The Student Handbook to T HE A PPRAISAL OF R EAL E STATE 1 The Valuation Process Chapter 4

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 4 2 The Valuation Process

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 4 3 Definition of the Appraisal Problem  Identification of the Client and Intended Users of the Appraisal  Identifying the Intended Use of the Appraisal  Purpose of the Appraisal  Effective Date of the Value Opinion  Identification of the Characteristics of the Property  Extraordinary Assumptions and Hypothetical Conditions  Limiting Conditions

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 4 4 Scope of Work  The level of detail?  What were you asked to do?  What did you do?  How deep did you dig?  How well did you inspect?

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 4 5 Data Collection and Property Description  Market area data  General characteristics of the region, city, and neighborhood  Subject property data  Specific characteristics of land and improvements  Personal property  Business assets

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 4 6 Data Collection and Property Description, continued Comparable property data  Comparable sales  Comparable listings (offerings)  Vacancy rates  Cost and depreciation comparables  Income and expense comparables  Capitalization rates (R O, EGIM, GRM, etc.)

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 4 7 Data Analysis  Market Analysis  Demand Studies  Supply Studies  Marketability Studies  Highest and Best Use Analysis Site as though vacant Ideal improvement Property as improved Consistent Use—the improvements contribute based on the highest and best use of the site

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 4 8 Land Value Opinion  Sales Comparison Approach  Allocation  Extraction  Subdivision Development Analysis  Land Residual Technique  Ground Rent Capitalization

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 4 9 Application of the Approaches to Value  Cost Approach  Sales Comparison Approach  Income Capitalization Approach Reconciliation of Value Indications and Final Opinion of Value Report of Defined Value

Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 4 10 Problems Suggested solutions begin on page 365.