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After the initial inspection of the property the appraiser spends time touring through the neighborhood or area. The purpose of this tour is to search for similar properties and sales in recent history. When the field work is finished, the appraiser completes a report which can consist of a short form report (less than ten pages) or a more extensive narrative report for commercial properties. For information regarding the timeline for completion of your specific project, contact us here.
An appraiser is not a contractor, inspector, engineer, electrician, plumber, or H.V.A.C. technician. The appraiser tours the property to get an idea of the subject property's location, general condition, exterior and interior finish, construction quality, size, etc. An appraisal is not a guarantee of condition. Your appraiser will form an opinion of the condition and quality of your property versus competing properties in the marketplaces.
Comps are comparable sales, comparable leases, or cost comparables. They are properties that are similar to the subject property in most respects and if possible are located nearby, and transacted or occurred recently. The selection of comparable sales is the building block of forming an opinion of value. Part of the appraiser’s responsibility is to thoroughly research the local real estate market and determine which comps best represent the value characteristics of the property being appraised.
Typically, highest & best use means the use or utilization of the real estate that provides the most profitable return on investment. It is the use (selected from reasonably probable and legal uses for a specific property) that results in the highest possible property value.
Fair market value is the most probable price that a property will sell for in a competitive and open market under all conditions requisite to a fair sale.
A narrative appraisal report is the most common report for commercial appraisals. This type of report contains an extensive level of detail and satisfies the needs of lenders and large institutions. Appraisal reports can have one, two, or three approaches, depending on the appraisal problem, property type, and/or use of the appraisal.
Restricted Use Appraisal Report
Restricted Use appraisal reports do not typically satisfy the needs of most lenders. Our firm's restricted use reports are generally more expensive than our competitors. They contain adequate detail and narrative (property tour, measurements, exhibits, maps, full comparable write ups, comparable adjustment tables, etc.) and fully support our opinion of value. Explanation regarding why adjustments are made is generally excluded. Restricted Use reports are less time consuming to produce and expensive than Appraisal Reports. This format may be a good fit for our non-lending institution clients.
Because a large percentage of equity (both private and corporate) lies in real estate, properly determining the value of real estate investments are essential to economic health. It is our job as professional appraisers to determine property value by gathering, analyzing, and applying information on each property that we appraise. As appraisers we are trained to be an impartial third party in the lending process protecting real estate buyers from overpaying for property as well as lenders from over lending to buyers.
The appraisal process is an orderly and concise method of reaching an opinion of value. The process has six major steps which include: definition of the problem, preliminary survey and appraisal plan, data collection and analysis, application of the three approaches to value, reconciliation of value indications, final opinion of defined value. This process assists the appraiser in reaching a sound conclusion. The major phase of this process involves the application of the three different approaches to valuation which are then reconciled to determine the most applicable approach. It is important to hire an appraiser with the experience, training, background, and geographical competence to do quality work that you can rely on.