What is an Appraisal Report?
USPAP, the governing standards for real estate and most business/personal property appraisals, recognizes “Appraisal Report” and “Restricted Appraisal Report” as the two appraisal report types available.
Most US States including Colorado have adopted USPAP standards as law.
An “Appraisal Report” is the most common type of appraisal. It can contain a moderate or extensive amount of information, depending on the assignment parameters and type of property being appraised. Compared to a “Restricted Appraisal Report” that has very limited information.
USPAP sets forth minimum criteria that an Appraisal Report must contain.
Colorado Appraisal Consultants often times will develop “Summary Appraisal Reports” and “Comprehensive Appraisal Reports”. The prior being slightly less detailed then the later. Both of these are still legally referred as as “Appraisal Reports” by USPAP.
An Appraisal Report contains a moderate or extensive level of detail, depending on the intended use of the report, scope of work property type and format (form or narrative).
Most residential and commercial appraisal reports are legally “Appraisal Reports” per USPAP standards.
Prior to 2014, USPAP recognized three types of appraisal reports:
After 2014, USPAP recognizes two types of appraisal reports:
- Restricted Appraisal Report
- Appraisal Report
The goal of the change was to make it easier for the public to understand report types.
Again, these standards set forth minimum requirements. Appraisers can still add in more information.
Lastly, the terms “Summary” and “Self-Contained” (or “Comprehensive”) can still be paired with “Appraisal Report”, even though there is only one minimum legal standard that applies, which is that of an Appraisal Report.
Appraisal Reports can have one, two, or three approaches to value, depending on the situation of the property and use of the appraisal.
The minimum reporting requirements of the Appraisal Report are as follows:
- State the identity of the client and any intended users, by name or type.
- State the intended use of the appraisal
- Summarize information sufficient to identify the real estate involved in the appraisal, including the physical, legal, and economic property characteristics relevant to the assignment.
- State the real property interest being appraised.
- State the type and definition of value and cite the source of the definition.
- State the effective date of the appraisal and the date of the report.
- Summarize the scope of work used to develop the appraisal.
- Summarize the information analyzed, the appraisal methods and techniques employed, and the reasoning that supports the analyses, opinions, and conclusions; exclusion of the sales comparison approach, cost approach, or income approach must be explained.
- State the use of the real estate existing as of the date of value and the use of the real estate reflected in the appraisal.
- When an opinion of highest and best use was developed by the appraiser, summarize the support and rationale for that opinion.
- Clearly and conspicuously state all extraordinary assumptions and hypothetical conditions, and, state that their use might have affected the assignment results.
- Include a signed certification in accordance with Standards Rule 2-3.
Appraisal Report Formats
Refer to our Value Vault resource section for additional appraisal definitions and appraisal related topics