- TYPICAL OUTLINE FOR WRITING THE SINGLE FAMILY RESIDENCE NARRATIVE APPRAISAL REPORT
A. Title Page:
- "A market value appraisal of the single family residence known as (Address)."
- Name of client.
- The name and address of the appraiser
B. Table of Contents:
- Body of report.
- Addenda section.
C. Letter of Transmittal:
- Name and address of addressee.
- Legal description or reference thereto.
- Purpose of appraisal, including type of value estimated.
- Date of evaluation.
- Reference to following report of pages, including exhibits as well as limiting conditions, factors considered and reasoning employed in arriving at the final conclusion of fair market value.
- Estimate of value (written and numbered).
- Certification of appraiser.
D. Summary of Salient Facts and Conclusions:
- Recap of pertinent information such as value estimate, date of value, purpose of appraisal, etc.
E. Premise Section:
- Statement of intended use of the appraisal report.
- Statement of limiting conditions on which the appraisal is based, including full definition of value as estimated in report.
F. Regional, City and Neighborhood Analysis:
- Pertinent features.
- Economic factors.
- Significant trends.
G. General Property Information:
- Record or legal owner.
- Legal description.
- Legal address.
H. Site Analysis:
- 1. Description of parcel:
- a. Size and shape.
- b. Topography and surface drainage.
- c. Soils including subsoil (foundational).
- d. Access.
- e. Landscaping, etc.
- 2. Street improvements and utilities.
- 3. Deed restrictions and zoning.
- 4. Assessed valuation and tax information.
- 5. Current use and adaptability.
- 6. Highest and best use.
I. Improvement Analysis:
- 1. Basic description:
- a. Type and date of construction.
- b. Architectural form.
- c. Number of rooms.
- 2. Summary of square foot areas:
- a. Residence.
- b. Garage.
- c. Other structures, walks and drives.
- 3. Exterior description:
- a. Foundation and sub-structure.
- b. Exterior treatment.
- c. Roof design and cover.
- d. Porches.
- 4. Interior description:
- a. Room descriptions (space allotment; floor, walls and ceiling finish; built-'ins and fixtures).
- 5. Mechanical Equipment:
- a. Heating and air conditioning.
- b. Electrical.
- c. Miscellaneous - garbage disposal, etc.
- 6. Miscellaneous Improvements:
- a. Outbuildings.
- b. Patios and walks.
- c. Landscaping.
J. Analysis and Valuation:
- Statement of problem.
- Methods of appraisal.
K. Estimate of Land Value:
- 1. By market data approach.
- 2. By sales abstraction.
- 3. Economic approaches:
- a. As percentage of annual income classification.
- b. As percentage of total property value.
- 4. Reconciliation of various approaches.
- 5. Final estimate of land value.
L. Appraisal Cost Approach:
- 1. Reproduction cost estimate:
- a. Justification.
- 2. Estimate of accrued depreciation:
- a. Physical deterioration with justification: curable and incurable.
- b. Functional Obsolescence with justification: curable and incurable.
- 3. Economic obsolescence with justification.
- 4. Depreciated reproduction cost.
- 5. Addition of estimated land value.
- 6. Value indicated by cost approach.
M. The Market Data Approach:
- 1. Market data presentation including statement of source and verification: a. Summary of pertinent data (sales and listings).
- 2. Analysis of market data:
- a. Factors of adjustment.
- 3. Application of adjusted market data factors:
- a. Comparison by various common denominators: e.g., ratio of sales price to living area; ratio sales price to number of rooms.
- b. Direct property comparison.
- 4. Reconciliation of indications using reliability coefficients.
- 5. Value indicated by market data approach.
N. Appraisal Income Approach:
- Seldom employed in analysis of single family residential property.
- Justified gross rent multiplier of neighborhood.
- Justified fair rental estimate for subject.
- Indicated value by income approach.
O. Reconciliation and Discussion of Value Estimates:
- 1. State values estimated by three separate approaches.
- 2. Analysis:
- a. Major, but not exclusive, weight to approach that:
- Is most closely related to purpose of the appraisal;
- Is most appropriate for property classification concerned;
- Has greatest amount of supporting data;
- Most accurately reflects attitude of typical purchaser; and
- Is most sensitive to current trends.
- 3. State final value conclusions:
- a. Suggested arbitrary separation:
- Land; and
P. Addenda Section:
- Market data.
- Market data map.
- Plots, maps, pictures, charts, statistical and factual data pertinent to the value estimate and necessary as supporting evidence not included in body of report.
Q. Appraiser's Qualifications.
In concluding this information on concepts, valuation and appraisal techniques, let us wave three warning flags. It is to be noted that there are subtle differences between valuation and appraising. The first is broader, tends to be economic in origin and emphasizes theory; the latter refers more to practice, methods and techniques. Next, anyone can make an appraisal, even a lay person, but the worth of an appraisal report is determined by the experience, knowledge, qualifications, and motives of the person behind it. Finally, let us not be deceived by any broad statement that appraising is an exact science. It is a science as is any of the other social sciences, but people and property cannot be appraised with the exactness and accuracy reached by the mathematical and physical sciences.