Real Estate and Facilities

Operations Division

Standard Report Outline for Appraisals

Due Diligence Guidelines Contents

Prepared for the Board of Regents of the University System of Georgia

The Board of Regents (“Board”) intends the following Standard Report Outline for Appraisal as an aid to insure that appraisals not only meet minimum appraisal standards, but also meet the needs of the Board. While acceptance of appraisal reports does not require strict adherence to this outline, it does serve as the basis for the required review of all appraisals submitted to the Board. Strict adherence to the form of this outline, without satisfactorily addressing its spirit, does not guarantee acceptance of the appraisals. However, your compliance with the items contained within this outline will help assure a speedy review while minimizing any corrections or clarifications on your part.

The standard report outline should be utilized for all appraisals for the Board except for appraisals of residential property when, on a case by case basis, permission is specifically granted to use a summary appraisal report in a form consistent with the Uniform Residential Appraisal Report (Fannie Mae Form 1004). If such a form is utilized, then in addition to fully completing the form appraisal, the appraiser will include specifically items marked (*) in this outline.

Prior to submittal of an appraisal you should check all calculations again, proof read to insure that there are no typographical errors that might decrease the credibility of an otherwise fine report and sign the report in all the appropriate places.

I. Introduction
II. Factual Data
III. Valuation, Analysis and Conclusions
IV. Exhibits and/or Addenda


* I-1. Cover - A label or title on the outside cover of the report should identify the property, its area, the appraiser or appraisers, and the date of the report.
* I-2. Letter of transmittal - The letter of transmittal must include the date and opinion of value.
I-3. Title Page
I-4. Table of Contents - The inclusion of a table of contents implies numbered pages.
I-5. Summary Sheet of Salient Facts and Conclusions - A summary sheet should include at a minimum:

  1. Name of the project.
  2. Identification of the real estate.
  3. Ownership.
  4. Highest and Best Use.
  5. Effective date of the Appraisal.
  6. Date of property inspection and whether or not the owner, or his representative, accompanied you on the inspection. Identify the owner’s representative if one accompanied you.
  7. Property Rights Appraised, such as fee, fee less mineral rights, or subject to easements, encroachments, leases, etc.
  8. Property rights excluded from appraisal.
  9. Size, usually in acres, and of the whole parcel, the acquisition, and the remainder if appropriate.
  10. Market value estimate total, and per acre, for the whole parcel acquisition, remainder, and damages if appropriate.

* I-6. Representative Photographs of the Subject Property

* I-7. Statement of Limiting Conditions and Assumptions - This section provides a good opportunity for you to draw additional attention to extraordinary assumptions or limiting conditions that may affect the appraisal for the value conclusion, as presented within the report. If Uniform Residential Appraisal Report is utilized then use Statement of Limiting Conditions and Appraiser’s Certification provided in Fannie Mae Form 1004B.

I-8. Effective Date of the Appraisal - State the effective date of the appraisal. Often, this date corresponds with the date of inspection, or the last date of inspection. The appraisal standard requirement recognizes that completed reports may take days, weeks, or months. It also recognizes that effective dates can apply to prior to dates or future dates relative to the date of inspection or the date of the appraisal report. A separate, simple statement clarifies the effective date.

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II-1. Statement of Co-authorship - This section specifically acknowledges any professional assistance provided by other persons who assisted in your arriving at the analysis, conclusions, or opinions concerning the real estate under appraisal.

II-2. Scope of the Appraisal - Scope of the appraisal should address the extent of the data collection process. It might include the geographical scope of investigations, scope of the time period researched, sources of data, and any of the standard appraisal approaches not used to value the property.

II-3. Purpose of the Appraisal - Usually the purpose of the appraisal is to reach a conclusion of market value. Appraisal standards require the recital of a definition of the value estimated. You may also wish to recite of the source of the definition.

II-4. Function of the Appraisal - Usually the appraisal will function to assist the Board in the acquisition or disposition of an interest in the property.

II-5. Interest Appraised - The interest may include the fee simple, unencumbered interest. It may also address the fee subject to easements, encroachments, or leases, or the fee less the mineral rights, or the lease interest, or the easement interest, etc.

II-6. Owner Contact - Clearly state the date on which you contacted the property owner, or what steps the you took in attempting to contact the property owner, or the instructions given to you to avoid contact with the owner.

II-7. Date of Inspection - Definitively state the date of inspection. Clearly state whether or not the property owner accompanied you on your inspection of the property or that you provided him, or her, the opportunity to do so.

