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APPRAISAL REPORT WRITING

1. The last step in the appraisal process before the final report is prepared is the reconciliation or
correlation of values as indicated by each of the three appraisal approaches (MDA, CA and ICA). In
reconciliation process the soundness of the methods and the result of each approached are weighed
objectively to arrive at the single best and most supportable conclusion of value.

2. RECONCILIATION OR CORRELATION –
1. Involves careful analysis and judgment for which no mathematical or mechanical formula can
be substituted
2. It is not simply a matter of averaging the three indicated value
3. It is a final statement of reasoning and weighing of the relative importance of the facts, results
and conclusions of each of the approaches that finish an entirely justified final opinion of
market
4. Is the last stage in appraisal process is reconciliation of the values by each of the three
appraisal approaches: Market Data or Sales Comparison Approach; Cost Approach and
Income Capitalization Approach

3. In the process of reconciliation or correlation, the Appraiser reviews his/her work and consider
factor for the reliability of each methods and the result of each approach which are to be weighted
objectively to arrive at the single best and most acceptable or adequate conclusion of value,
Four factors to be taken:
1. Definition of value sought pursued
2. Amount and reliability of the data collected in each approach
3. Inherent/Essential strengths and weaknesses of each approach
4. Relevance of each approach to the subject property under assignment and market
behavior/performance

4. One the Appraiser is certain of the soundness of the indicated values, he/she then should decide
which is the most reliable in terms of value wanted for the Subject of the assignment.

5. Appraiser’s report becomes the Appraiser’s representative to the client and the users
thereof. It is something the Appraiser has to showcase as an accurate opinion property value based
on analysis of historical data and facts at hand in accordance with the generally accepted valuation
standards and principles of value. A readable, well-organized report creates a favorable impression
of the Appraiser’s profession competence and trustworthiness.

6. APPRAISAL REPORT IS IMPORTANCE BECAUSE IT –


1. Communicates the conclusion of an appraisal assignment to the client and/or users and other
party readers
2. Confirm the basis of valuation
3. Show the purpose of the appraisal/valuation and the assumptions or limiting conditions
underlying the valuation/appraisal and
4. Show the analytical process and realistic data used to arrive at the value conclusion
5. It contains information about the Subject of the assignments as well as relevant facts like:
• The property and property rights subject to the assignment
• Basis of the appraisal and the intended purpose thereof
• All underlying assumptions and limiting conditions
APPRAISAL REPORT WRITING

• The extent of the inspection references to the applicability of standards and any
required disclosures
• Specifies the dates of valuation and reporting
• The name of the Appraiser, the date of the appraisal and the Appraiser’s signature
7. APPRAISAL REPORT – is
1. Any written or oral communication of an appraisal or review or analysis of documents
that is transmitted by the Appraiser to the client upon completion of an assignment
2. A statement of material facts or conditions on which another person can rely because it
cannot be denied at a later date
3. A document that records the instructions for the assignment, the basis and purpose of the
appraisal and the results of the analysis that led to the opinion if value
4. A document that explains the analytical processes undertaken in carrying out the
appraisal/valuation and present meaningful information used in the analysis. The type,
content and length of a report vary according to the intended user, legal requirements, the
property type and the nature and complexity of the assignment.

8. ORAL REPORT
1. The results of an appraisal assignment which is verbally communicated to a client or
presented before a court either as expert testimony or by means of deposition
2. A report communicated orally to a client must be supported by a work file and at a
minimum, followed-up by a written summary of the valuation

9. WRITTEN REPORT –
1. The results of an appraisal/valuation assignment communicated to a client in writing,
which includes electronic communication
2. May be detailed narrative documents containing all pertinent materials examined and
analyses performed to arrive at a value conclusions or abbreviated narrative documents,
including periodic updates of value, forms used by governmental and other agencies or letters
to clients.

10. CARDINAL RULES IN APPRAISAL REPORT WRITING.


1. It should be clear and concise, a presentation of a professional and technical paper; hence, it
should be simple and conventional message to the client and/or reader
2. It should not be futile that it will tend to confuse the client or reader rather than convincing
them on the conclusions reached
3. The necessary essentials of good grammar and compositions are rules of consideration

11. CARDINAL RULES IN REPORT WRITING ON GOOD GRAMMAR AND COMPOSITION:


1. Use Simple Words
2. Do not Use Insincere Words
3. Avoid worn-out expressions
4. Let important ideas Stand-Out
5. Develop Short Paragraphs
6. Use graphic aids and Table

