Appraisal Process
An orderly procedure that appraiser use to solve a valuation problem.
Appraisal Report
Communication of a formal appraisal. Self-contained appraisal report: Contains all information needed for solution of the appraisal problem. Summary appraisal report: contain only a summary of the information used to prepare the appraisal. Restricted use Appraisal Report: Contains only a brief statement of the information used.
Assignment conditions
In USPAP, all of the assumptions, conditions, standards, and expectations, that apply to a specific assignment
Client
Defined in USPAP, as the "the party or parties who engages an appraise, by employment or contract, in a specific assignment"
Contractual conditions
Part of the agreement between the client and the appraiser, imposing specific requirements that the appraiser is to meet.
Credible appraisal
worthy of being relied on
Definition of the appraisal problem
The first of the four steps in the formal appraisal process. There are 6 essential elements to being defined.
Effective date of value
The date of value; the date when the opinions of the appraisal are valid
Exposure time
How long the property would have been marketed, prior to the date of value, in order to sell for the appraised value. Contract with Marketing Time.
Extraordinary assumption
Defined in USPAP, as an assumption, as of the effective date of the assignment results, directly related to a specific assignment, which, it found to be false, could alter the appraiser's opinions or conclusions
Form report
Written appraisal report, presented on a standardized form or checklist
Hypothetical condition
Defined in USPAP as a condition, directly related to a specific assignment, which is contrary to what is known by the appraiser but is used for the purpose of analysis.
Income approach
one of the three classic approaches to value, where the expected net income from the property is capitalized into a value estimate
Intended use
How the client and any intended user plan to use an appraisal report, as agreed upon between the client and the appraiser at the start of the assignment
Intended user
Defined in USPAP as " the client and any other party as identified, by name or type, as users, of the appraisal, appraisal review, or appraisal consulting report by the appraiser on the basis of communication with the client at the time of the assignment"
Letter report
A short written report, summarizing the appraisal and its conclusion
Limiting conditions
all of the conditions, general or specific, imposed by an appraiser that limit the use of an appraisal or report
Market Data
data indicating the characteristic of activity in a specific market at a specific time
Market Exposure
Making a reasonable number of potential buyers and tenants of a property aware that the property is available
Market value
The most probable price in terms of money that a property should bring in a competitive and open market, under all conditions requisite to a fair sale, with the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus
Marketing time
The time it would take to sell the property, assuming that marketing started on the date of value. Contrast with exposure time
Narrative report
A detailed, formal, written report of the appraisal and the value conclusion
Reconciliation
The process by which the appraiser reviews and analyzes the indicated values developed by the applied approaches, to arrive at the final value conclusion
Restricted Use Appraisal Report
Sales comparison approach
Method of estimating depreciation. Building values abstracted from sales are compared to costs ne on the sales date, or the sales prices of similar properties of different ages are compared.
Scope of work
The agreement between appraiser and client regarding the type and extent of research and analysis in a specific assignment; a USPAP Rule
Self contained appraisal report
see appraisal report
Subject property
Summary appraisal report
Type of value
Value of exchange
Value in use
The appraisal process involves four steps, the first of which is to:
define the appraisal problem
The intended user of an appraisal report includes:
those the appraiser intends to rely on it
In appraisal, the effective date of value is:
the date agreed on in advance with the client
One common appraisal assignment is to appraise the:
"fee simple" ownership
Assignment conditions include:
Hypothetical conditions, extraordinary assumption, jurisdictional exception
The amount and kind of data needed to prepare an appraisal depend upon:
The appraiser's conclusion of value should be based on:
A weighing of the values indicated by each of the three approaches according to their appropriateness and the reliability of the data used
When a standard form is used to report an appraisal, it is most likely to be a :
Summary Appraisal Report
The concept of market value in appraisal practice does not include:
A good buy
The cost approach is normally given more weight in the appraisal of:
new buildings & special use buildings
