The estimate of market value takes the form of a written appraisal report. Such reports may be on standard forms, or they may be presented in a more formal narrative fashion. For mortgage purposes, especially where single-family dwellings are concerned, the form appraisal is more frequently used. For income properties and for appraisal reports prepared for court testimony, for example, in eminent domain proceedings, the narrative appraisal report is a practical necessity.
The Narrative Appraisal Report
The narrative appraisal report has been described by the Philippine Institute of Real Estate Appraisers and the Society of Real Estate Appraisers
as a formal written document which contains (a) the estimate of value, (b) the effective date of the appraisal, (c) the certification and signature of the appraiser, (d) the purpose of the appraisal, (e) the qualifying conditions, (1) an adequate description of the neighborhood and identification of the property and its ownership, (g) the factual dab (h) an analysis and interpretation of the data, (i) the processing of the data by one or more of the three approaches and (j) other descriptive supporting material (maps, plans, charts, photographs).
From this description it will be appreciated that the professional appraiser prepares a formal written statement giving his or her opinion of the value of the property that is identified and described as of the date of valuation, with sup-porting evidence taken from the three recognized appraisal reports. An outline for the appraisal of single-family dwellings includes the following data, as recommended by the Philippine Institute of Real Estate Appraisers.
Table of Contents:
The Narrative Appraisal Report
Letter of Transmittal Photograph
Identification of Property
Type of Property
Purpose of Appraisal
Definition of Value
Highest and Best Use
Zoning and Restrictions
Assessed Value and Taxes
Land Description and Value
Comparison of Land Sales
Description of Improvements
Condition of Improvements
Market Data Approach
Market Data Comparisons
Correlation and Final Estimate of Value
Certificate Contingent and Limiting Conditions
Qualifications of Appraiser
Market Data Map
Note that the table of contents recommended for the narrative appraisal report conforms to the minimum requirements of the society and institute. Additional material provides the documentation necessary to the narrative report: the letter of transmittal, photograph, floor plan, and plot plan help to identify the property valued. An additional element of the narrative report is the certificate of value in which the appraiser submits his in her final estimate of value on a signed certificate. The contingent and limiting conditions qualify the appraisal report and limit its interpretation and use by the client. A statement of the limiting conditions applying to an apartment house appraisal illustrates the function of this portion of the narrative.
Next week I talk more about the Statement of Limiting Conditions as part of the appraisal report. I must say I am impressed with the work I have made here so far. Please let me know if you, my readers, would like to find out more about these topics by adding to the comments section. Many thanks.