KINDS/TYPES OF APPRAISAL REPORTS


1. CERTIFICATE/LETTER FORM –
➢ It is simple Certificate or Letter where the Appraiser’s Opinion of Value is stated
APPRAISAL REPORT WRITING

➢ In most sense, it is not an Appraisal Report because it does not contain or state any
supporting date or interpretation leading to the
➢ Appraiser’s conclusion of value
➢ Most often, Professional Practitioners do not encourage it for a lot of reasons
➢ A document which the appraiser certifies the amount of the valuation of the property
➢ It contains the statement of the
• Appraisal/Valuation date and purpose of the assignment
• Date of the certificate
• Assumptions upon which the appraisal/valuation was based
• Name, address and qualification of the Appraiser/Valuer
• Statement that Appraiser’s fee is not contingent upon any aspect of the report
• Appraiser’s statement in compliance of the ethical and professional standards in the
conduct of the appraisal

2. STANDARD FORM REPORT – (Restricted Report)


➢ The kind of report usually by banks, financial institutions, insuranc e companies and
some government bodies
➢ Type of report just a simple filling-up of blanks
➢ Institutions and government agencies frequently find this report the best to suit their
purposes
➢ It enables those responsible for reviewing the appraisals to know exactly where in the
report to find any particular category/item of data and completion of the form reports is
to provide timely submissions of the appraiser’s value conclusion
➢ Permits the client to readily review and comprehend the body report.

3. NARRATIVE REPORT – (Self-Contained)


➢ Is comprehensive or somewhat complete type of Appraisal Report
➢ It affords the Appraiser the opportunity to support his opinions and conclusions of value
which would convince the Reader/Client of the soundness of his estimate
➢ A summary of the appraisal methods and techniques which the appraiser has applied to
factual material within the framework of the appraisal process to arrive at conclusion of
value
➢ Reflects the Appraiser’s ability to understand the basic economic appraisal principles, his
ability to interpret pertinent data and judgment in selecting the appropriate appraisal
method and technique as well as his skill in applying them to derive An estimate of a
specifically defined value
➢ Facts and reasons

12. WHAT IS COMPLIANCE STATEMENT OR CERTIFICATION OF VALUE?


It refers to an affirmative statement attesting to the fact that the Appraiser/Valuer has followed the
ethical and professional requirements of the International Valuation Standards (IVS) Code of
Conduct in performing the assignment.

13. IN COMPLIANCE WITH THE MANDATE (IVS CODE OF ETHICS) EACH APPRAISAL REPORT
SHOULD:
1. Clearly and accurately set forth the conclusions of the appraisal/valuation in a manner that
is not misleading
APPRAISAL REPORT WRITING

2. Identify the client, the intended use of the Appraisal/valuation and the relevant/important
dates –
The dates as of which the value estimate applies/effective
The date of the report
The date of the inspection
3. Specify the basis of the appraisal including the type and definition of value (when any
component is valued more than one bases a clear distinction must be made between the
bases)
4. Identify and describe the
Property rights or interests to be valued
Physical and legal characteristics of the property
Classes of property included in the appraisal other than the primary property
category
5. Describe the scope/extent of the work used to develop the valuation
6. Specify all assumptions and limiting conditions upon which the value conclusion is
contingent
7. Identify special, unusual or extraordinary assumptions and address the probability that such
conditions will occur
8. Include a description on the information and data examined, the market analysis performed,
the valuation approaches and procedures followed and the reasoning that supports the
analyses, opinions and conclusions in the report
9. Contain a clause specifically prohibiting the publication of the report in whole or in part or
any reference thereto or to the valuation figures contained therein or to the names and
professional affiliation of the Appraiser/Valuers without the written approval of the
Appraiser/Valuer
10. Name, professional qualifications and signature of the Appraiser

14. In compliance with IVS and Generally Accepted Valuation Principles (GAAP), Appraiser/Valuers
are mandated to adhere to all provisions of the International Valuation Standards (IVS) vis-à-vis
Philippine Valution Standards (PVS) Code of Conduct pertaining to Ethics, Competence, Disclosure
and Reporting
a. ETHICS: Appraiser/Valuers should at all times maintain a high standards of honesty and
integrity and conduct their activities in a manner not detrimental to their clients, the
public, their profession, or their respective national professional valuation body.
b. COMPETENCE: Appraisers/Valuers must have the knowledge, skill and experience to
complete the assignment efficiently in relation to an acceptable professional standard.
c. DISCLOSURE : It is essential that Appraisers/Valuers develop and communicate their
analyses, opinions, and conclusions to users of their services through Appraisal
Reports that are meaningful and not misleading and that disclose anything that might be
taken to affect objectivity such as the Appraisal report should –
1. Provide sufficient information to describe the work performed, the conclusions
reached, and the context in which they were shaped
2. Set out a clear and accurate description of the scope of the assignment and its purpose
and intended use, disclosing any assumptions, hypothetical scenarios, or limiting
conditions that directly affect the valuations and, where appropriate, indicating their
effect on the value
3. Disclosure of any direct or indirect personal or corporate relationship with the entity
controlling the asset should be disclosed in the valuation report
APPRAISAL REPORT WRITING

