APPRAISAL REPORTS

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.

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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

Floor Plan

Plot Plan

Identification of Property

Type of Property

Purpose of Appraisal

Definition of Value

Regional Data

City Data

Neighborhood Data

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

Depreciation

Cost Approach

Market Data Approach

Market Data Comparisons

Income Approach

Rental Comparisons

Correlation and Final Estimate of Value

Certificate Contingent and Limiting Conditions

Qualifications of Appraiser

Addenda

City Map

Neighborhood Map

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.

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