The appraisal report is a detailed description of the process the appraiser used in estimating the value of a specific property. An appraiser collects market data and thoroughly analyzes it using industry-standard methods. Based on the analysis, a value is determined for the property and presented in an appraisal report.
Appraisal reports can take different forms depending on how the information will be used. However, each report includes standard sections and types of information — this can include an introduction, factual descriptions, data analysis, the appraiser’s opinions, and an addendum.
The appraisal report is designed to provide information to assist people making real estate decisions. They can be complex and include detailed analyses of market data and procedures for estimating value. The report should always provide information in a clear and effective manner.
Types of Appraisal Reports
Oral report — This report is used when the client does not need a formal written report. It should include a description of the property and the facts, assumptions, conditions, and reasoning on which the conclusion is based. The appraiser should keep detailed notes and data providing written evidence of his or her analysis and conclusions.
Letter report — This report usually contains the appraiser’s investigations and analyses only. Certain items must be included, such as the certificate, property identification, valuation date, limiting conditions, indication of the contributions of others, and a statement of non-bias. Please note that use of the letter report is limited.
Letter-form appraisal report — This report is primarily used by governmental and financial institutions. The form provides a clear-cut way to locate information and ensures that no item required in the review process is omitted. However, it restricts additional information, which must be introduced as a supplement.
Narrative report — This report provides the most complete appraisal information and is the most commonly used by appraisers. It provides a thorough documentation of all reasoning and data in the appraisal process (within financially feasible constraints). The report includes four parts: introduction, factual descriptions, data analysis and appraiser’s opinions, and addendum.
Whatever type of report the appraiser decides to use, he or she should ensure that all of the included information provides the client with an understanding of the basis for determining the value. The sections should be tied together and lead to a clear-cut, reason-based conclusion.
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