal Identifying the intended use of the appraisal Type of value and its definition Effective date of the value opinion Identifying the relevant characteristics of the property Assignment conditions  Extraordinary assumptions and hypothetical conditions  Limiting conditions

4. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 7 4 Scope of Work The level of detail? What were you asked to do? What did you do? How deep did you dig? How well did you inspect? Planning the appraisal

5. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 7 5 Data Collection and Property Description Market area data General characteristics of the region, city, and neighborhood Subject property data Specific characteristics of land and improvements Personal property Business assets

6. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 7 6 Data Collection and Property Description, continued Comparable property data  Comparable sales  Comparable listings (offerings)  Vacancy rates  Cost and depreciation comparables  Income and expense comparables  Capitalization rates (R O, EGIM, GRM, etc.)

7. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 7 7 Data Analysis Market analysis  Demand studies  Supply studies  Marketability studies Highest and best use analysis  Site as though vacant  Property as improved

8. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 7 8 Site Value Opinion Techniques  Sales comparison  Allocation  Extraction  Income capitalization techniques Subdivision development Land residual technique Ground rent capitalization

9. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 7 9 Application of the Three Approaches Sales Comparison Approach Cost Approach Income Capitalization Approach

10. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Final Steps of Valuation Process Final reconciliation of value indications Report of defined value Chapter 7 10

11. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 7 11 Problems Suggested solutions begin on page 419.