Godfrey Appraisal Services is able to prepare a wide variety of appraisals to meet client needs. For this reason it is important to distinguish between appraisal development and appraisal reporting.
Development of
an appraisal is classified as Complete
or Limited, depending on the
approaches to value that are employed. Lenders commonly use both appraisal
types.
A Complete Appraisal normally includes all three
traditional approaches to value; depreciated cost, sales comparison, and income
capitalization. In certain situations an appraisal may exclude one of these
approaches, because it is not applicable, and still be a Complete Appraisal.
A Limited Appraisal intentionally excludes one or two applicable approaches that might produce credible value indications. Limited Appraisals are usually selected to reduce the cost of an appraisal, or when the parties involved believe value is best reflected by development of some, but not all, approaches to value. Clients accept that a Limited Appraisal can produce a value conclusion that is less reliable than a Complete Appraisal. However, it is the appraiser’s responsibility to always use the most applicable approach to value.
Reporting of an
appraisal may be in one of three report formats; a Self-Contained, Summary or
Restricted report. The type of report selected does not influence the appraisal
development process; a Complete or a Limited appraisal may be reported in any of
these formats.
A Self-Contained report includes discussions of all
pertinent influences on the valuation process. This is normally characterized by
a complete discussion of the city, the subject neighborhood’s composition,
characteristics and trends, a thorough description of the subject and its
highest and best use, detailed presentations, discussions and analyses of market
data, and a discussion of the reconciliation process and final conclusion. The
Self-Contained report is a thorough report containing all pertinent supporting
documentation.
A Summary report includes brief discussions or statements
on the pertinent influences in the valuation process. This typically includes a
synopsis of city economics, a brief neighborhood discussion, a brief description
of the subject and its highest and best use, charted presentations of market
data and short summaries of analyses and conclusions, and a simple summary of
the final value conclusion. A Summary report is an abbreviated report containing
limited documentation. Summary reports are typically selected to reduce the cost
of an appraisal, or by clients who are very familiar with a given market and
property type.
A Restricted report is an extremely brief report that includes little more than a simple identification of the subject property, a statement of the approaches utilized, and the appraiser’s conclusion. This type of report has very restricted utility. Clients should not expect to completely understand the report because of the lack of discussion/documentation, and the report cannot be presented to a third party. Restricted reports have limited utility, and are rarely acceptable to lenders.