Basic Appraisal Procedures - McKissock Study guide with
complete solution
Valuation Process
Systematic set of procedures an appraiser follows to provide answers to a clients
questions about real property value
Appraisal Process
1. Define Problem
2. Determine scope of work
3. Gather Record & verify dat
4. determine highest and best use
5. estimate land value
6. est. value by all three approaches
7. Reconcile est. value into final opinion value
8. report the final opinion
defining problem
Identification and location of the real estate
Identification of the property rights
Definition of value
Purpose and intended use of the appraisal
Effective date of the opinion of value
Any special limiting conditions
identification and location of the real estate
usually with a legal description (metes and bounds, rectangular survey, lot and block)
identify the characteristics of the property that are relevant to the type and definition of
value and intended use of the appraisal
Standards rule 1-2E of USPAP
Identify the characteristics of the property that are relevant to the type and definition of
value and intended use of the appraisal
market value
stated as an opinion that presumes the transfer of a property as of a certain date under
specific conditions
Appraisers are cautioned to
identify the exact definition of market value and its authority applicable in each appraisal
completed for the purpose of market value
Standards 1-2c of USPAP
identify type of value, if opinion to be developed market value, ascertain whether the
value is to be the most probable price: terms of cash; terms of financial arrangements
equ. to cahs; other terms; if not market value must be clearly identified
purpose of the assignment
objective of assignment. ex: to develop an opinion of the defined value of a specified
interest in real estate
intended user
client and any other party as identified by name or type as users of the appraisal review
report by the appraiser
, retrospective and prospective value
Two dates are essential to an appraisal report. Standards Rules 2-2(a)(vi) and 2-2(b)(vi)
and 8-2(a)(vi) and 8-2(b)(vi) require that each appraisal report specify the effective date
of the appraisal and the date of the report
standards 1-2d of USPAP
identify the effective date of the appraisers opinions and conclusions
extraordinary assumption
an assignment specific assumption as of the effective date if which found to be false
could alter the appraisers opinions or conclusions
hypothetical edition
condition directly related to specific assignment which is contrary to what is known by
the appraiser to exist on the effective date of assignment results but is used for the
purpose of analysis
Advisory opinions-22 os USPAP
Accomplishing the first four action steps (SR 1-2(a) through (d))... ...provides the basis
for deciding which of the property's characteristics are relevant in the assignment
determine scope of work
the type and extent of research and analysis or appraisal review assignment
advisory opinion-22
understanding whihc analysis methods and techniques are necessary and what data
are necessary to correctly complete the analysis is an integral part of the scope of work
decision
standards rule 1-2h of USPAP
determine the scope of work necessary to produce credible results in accordance with
the SCOPE OF WORK RULE
scope of work rule
identify problem; determine and perform the scope of work necessary to develop
credible assignment results; disclose scope of work in the report
scope of work includes but is not limited to:
the extent to which the property is identified;
the extent to which tangible property is inspected;
the type and extent of data researched; and
the type and extent of analyses applied to arrive at opinions or conclusions.
standards rule 2-2a in USPAP
summarize the scope of work used to develop the appraisal
workfile
documentation necessary to support an appraiser's analyses, opinions, and conclusions
record keeping rule
an appraiser must prepare a workfile for each appraisal or appraisal review assignment
workfile must include
name of client and identity by name or type of any other users; true copies of all written
reports, documented on any type of media; summaries of any oral reports or testimony,
or a transcript of testimony, including the appraiser's signed and dated certification; all
other data, information, and documentation necessary to support the appraiser's
opinions and conclusions and to show compliance with USPAP
how long does an appraiser have to keep his workfile
complete solution
Valuation Process
Systematic set of procedures an appraiser follows to provide answers to a clients
questions about real property value
Appraisal Process
1. Define Problem
2. Determine scope of work
3. Gather Record & verify dat
4. determine highest and best use
5. estimate land value
6. est. value by all three approaches
7. Reconcile est. value into final opinion value
8. report the final opinion
defining problem
Identification and location of the real estate
Identification of the property rights
Definition of value
Purpose and intended use of the appraisal
Effective date of the opinion of value
Any special limiting conditions
identification and location of the real estate
usually with a legal description (metes and bounds, rectangular survey, lot and block)
identify the characteristics of the property that are relevant to the type and definition of
value and intended use of the appraisal
Standards rule 1-2E of USPAP
Identify the characteristics of the property that are relevant to the type and definition of
value and intended use of the appraisal
market value
stated as an opinion that presumes the transfer of a property as of a certain date under
specific conditions
Appraisers are cautioned to
identify the exact definition of market value and its authority applicable in each appraisal
completed for the purpose of market value
Standards 1-2c of USPAP
identify type of value, if opinion to be developed market value, ascertain whether the
value is to be the most probable price: terms of cash; terms of financial arrangements
equ. to cahs; other terms; if not market value must be clearly identified
purpose of the assignment
objective of assignment. ex: to develop an opinion of the defined value of a specified
interest in real estate
intended user
client and any other party as identified by name or type as users of the appraisal review
report by the appraiser
, retrospective and prospective value
Two dates are essential to an appraisal report. Standards Rules 2-2(a)(vi) and 2-2(b)(vi)
and 8-2(a)(vi) and 8-2(b)(vi) require that each appraisal report specify the effective date
of the appraisal and the date of the report
standards 1-2d of USPAP
identify the effective date of the appraisers opinions and conclusions
extraordinary assumption
an assignment specific assumption as of the effective date if which found to be false
could alter the appraisers opinions or conclusions
hypothetical edition
condition directly related to specific assignment which is contrary to what is known by
the appraiser to exist on the effective date of assignment results but is used for the
purpose of analysis
Advisory opinions-22 os USPAP
Accomplishing the first four action steps (SR 1-2(a) through (d))... ...provides the basis
for deciding which of the property's characteristics are relevant in the assignment
determine scope of work
the type and extent of research and analysis or appraisal review assignment
advisory opinion-22
understanding whihc analysis methods and techniques are necessary and what data
are necessary to correctly complete the analysis is an integral part of the scope of work
decision
standards rule 1-2h of USPAP
determine the scope of work necessary to produce credible results in accordance with
the SCOPE OF WORK RULE
scope of work rule
identify problem; determine and perform the scope of work necessary to develop
credible assignment results; disclose scope of work in the report
scope of work includes but is not limited to:
the extent to which the property is identified;
the extent to which tangible property is inspected;
the type and extent of data researched; and
the type and extent of analyses applied to arrive at opinions or conclusions.
standards rule 2-2a in USPAP
summarize the scope of work used to develop the appraisal
workfile
documentation necessary to support an appraiser's analyses, opinions, and conclusions
record keeping rule
an appraiser must prepare a workfile for each appraisal or appraisal review assignment
workfile must include
name of client and identity by name or type of any other users; true copies of all written
reports, documented on any type of media; summaries of any oral reports or testimony,
or a transcript of testimony, including the appraiser's signed and dated certification; all
other data, information, and documentation necessary to support the appraiser's
opinions and conclusions and to show compliance with USPAP
how long does an appraiser have to keep his workfile