4. If valuer is acting as an External Valuer but also has worked in a fee earning capacity
for the client, such relationship must be disclosed lest a third party, having to rely on
the valuation, deem the Valuer’s objectivity compromised
5. Any limitations to quality of the service that a Valuer is able to offer must be disclosed
whether this is due to externally imposed constraints or peculiar to the Valuer or the
assignment. Whether outside assistance has been sought the Valuer must disclose the
identity of the assistants, the extent of reliance on, and the nature of, such assistance
6. A Valuer must place a restriction against the publication of a valuation or its
conclusion without consent so that the Valuer can keep a measure of control over the
form and context in which his pr her valuations are publicity disclosed
7. A valuer should disclose any departures from the International Valuation Standards.
Provided such departure is reasonable, complies with the principles of ethics and
measures of competence, and a rationale for such departure is provided in the
valuation report.

15. ASSUMPTIONS ARE SUPPOSITIONS TAKEN TO BE TRUE.


1. Assumptions involve facts, conditions, or situations affecting the subject of, or approach to, a
valuation but which may not be capable or worthy of verification
2. They are matters that, once declared, are to be accepted in understanding the valuation
3. All assumptions underlying a valuation should be reasonable

16. All valuations are dependent to some degree on the adoption of assumptions. In particular, the
definition of Market Value incorporates assumptions to ensure consistency of approach and the
Valuer may need to make further assumptions in respect of facts which cannot be known or facts
which could be determined.

17. A STATEMENT OF LIMITING CONDITIONS is necessary in an appraisal because


1. It notifies the client of items subject to which the appraisal is made
2. It protects the appraiser against conditions which he or she does not have control and
3. It limits the liability of the appraiser
4. Limiting Conditions are constraints imposed on valuations
• BY CLIENTS – (e.g., where the Valuer is not permitted to investigate fully one or more
of the significant factors likely to affect valuation);
• BY THE VALUER – (e.g., where the client may not publish the whole or any part of
the Valuation Report or Valuation Certificate without the Valuer’s prior written
approval of the form and context in which it may appear); or
• BY LOCAL STATUTORY LAW.
THREE MAJOR DIVISION OF AN APPRAISAL REPORT

a. PART I – INTRODUCTION
1. Title Page (Name of Appraiser/Client, Date of Appraisal, Type of Pro., Address)
2. Table of Contents
3. Letter of Transmittal
4. Summary of Salient and important Conclusions (Opinion of Value, HaBU, RCN, AGE, DEP, Net
Income, Reconciled Value.)
b. PART II – DESCRIPTION ANALYSIS AND CONCLUSION
1. Date and Purpose of the appraisal
2. Definition of value
APPRAISAL REPORT WRITING

3. Identification of the appraised property, its legal description and the specific underlying
assumptions
4. Definition of Property rights appraised and the date of valuation
5. History description of improvement
6. City, data, zoning, utilities and taxes
7. HABU Analysis (Physically possible, Legally permissible, Financially feasible, Max profit)
8. Development of an indications and conclusions of value
9. Qualifying and Limiting Conditions (includes general underlying assumptions)
• Notifies subject of items to clients
• Protect appraiser
• Limits liability
10. Certification of value if not combined with letter of transmittal
11. Qualifications of Appraiser
c. PART III – ADDENDA
• Maps, plats, photographs
• Detailed statistical data
• Compound lay-out and floor plan of improvements, if any
• Other pertinent data/exhibits

18. GUIDELINES IN TRANSMISSION OF APPRAISAL REPORTS THROUGH ELECTRONIC MEANS:


1. The software should provide for security of transmission
2. The origin, date and time of the sending including the destination, date and time of receipts
should be identified
3. The Software should allow confirmation that the quantity of the data transmitted
corresponds to that received and should render as “ready-only” to all except the author
4. The appraiser should ensure that the digital signature is/are protected and fully under the
Appraiser’s control by means of passwords (PIN numbers), hardware devices (secure cards)
or other means
5. A true electronic and/or paper copy of an electronically transmitted report must be retained
by the Appraiser within 5 years as required by law

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