Basic Appraisal Procedures Residential Applications & Model Appraisals 15-13 Uniform Residential Appraisal Report (URAR) Model Appraisal On the following pages are examples of a completed Fannie Mae/Freddie Mac 2005 Uniform Residential Appraisal Report and Exterior Only Appraisal Report of the same property. The forms have been cut up to permit a larger and easier to read display of the form.
15-14 Residential Applications & Model Appraisals Basic Appraisal Procedures URAR Model Appraisal: Subject & Contract URAR Model Appraisal: Neighborhood & Site 100
Basic Appraisal Procedures Residential Applications & Model Appraisals 15-15 URAR Model Appraisal: Improvements 1 x $5,000
15-16 Residential Applications & Model Appraisals Basic Appraisal Procedures URAR MODEL APPRAISAL - Sales Comparison Approach Grid (1) 1 months ago 2 months ago 2 months ago Good/Superior -10,000 40 40 40 40 1,875
Basic Appraisal Procedures Residential Applications & Model Appraisals 15-17 URAR Model Appraisal: Sales Comparison Approach (2) 10 Two Years OverThreeYears Over Three Years 1 2 URAR Model Appraisal: Reconciliation 3/12
15-18 Residential Applications & Model Appraisals Basic Appraisal Procedures past 3 years. URAR Model Appraisal: Additional Comments 10 subject house is the same age as the typical house in this neighborhood. other Comparable Sales #1 & #2 have the same influence. Sale #3 does not. [See Additional Comments.]
Basic Appraisal Procedures Residential Applications & Model Appraisals 15-19 URAR Model Appraisal: Cost Approach 7,000 16,192 91,600(r) 18,000(r) 11,500(r) 229,000(r) 121,000(r) 108,000 155,000 URAR Model Appraisal: Income Approach (GMRM) URAR MODEL APPRAISAL: PUD Information
15-20 Residential Applications & Model Appraisals Basic Appraisal Procedures URAR Model Appraisal: Page 4
Basic Appraisal Procedures Residential Applications & Model Appraisals 15-21 URAR Model Appraisal: Page 5
15-22 Residential Applications & Model Appraisals Basic Appraisal Procedures URAR Model Appraisal: Page 6
Basic Appraisal Procedures Residential Applications & Model Appraisals 15-23 URAR Model Appraisal: Page 6 (continued) * * Indicates information that is personal to the Appraiser and Supervisory Appraiser who sign the appraisal
15-24 Residential Applications & Model Appraisals Basic Appraisal Procedures URAR Model Appraisal: Addenda: Sales Contract
Basic Appraisal Procedures Residential Applications & Model Appraisals 15-25 URAR Model Appraisal: Addenda: Photographs of Subject Street & Comparable Sales
15-26 Residential Applications & Model Appraisals Basic Appraisal Procedures URAR Model Appraisal: Addenda: Building Sketch
Basic Appraisal Procedures Residential Applications & Model Appraisals 15-27 URAR Model Appraisal: Addenda: Neighborhood Map
15-28 Residential Applications & Model Appraisals Basic Appraisal Procedures URAR Model Appraisal: Addenda: Community Map
Basic Appraisal Procedures Residential Applications & Model Appraisals 15-29 URAR Model Appraisal: Addenda: Regional Map
15-30 Residential Applications & Model Appraisals Basic Appraisal Procedures URAR Model Appraisal: Addenda: Single - Family Comparable Rent Schedule similar to the similar to the superior 2
Basic Appraisal Procedures Residential Applications & Model Appraisals 15-31 URAR Model Appraisal: Addenda - Additional Comments ADDITIONAL COMMENTS: The interior and equipment are typical of houses in this neighborhood. The appraised value includes only those items of equipment that are considered to be part of the real estate. The house is well maintained. No significant repairs are currently needed. See Environmental Addenda for additional information on environmental hazards. SITE: The subject site is typical of the neighborhood. The were no observed environmental hazards on the site. There were typical utility easements for electricity, sewer and telephone which have no effect on the value. There were not apparent adverse easements, encroachments, special assessments, slide areas, etc. on the site or comparable properties that required adjustments. The subject property is near the railroad track and industrial area. COST APPROACH: This house is 40 years old. It does not need any modernization. The bathrooms, kitchen, mechanical equipment and other features of the house meet the current standards for houses of this age in this market. Included in the value of the site improvements are the walks, driveways, fences, utility connections and landscaping. The house has a general lack of storage space. $4,000 of functional obsolescence was estimated for this deficiency. There is no eating area in the kitchen which is expected in this market. $4,000 of functional obsolescence was estimated for this deficiency.. There is only a crawl space under the house in a market that prefers basements. $8,000 of functional obsolescence was estimated for this deficiency. In addition the reproduction cost does not include the cost of a basement so the difference for a house with and without a basement would be greater than $4,000. The domestic solar hot water heater (which is less than a year old) cost $7,000. It adds only $5,000 in value, and therefore it suffers $2,000 functional obsolescence. The subject site is near the railroad tracks. 5% external obsolescence is estimated to be caused by being in close proximity to the railroad tracks and industrial buildings. Comparable Sales #1 and #2 are also near the railroad track and industrial buildings, therefore no adjustment is needed. Comparable Sales #3 is not effected by this external obsolescence therefore a minus $10,000 adjustment is made to reflect this difference between comparable sale #3 and the subject property. SALES COMPARISON APPROACH: The comparable sales were verified and no personal property was included in their sale prices. All comparable sales are closed sales. In order to locate these comparable sales, we checked the appraisals we previously made in the area, the Local Data Center, MLS Service, and our own files.
