The Valuation Process

1. Chapter 4 The Valuation Process

2. The Valuation Process Chapter 4

3. Definition of the Appraisal Problem • Identification of the Client and Intended Users of the Appraisal • Identifying the Intended Use of the Appraisal • Purpose of the Appraisal • Effective Date of the Value Opinion • Identification of the Characteristics of the Property • Extraordinary Assumptions and Hypothetical Conditions • Limiting Conditions Chapter 4

4. Scope of Work • The level of detail? • What were you asked to do? • What did you do? • How deep did you dig? • How well did you inspect? Chapter 4

5. Data Collection and Property Description • Market area data • General characteristics of the region, city, and neighborhood • Subject property data • Specific characteristics of land and improvements • Personal property • Business assets Chapter 4

6. Data Collection and Property Description, continued • Comparable property data • Comparable sales • Comparable listings (offerings) • Vacancy rates • Cost and depreciation comparables • Income and expense comparables • Capitalization rates (RO, EGIM, GRM, etc.) Chapter 4

7. Data Analysis • Market Analysis • Demand Studies • Supply Studies • Marketability Studies • Highest and Best Use Analysis • Site as though vacant • Ideal improvement • Property as improved • Consistent Use—the improvements contribute based on the highest and best use of the site Chapter 4

8. Land Value Opinion • Sales Comparison Approach • Allocation • Extraction • Subdivision Development Analysis • Land Residual Technique • Ground Rent Capitalization Chapter 4

9. Application of the Approaches to Value • Cost Approach • Sales Comparison Approach • Income Capitalization Approach • Reconciliation of Value Indications and Final Opinion of Value • Report of Defined Value Chapter 4

10. Problems • Suggested solutions begin on page 365. Chapter 4