The step-by-step process of writing an Appraisal Report
REGIONAL MARKET ANALYSIS
A survey of the industries and businesses that generate employment and income in a community. This is studied to predict population, income, or other variables that affect the real property values of land use.
What Information is found in this section?
1. Environmental: Climate & Transportation (airports, freeways, railroads, etc.)
2. Social: Population Statistics such as Median Age; Housing Statistics such as number of Households, Homeowners, Renters, and Vacant Housing
3. Education: Colleges in the area and Graduation Rates
4. Economic: Unemployment Rates in the County, State, and Country
5. Labor Force by Industry
6. Major Employers in the County
COMMUNITY ANALYSIS
In depth review of the property's neighborhood
What information is found in this section?
1. Neighborhood Description: What landmarks are to the west, east, north, and south of the property?
2. Access & Linkages: What major interstates are nearby, major roadways, public transportation, and how far is the largest airport?
3. Local Area Demographics: What does the population growth and household income look like in the next 5 years?
4. Development Trends: What big projects are happening nearby?
5. Zoning & Land Use Plans: What is the subject property zoned as?
SITE ANALYSIS
What information is found in this section?
The identification and analysis of the characteristics that create, enhance, or detract from the utility and marketability of the site (land that has been improved or is ready to be used for a specific purpose). This analysis relies upon the legal deed description in conjunction with the county's GIS system, and physical inspection of the site.
IMPROVEMENT ANALYSIS
What information is found in this section?
Analysis of the additions to land to make property usable, such as curbs, sidewalks, streetlights, sewers, drains, and fills.
On-site improvements include grading, landscaping, paving, and utility hookups. Off-site improvements include streets, curbs, sidewalks, drains, and the connection of utility lines. Above shows an example of what an Improvement Analysis may look like in an Appraisal Report.
TAXES & ZONING
What information is found in this section?
Tax Rate is the factor used to calculate the total tax of a property, typically expressed in dollars per $100 or $1,000 (mills) of assessed value. This is calculated by dividing the total amount of taxes for a community by the total assessed value of all the properties in the community.
Zoning Analysis is a depiction of what is permitted and/or required versus what is proposed for a particular project and its respective zoning lots. The zoning map to the left depicts labeled zoning district divisions that are defined in a municipal zoning ordinance.
The ordinance typically recites the land uses permitted in each zoning district along with other restrictions.
HIGHEST and BEST USE
1. The reasonably probable use of property that results in the highest value. The four criteria that the Highest and Best Use must meet are Legal Permissibility, Physical Possibility, Financial Feasibility, and Maximum Productivity. These four criteria can be seen in the above graphic.
2. The use of an asset that maximizes its potential and that is possible, legally permissible, and financially feasible.
3. [The] highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future.
4. [For fair value determination] the use of non-financial asset by market participants that would maximize the value of the asset or the group of assets and liabilities within which the asset would be used. The highest an best use of a non-financial asset takes into account the use that is physically possible, legally permissible, and financially feasible.