A basic function of nearly all real estate transactions is a principle or feature called an appraisal. An appraisal is an opinion of value. There are three methods of appraisal: The cost approach, the income approach and the comparative market data approach. The appraisal involves a process of collecting, analyzing and reporting data or information pertaining to a specifically described parcel of real estate ascribing to it a statement of value.

There is a multitude of reasons or purposes for an appraisal. They may be fair market value purchase and sale, loan purposes, estate settlement, insurance coverage or condemnation. The intended use of the report is given. The date of inspection is stated and the date of valuation is established. The marketing time period and exposure time are important in the case of the market value appraisal. Obviously, depending upon the purpose for the appraisal and for whom the appraisal is ordered, the type, length and coverage of essential elements may vary. Most generally, however, the following are fundamental parts to an appraisal:

The subject property is identified by description, characteristics, narrative and photograph. The setting or location is described and placed in relation to adjacent properties and neighborhood, including access, services and impact by and for various uses which may impinge upon the use of the subject for a specific use. The scope of the appraisal is given, wherein the appraiser states the steps taken and the process followed to achieve the result provided with the report.

In order to make a report of value meaningful, it must also include any hypothetical conditions that might bear upon the subject property. Likewise, unusual or extraordinary factors or assumptions that may be contributing factors or suppliers of information or delivery of services together with the stated or intended use of the subject property may all blend together to achieve the desired end product.

The appraiser will attach or append the appraiser’s certification to the property report. This certification provides the qualifications of the appraiser, the summary of the general process taken, a disclosure or disclaimer of any bias or personal interest in or about the property the appraiser may have and the general identification of objective or subjective facets that may influence the determination and statement of value.

St. George Realtor Jim Coleman is an associate broker and partner/owner of ERA Brokers Consolidated. He specializes in residential, investment and commercial real estate. You can contact him via e-mail at jim@realtorjimc.com, by phone at (435) 674-0600 or by mail to: Jim Coleman, 201 E. St. George Boulevard, St. George, UT 84770.