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Deciphering Property Appraisal Reports

Property appraisal reports may contain technical terms and numbers that can be challenging to understand for those not familiar with the appraisal process. Here's a guide to help readers decipher appraisal reports, including key terms and the final property value estimate:




1. Appraisal Date:

  • This is the date on which the appraisal was conducted. It's crucial to know when the property's value was assessed because market conditions can change over time.

2. Subject Property:

  • The subject property is the property being appraised. It includes details about its location, size, and a brief description of its features.

3. Comparable Sales (Comps):

  • These are properties similar to the subject property that were used as references for the appraisal. The appraiser compares the subject property to these comps to estimate its value.

4. Valuation Methods:

  • Appraisers typically use one or more of three main valuation methods: the Sales Comparison Approach, the Cost Approach, and the Income Approach. The report should explain which methods were used.

5. Property Description:

  • This section provides a detailed description of the subject property, including its size, layout, condition, and unique features.

6. Adjustments:

  • In the Sales Comparison Approach, the appraiser makes adjustments to the comps to make them more similar to the subject property. These adjustments account for differences in features and condition.

7. Market Conditions:

  • The report may discuss current market conditions and trends in the area, which can affect property values.

8. Final Estimate of Value:

  • This is the appraiser's estimate of the property's current market value. It's the amount that the property is valued at for the given appraisal date.

9. Reconciliation of Values:

  • If multiple valuation methods were used, the appraiser may reconcile these values to arrive at the final estimate of value.

10. Certification and Signature:

  • The appraiser certifies that the report was prepared in accordance with professional standards. Their signature indicates their responsibility for the report's accuracy.

11. Purpose of the Appraisal:

  • The report should state the purpose of the appraisal, such as for a mortgage application, estate planning, or investment analysis.

12. Use of the Appraisal:

  • Explain how the appraisal can be used. For example, it can be used for financing or investment decisions.

13. Definitions and Explanations:

  • Look for a glossary or explanations of technical terms and abbreviations used in the report.

14. Additional Commentary:

  • Some reports may include additional commentary or insights from the appraiser regarding the property's value and unique characteristics.

15. Market Value vs. Assessed Value:

  • Clarify that market value (appraised value) may differ from the property's assessed value for tax purposes.

16. Appraiser Contact Information:

  • Include the appraiser's contact information in case the reader has questions or needs further clarification.

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