15-32 Residential Applications & Model Appraisals Basic Appraisal Procedures The comparable sales were verified by the sources shown in the report, and the appraiser was able to ascertain that there were no significant sales concessions, special financing, or other special considerations. The dates of sale reported are the closing dates. Many comparable closed sales were considered in making this appraisal. The three closed sales displayed are considered to be the most comparable and the best indicators of value for the subject property. Most weight is given to Comparable #2 because it required the smallest amount of adjustment, is in a similar location to the subject, and has the most reliable adjustments. INCOME APPROACH: Good rental data and information about houses that were rented when they were sold was available in this neighborhood to develop an Estimated Market Rent and Gross Rent Multiplier. COMPETENCY: The Appraiser and the Supervisory Appraiser, both signers of this report, believe that they are competent to make this appraisal based on their experience and educational background.
Basic Appraisal Procedures Residential Applications & Model Appraisals 15-33 Notes
15-34 Residential Applications & Model Appraisals Basic Appraisal Procedures Exterior - Only Inspection Residential Appraisal Report (2055) - Model Appraisal 15.15 The following is quoted from the Fannie Mae announcement that pertains to the Exterior- Only Inspection Residential Appraisal Report dated March 2005 and available on the Fannie Mae web site: www.efanniemae.com USE This report form is designed to report an appraisal of a one-unit property or a one-unit property with an accessory unit (including a unit in a planned unit development (PUD)), based on an exterior only inspection of the subject property from the street. This report form is not designed to report an appraisal of a manufactured home or a unit in a condominium or cooperative project. The appraiser must be able to obtain adequate information about the physical characteristics (including but not limited to, condition, room count, gross living area, etc.) of the subject property from the exterior-only inspection and reliable public and/ or private sources to perform this appraisal. The appraiser should use the same type of data sources that he or she uses for comparable sales such as, but not limited to, multiple listing services, tax and assessment records, prior inspections, appraisal files, information provided by the property owner, etc.
Basic Appraisal Procedures Residential Applications & Model Appraisals 15-35 Exterior-Only Inspection Residential Appraisal Report (2055) Model Appraisal Report: Subject & Contract 1,99 Exterior-Only Inspection Residential Appraisal Report (2055) Model Appraisal Report: Site 1
15-36 Residential Applications & Model Appraisals Basic Appraisal Procedures Exterior-Only Inspection Residential Appraisal Report (2055) Model Appraisal Report: Improvements 197_
Basic Appraisal Procedures Residential Applications & Model Appraisals 15-37 Exterior-Only Inspection Residential Appraisal Report (2055) Model Appraisal Report: Sales Comparison Approach Grid (1) 1 month ago 2 months ago 2 months ago 40 40 40 40
15-38 Residential Applications & Model Appraisals Basic Appraisal Procedures Exterior-Only Inspection Residential Appraisal Report (2055) Model Appraisal Report : Sales Comparison Approach Grid (2) 10 Two Years Over Three Years Over Three Years 1 Exterior-Only Inspection (2055) Model Appraisal Report: Reconciliation 155,000 3/12
Basic Appraisal Procedures Residential Applications & Model Appraisals 15-39 Exterior-Only Inspection Residential Appraisal Report (2055) Model Appraisal Report: Additional Comments past 3 years. 10 subject house is the same age as the typical house in this neighborhood. other Comparable Sales #1 & #2 have the same influence. Sale #3 does not. [See Additional Comments.]
