This is a short synopsis of how an appraisal is prepared.

• The appraisal process is the process of collecting, analyzing and reconciling data that relates to the property being appraised. This data is formatted in a logical order to lead the reader of the report to the same conclusion as the appraiser. There are several types of appraisal reports. The "Self Contained Appraisal" report, the "Summary Appraisal" report, and the "Restricted Appraisal" report. (These differences can be found by accessing the underlined text links above). The differences in the three types of reports is the level of detail presented to the reader/client. The "Self Contained Appraisal" is the most detailed of the three types of reports. This report type is generally prepared in a narrative format and for commercial properties. The "Restricted Appraisal" is the least descriptive of the three report types, and is restricted in its use to the client, and considers anyone else using the report as an unintended user. This report is primarily intended for the 2nd mortgage market under certain lender guidelines. The Summary Appraisal is the most popular type of report used for residential lending. This report is also used for a wide array of valuation assignments. (i.e.: Estates, Divorce, Setting Listing Prices, Insurance Claims, Liquidation, Court Testimony, Assessment Appeals, PMI Removal, Foreclosures and others.) Both the summary appraisal and Restricted Appraisals are generally prepared on a standardized form with the narrative in book form.
  
  
• The preparation of the appraisal generally begins with an interior and exterior inspection of the building and property. The appraiser looks for assets and detriments that the real estate offers by viewing the property with an objective/non bias eye.
  
  
• Some of the more important features of the property are gross living area, condition, quality of construction, location, layout, number of bedrooms and bathrooms and lot size to name a few. The appraiser also notes amenities such as  central a/c, fireplaces, decks, recent renovations, pool, fencing etc. It is important for the homeowner to point out amenities, or recent improvements that may not be obvious to the appraiser in a normal walk through of the subject property.
  
  
• The appraiser also makes an assessment of the neighborhood and surrounding area, noting the location of amenities which may be important to the average home owner and/or buyer. In some cases these same items may be a detriment to the property based on there proximity to the subject. Residential properties that are too close to non residential properties may be viewed as less desirable by the typical purchaser, and reflected as such in the appraisal report.
  
  

• The appraiser needs to confirm tax data, zoning classification, and to confirm sales in the area. This can be done through various different sources such as: public records, Multiple Listing Service (MLS), professional associations, publications, physical inspections and experts (builders, attorneys, lenders and others). When all the data has been gathered it is used to make a Highest & Best Use Analysis of the subject property. Never the less it is part of the appraisal process. The data collection, focuses on the three approaches to value. These approaches to value are the Cost Approach, the Income Approach, and the Market Data Approach. Not all three approaches to value are relevant in each appraisal assignment. Depending upon the assignment, the appraiser may choose not to use one or more of these approaches. (To find out more about these approaches please click on the underlined corresponding text links above).
  
  
• In the final stages of the appraisal process, the appraiser analyzes and adjusts the data collected. The appraiser reconciles the three approaches to value, giving greatest weight to the approach considered most appropriate for the property being appraised. If more than one approach to value is used in the appraisal report, each approach generally indicates a value that is reasonably close to the other approaches. After the report is finished a review of all appraisal reports are reviewed by a senior appraiser to check for consistency, accuracy, clarity and conformity to appraisal guidelines/regulations. Occasionally other experts will be hired to review our appraisals for better quality control. Once the review is complete the final changes are made and the appraisal report is published and bound. All clients receive two originals, except by prior arrangement.

Preparation For The Appraiser

• The homeowner/lender should have certain items available to the appraiser either when the property is inspected or prior to inspection. This will speed the process along smoothly. The appraiser needs a copy of the deed, or sales contract, a survey, and a copy of a recent tax bill. Please be sure to point out any recent improvements to the property. If you are aware of any recent sales in the area, that may be of help and be sure to point this out as well. The appraiser may or may not use all of the data that you supply, but you can be sure that the appraiser will appreciate your efforts and will consider them in the appraisal process. 
  
  Prior to your appointment with an appraiser, you may want to spruce up your home. You can find some helpful tips located on our home improvement page.

Knowing Your Rights!

• Under the Equal Credit Opportunity Act, your lender must provide you with a copy of the appraisal report upon your written request. If you are dissatisfied with any information contained in your appraisal report, you should contact your lender immediately.
  
  Below is an excerpt from the U.S. Department of Justice
  

CODE OF FEDERAL REGULATIONS
TITLE 12--BANKS AND BANKING
CHAPTER II--FEDERAL RESERVE SYSTEM
SUBCHAPTER A--BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
PART 202--EQUAL CREDIT OPPORTUNITY (REGULATION B)
REGULATION B (EQUAL CREDIT OPPORTUNITY)
Current through October 1, 1999; 64 FR 53565

§ 202.5a Rules on providing appraisal reports.

1. Providing appraisals. A creditor shall provide a copy of the appraisal report used in connection with an application for credit that is to be secured by a lien on a dwelling. A creditor shall comply with either paragraph (a)(1) or (a)(2) of this section.

    

   1. Routine delivery. A creditor may routinely provide a copy of the appraisal report to an applicant (whether credit is granted or denied or the application is withdrawn).
      
      
      
   2. Upon request. A creditor that does not routinely provide appraisal reports shall provide a copy upon an applicant's written request.

       

      1. Notice. A creditor that provides appraisal reports only upon request shall notify an applicant in writing of the right to receive a copy of an appraisal report. The notice may be given at any time during the application process but no later than when the creditor provides notice of action taken under § 202.9 of this part. The notice shall specify that the applicant's request must be in writing, give the creditor's mailing address, and state the time for making the request as provided in paragraph (a)(2)(ii) of this section.
         
         
      2. Delivery. A creditor shall mail or deliver a copy of the appraisal report promptly (generally within 30 days) after the creditor receives an applicant's request, receives the report, or receives reimbursement from the applicant for the report, whichever is last to occur. A creditor need not provide a copy when the applicant's request is received more than 90 days after the creditor has provided notice of action taken on the application under § 202.9 of this part or 90 days after the application is withdrawn.
         
         
2. Credit unions. A creditor that is subject to the regulations of the National Credit Union Administration on making copies of appraisals available is not subject to this section.
   
   
3. Definitions. For purposes of paragraph (a) of this section, the term dwelling means a residential structure that contains one to four units whether or not that structure is attached to real property. The term includes, but is not limited to, an individual condominium or cooperative unit, and a mobile or other manufactured home. The term appraisal report means the document(s) relied upon by a creditor in evaluating the value of the dwelling.

[58 FR 65661, Dec. 16, 1993]

For information on who the client is and client confidentiality please click here.