Module09 - Outline

Module09 - Outline - Module 09 Reconciling the Value...

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Module 09 Reconciling the Value Estimates Objectives After the three approaches have been applied, a single opinion of value is most often sought. This is done by a process called reconciliation. The following topics are covered here: 15.1 General Review of the Appraisal 15.2 Reconciling the Value Approaches 15.3 Rounding the Answer The appraisal report is a formal communication that details the investigation the appraiser has made on behalf of the client. Our task here is to cover: 16.1 The Form and Content of Appraisal Reports 16.2 Reporting Options Available Under USPAP 16.3 Traditional Formats of Written Appraisal Reports 16.4 Writing the Narrative Appraisal Report 15.1 GENERAL REVIEW OF THE APPRAISAL The appraisal review can be divided into two steps: 1. Review the overall appraisal assignment and process 2. Review for technical accuracy Reviewing the Appraisal Process 1. Reconsider the overall appraisal assignment. Have you: a. Precisely located and identified the property? b. Clearly defined the property rights to be appraised? c. Pinpointed the date as of which the value opinion applies? d. Given a formal definition of the type of value stated to be the purpose of the appraisal? 2. Review the relevance of the value approaches applied, considering: a. The type of property being appraised b. The purpose of the appraisal Technical Review 1. Check all calculations and measurements for accuracy. 2. Check all data for completeness and accuracy. 3. Check all procedures for consistency. a. Was the highest and best use as if vacant used as the basis for market value? b. Is the property age used in the sales comparison approach the same as in the cost approach? c. Were the features rated as desirable in the sales comparison approach considered as such in estimating market rents? d. Was any obsolescence recognized in the cost approach also adjusted for in the sales comparison and income approaches? 4. Use the market insight gained in the appraisal to reconsider the adjustments, judgments, and/or assumptions that were made.
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a. Are they still appropriate? b. Are they still reasonable? 15.2 RECONCILING THE VALUE APPROACHES Appraising the Appraisal This step is an evaluation of each value approach, the data used, and the range of indicated value for each. How Appropriate Is the Approach? To answer this question, the appraiser should consider the: 1. Purpose of the appraisal 2. Type of property being appraised 3. State of the market 4. Strengths and weaknesses of the approaches used Evaluating the Data 1. Review the adequacy of the data used in each approach. Data should be: a. Pertinent to the approach b. Reliable enough to support the validity of the approach c. Sufficient in quantity 2. Review the assumptions made in each approach. a.
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Module09 - Outline - Module 09 Reconciling the Value...

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