15-40 Residential Applications & Model Appraisals Basic Appraisal Procedures Exterior-Only Inspection Residential Appraisal Report (2055) Model Appraisal Report - Cost Approach Exterior-Only Inspection Residential Appraisal Report (2055) Model Appraisal Report - Income Approach Exterior-Only Inspection (2055) Model Appraisal Report - Income Approach Exterior-Only Inspection Residential Appraisal Report (2055) Model Appraisal Report - PUD Information
Basic Appraisal Procedures Residential Applications & Model Appraisals 15-41 Exterior-Only Inspection Residential Appraisal Report (2055) Model Appraisal Report - Page 4
15-42 Residential Applications & Model Appraisals Basic Appraisal Procedures Exterior-Only Inspection (2055) Model Appraisal Report: Page 5
Basic Appraisal Procedures Residential Applications & Model Appraisals 15-43 Exterior-Only Inspection Residential Appraisal Report (2055) Model Appraisal Report: Page 6
15-44 Residential Applications & Model Appraisals Basic Appraisal Procedures Exterior-Only Inspection Residential Appraisal Report (2055) Model Appraisal Report: Page 6 * This information is based on the Appraiser s and Supervisory Appraiser s (only if required) personal data. Exterior-Only Inspection Residential Appraisal Report (2055)-14 Exterior-Only Inspection (2055) Model Appraisal Report: Addenda The requirements for the addenda of an Exterior-Only Inspection Residential Appraisal Report (2055) are the same as for the Uniform Residential Appraisal Report (URAR). The addenda exhibits on the URAR Model Appraisal Report are the same as the this Exterior-Only Inspection (2055) Model Appraisal Report - Addenda
Basic Appraisal Procedures Residential Applications & Model Appraisals 15-45 Narrative Appraisal Reports The appraiser is afforded the best opportunity to support opinions and conclusions and to convince the client of the soundness of their value estimate in a narrative appraisal report. Its content and arrangement may vary. A typical report follows the table of contents shown in Fig. 15-1. Some appraisal organizations have their own specific guidelines for the preparation of narrative demonstration appraisals to be used for credit towards their designations. FIG. 15-1 CONTENTS OF A TYPICAL NARRATIVE APPRAISAL REPORT Part One - Introduction Title Page Letter of transmittal Certification Table of contents Qualifications of the appraiser Photographs of the property Summary of salient facts and conclusions Part Two - Premises of the Appraisal Underlying assumptions and limiting conditions Intended use Intended user Client Market value definition Effective date of appraisal Date of report Property rights appraised Part Three - Presentation of Data Identification of the property Identification of non-realty items Regional map Regional data Community map Community data Neighborhood boundary map Neighborhood data Zoning data Assessment and tax data Site plan Site data Description of the improvements History of the property Ownership history Floor plans
15-46 Residential Applications & Model Appraisals Basic Appraisal Procedures Part Four - Analysis of Data and Conclusions The appraisal process Highest and best use of the site as though vacant Highest and best use of the property as improved Cost approach including site valuation Sales comparison approach Income approach Reconciliation and final value estimate Part Five - Addenda Detailed legal description Additional regional, community, neighborhood data and statistics Additional photographs Additional plans Other appropriate items Summary The valuation process is the orderly step-by-step procedure an appraiser follows to produce a credible appraisal. It begins with the definition of the problem to be solved and concludes with a report of the solution in the form of an estimate of the defined value that is sought. The purpose of the appraisal process is to provide the outline for making thorough, accurate appraisals in an efficient manner. Most appraisers would agree that making appraisals is an art, not a science. They would further explain that the profession is constantly trying to make appraising more scientific. A big step toward this goal has been the development of the valuation process. Within this theoretical framework, a concise, logical and clearly supported value conclusion can be presented which meets the needs of clients as well as the standards of the appraisal profession. New techniques using statistical methods to abstract information from the market, such as automatic valuations models using multiple regression analysis and other statistical techniques, are also making the appraisal process more scientific. The final step of the valuation process is to produce an appraisal report. What type of report is produced should be determined when the appraiser and the client determine what the client s needs are, who the intended user(s) are, what the intended use(s) of the appraisal will be will there be any additional intended users? It is one of the many things to be decided as part of the process of agreeing upon the scope of work. Appraisal reports can be oral reports, letter reports, form report or narrative reports. The USPAP has requirements for producing each of these types of report which must be strictly followed. It is the appraiser s responsibility to produce a credible appraisal report that will satisfy the needs of the client and all identified intended users.