II-8. Identification of the Real Estate Appraised - A legal description serves this purpose well, particularly if the Board or the owner provides it. You can put lengthy legal descriptions in the addenda of the report after making reference to it. If a survey provides the identification of all the real estate, make it a condition of your valuation. If the Board or the owner provides both a legal description and a survey, state whether or not they coincide, and if not which serves as the basis of your valuation. If you have access to neither a legal description or a plat, state how you identified the property and how someone else might identify it.

II-9. Neighborhood Analysis - The neighborhood analysis should be limited to the pertinent social, economic, governmental, and physical area data that pertains to the valuation of the subject property. It should concisely state characteristics, trends, and patterns that relate to real estate value. Do state the surrounding land uses. Strive to focus only on the relevant neighborhood data.

II-10. Property Data - You should address a number of items under property data. If certain items do not apply, say so.

  1. Site Description - Strive to discuss all of the characteristics that relate to value. Reference to the quantity, quality, and/or utilization of land cover types, soil, topography, mineral rights, and deposits, permits, access, utilities, and easements, when appropriate. It helps for the appraisal to include those characteristics that the owner expresses as important. Include minor land improvements, such as fencing, ponds, roads, etc. as improvements to the land, as distinguished from improvements on the land, such as buildings or major structural land improvements.
  2. Improvements - Describe by narration or form schedule the type, original and present use, dimensions, construction characteristics, condition, age, renovation, and other significant items concerning the buildings and/or major structural land improvements.
  3. Dwelling Occupancy - You can assist the Board in relocation assistance by including an identification of the occupants, length of occupancy, and a description of individual dwellings if appropriate.
  4. Equipment - Describe by narration or by form schedule the type, utility, state of cannibalization, obsolescence, etc., of all items of equipment included as a part of the realty in your appraisal. Include their repair or replacement requirements.
  5. Products or Other Components - Describe the products or other components included as a part to the real estate such as timber products, crops, etc.
  6. Reservations/Rights - Describe any reservations or rights, products, or components that affect the valuation of the property.
  7. History - Present a brief history of the property as required by appraisal standards. This section offers a good opportunity to include any offers to buy or sell, the conditions and purpose of any recent sales and/or general marketability of the subject property. You should relegate lengthy recitals of ownership, sales, offers, and related matters to the addenda of the report.
  8. Assessed Value and Annual Tax Load - Present the current assessment in dollars and the dollar amount of the real estate taxed for each separate tax parcel that comprises the subject property. If the property does not appear in the tax digest, give the tax rate and provide your estimate of what the taxes might be.
  9. Zoning - Indicate the specific zoning, if any, and generally describe the legally permissible uses under this zoning, as well as the possibility of zoning changes that may affect value. Comment on the conformity of the existing use, or uses, with the zoning.
  10. Leases - State if any leases currently exist. If so, describe the terms and conditions.

II-11. Highest and Best Use - Provide the definition of highest and best use you use to value the concerned property. You may wish to cite its source. Discuss your application of the definition to the subject property in determining its highest and best use. Clearly state your conclusion of the highest and best use for the land, as if vacant, and for the property as improved, if appropriate. Assume that the reviewer will not interpret the highest and best use of the land to apply to the improved property, or vice versa. If the appraisal addresses a partial taking, clearly state the highest and best use of the whole parcel and the remainder, both as if vacant and as improved where appropriate. Specifically address the following items:

  1. Conformity - State whether or not the present use of the subject property conforms with the highest and best use.
  2. Differing and/or Intensity Changes in Use:
    1. Partial Takings - You should discuss any differing uses, or a change in the intensity of the present use, as a result of a partial acquisition, and consider whether an alternative evaluation applies.
    2. Easements - When an appraisal serves for the acquisition of an easement, specifically address and discuss the highest and best use of the property in the “before” and “after” condition. Again, consider whether differing uses or changes in the intensity of the existing use require alternative evaluation.
  3. Project influence on Use - The report should state, when appropriate, that the appraisal will disregard any decrease or increase in the utility of the property as a result of the project for which the property is being acquired, other than physical deterioration.
  4. Temporary or Interim Uses - If you consider a change in use as imminent, or very probable, as distinguished from highly speculative or remote, you should recognize and discuss temporary or interim uses because they can affect the subsequent evaluation process, keeping in mind the principle of consistent use.
  5. Multiple Uses - Compatible multiple uses may occur. You should identify and consider them without pyramiding value or violating the principle of consistent use.
  6. Highest and best use and the concept of market value have foundations firmly secured to the actions and motivations of the private sector, where multiple buyers and sellers act in their own best interest. The Board, acting on behalf of the people of the State of Georgia, does not meet this criteria. Consequently, the Board discourages you from concluding that public use of a property constitutes its highest and best use. Such a conclusion will subject the analysis of highest and best use to rigorous examination.

