| Knowledge Center |
|
A |
B |
C |
D |
E |
F |
G |
H |
I |
J |
K |
L |
M |
N |
O |
P |
Q |
R |
S |
T |
U |
V |
W |
X |
Y |
Z |
| |
|
|
| Appraisal |
| The act or process of estimating value.
The resulting opinion of value derived from
the appraisal may be informal, transmitted
verbally, or it may be formal, presented in
written form. Usually, it is a written
statement setting forth an opinion of the
value of an adequately described property as
of a specified date, supported by the
presentation and analysis of relevant data. |
| |
| Appraisal Date |
| The date to which the valuation applies,
sometimes referred to as the effective date
of the appraisal. |
| |
| Appraisal Process |
| A systematic analysis of factors that
bear upon the value of real estate. An
orderly process by which the task (e.g.,
estimating market value as at a specified
date), is established, the work necessary to
solve the problem is planned, and the data
involved is acquired, classified, analyzed,
and interpreted into an estimate of value. |
| |
|
Appraisal Purpose |
| The purpose of the appraisal refers to
the use that will be made of the value
estimate. Five major purposes or reasons are
outlined for which an appraisal may be
required. |
- Transfer of Ownership:
Involves the buying, selling, and
exchanging of real estate.
- Extension of Credit:
Normally relates to mortgage lending or
other financing and an estimate of value
to establish the loan amount.
- Compensation for Damage or
Loss:
Usually involves insurance claims or
expropriation.
- Taxation:
Includes municipal assessment for
property taxes and income tax on capital
gains.
- Land Use Studies or
Feasibility Studies:
Largely carried out for developers and
investors interested in establishing the
highest and best use of a particular
parcel of land. This process typically
involves a number of estimates of value
for different forms of development,
e.g., freehold detached homes as
compared to condominium townhouses.
|
| It is essential that the purpose be
established at the very beginning of the
assignment and be clearly stated in the
appraisal report. |
| |
| The purpose is often simply
stated as follows: |
|
This appraisal is to estimate the market
value of the subject property as of
September 18th, 20xx, for sale purposes. |
| |
|
Appraisal Report |
| A written summary estimating the value
of property and the conditions and
limitations at the time of appraisal.
Two recognized types of appraisal reports
are found in the marketplace. |
| |
| 1. The
Narrative Report |
| Takes a logical, systematic, and
detailed approach by presenting theory,
facts, analysis, application of methodology,
and finally conclusions. Narrative reports
must be written in sufficient detail and in
such a way that a reader will easily
understand the appraiser’s reasoning and
justifications for the conclusions and
estimates reached. |
| |
| 2. The Form
Report |
| Consists primarily of preprinted
information that is checked off or details
are inserted where relevant. Space is
provided for brief additional comments. The
form report allows for a reasonably brief,
but systematic and precise presentation of
information and analysis. Provincial
jurisdictions that participate in the
MVA–Residential Designation program use this
report format or a variation thereof. |
| |
| Report Content |
| The appraisal is an orderly process with
a methodical outline covering the necessary
steps in estimating the value of a property.
Eight commonly accepted steps, referred to
as the appraisal process, establish the
basis for report content. |
- Define the
Problem
- Preliminary
Inspection and Planning Work
- Data Collection
and Analysis
- Apply the Cost
Approach
- Apply the Direct
Comparison Approach
- Apply the Income
Approach
- Reconciliation
and Final Estimate
- Write the
Appraisal Report
|
| Report Outline |
| An appraisal plan or outline is
recommended when the appraisal activity
involves the production of a complex
narrative report. This plan or outline
should be established prior to the
commencement of work and could include
tentative lists of tables, charts, diagrams,
and maps needed and headings/subheading for
sections within the report. |
| |
| Appraisal outlines will vary
considerably. Bellow is a
sample appraisal report outline. |
| |
| Repot Outline |
1.
Introduction
2.
Title Page
3.
Letter of Transmittal
4.
Photographs of Subject
Property
5.
Summary of Salient Fact
about the Property
6.
Assumptions and Limiting
Conditions
7. Certification
of Appraisal
8. Definition
of the Appraisal Problem
9.
Analysis of: Property,
Site, Interior and Exterior Improvements
10.
Methods of Valuation:
Cost Approach or Direct Comparison Approach
11.
Reconciliation and Final
Estimate
12.
Addenda: Neighborhood
Map, Site, Site Plan, Floor Plan, Property
Comparables |
|
back to top 
|
|
Appraiser |
| A professional who estimates value and
possesses the necessary qualifications,
ability, and experience to execute or direct
the appraisal of real and/or personal
property. |