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III-1. Sales Presentation - The Board recommends that the introduction of the sales data follow the discussion of highest and best use and precede their analysis.

  1. Detailed descriptions of the sales can occur in the addenda of the report, or as exhibits, including entire or partial analysis, tabulation, and graphs.
  2. If you include detailed descriptions of the sales in the addenda, or as an exhibit, the Board recommends a general introductory sales discussion at this point in the report. Sales will require adequate identification when referenced and/or used for comparison in the respective approaches.
  3. Sales data should include the property rights conveyed, the interests conveyed, the date, the price, the terms and conditions, sufficient description for meaningful analysis, the buyer, seller, and verification. Deed book and page reference can confirm that a transaction occurred, but only contact with the buyer, seller, broker, or other person having knowledge of the transaction can verify the price, terms, conditions, etc. Verification is not always possible. When you cannot verify the sale, report the extent of your effort do so.

III-2. Sales Map - Include a sales map. The map helps to identify the location of the sales, as well as their location relative to the subject, if possible. You can include this map in the addenda of the report, but you may consider placing it within the body of the report and to add credence to your analysis and/or comparisons. Where practicable, plot the boundaries of the sales on the sale map, or an area map or maps, so that the reader or reviewer can easily locate them during a field inspection or a review of the area.

III-3. Selection and Application of Approach(es) - The three recognized approaches to value include:

  1. The Direct Sales Comparison Approach, based upon the analysis of comparable sales and/or other market data.
  2. The Income Approach, based upon the capitalization of net income.
  3. The Cost Approach, based on replacement or reproduction cost new (whichever would apply) of the improvements or buildings, less applicable depreciation, plus the value of the land.

Appraisals may rely on one, two, or all three of these approaches. The appraisal project at hand will dictate those approaches best suited to logically support a market value estimate. You should discuss the reasoning for selecting the approach or approaches used. Appraisal standards require you to explain and support the exclusion of any of these approaches. When appraising vacant land for the Board, this explanation does not require a lengthy discussion. The data utilized in the valuation process comes from the market place. You should avoid using data not clearly supported by factual evidence. You should not rely upon purchases by the Board, or other State and local government agencies to represent market value. The U.S. Constitution requires such entities to pay just and adequate compensation that may exceed market value. In addition, the possibility exists that purchases by the Board or other governmental agencies occurred under the threat of condemnation under the power of eminent domain. The Board discourages you from relying upon such sales.

III-4. Reconciliation and Final Estimate of Value - The process of reconciliation occurs throughout the appraisal process, but reporting reconciliation of the approaches to value typically occurs at the end of the report. Even when you use a single approach to value, the reconciliation section of the report serves as (1) a summary of the most pertinent data of that particular approach and (2) as the appraiser’s final conclusions to his opinion of market value.

When reconciling the market value indications of two or all three approaches, take into account the type of property and the adequacy of the data processed in each approach. This summary should explain the strengths and weaknesses of each approach and establish the appropriate consideration given to each.

The final market value estimate should not rely upon mere averaging of the value indications by the approaches. Discuss your examination of the spread between the minimum and maximum amounts. Explain your emphasis on the approach that you deem most reliably reflects local thinking and marketability. Consider tempering your estimate with any reliance placed on the other approaches. The real estate market lacks the precision of calculations, so consider appropriate rounding.

Finally present your final value estimate in a definitive, unqualified statement.

* III-5. Certification - Appraisal Standards require a certification similar in content to the following:

[NOTE: If Uniform Residential Appraisal Report is utilized then use Statement of Limiting Conditions and Appraiser’s Certification provided in Fannie Mae Form 1004B.]

I certify that, to the best of my knowledge and belief:

  1. I have taken into consideration the factors that have an impact on value in my development of the estimate of market value in the appraisal report. I have not knowingly withheld any significant information from the appraisal report and all statements and information in the appraisal report are true and correct.
  2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal unbiased professional analyses, opinions, and conclusions.
  3. I have no (or the specified) present or prospective interest in the property that is the subject of this report, and I have no (or the specified) personal interest or bias with respect to the parties involved. Neither my current or future employment nor my compensation for performing this appraisal is contingent on the appraised value of the property.
  4. My compensation is not contingent on an action or event resulting from the analyses, opinions, or conclusions, or the use of, this report. I was not required to report a predetermined value or direction in value that favors the cause of the client or any related party or the attainment of a specific result. I did not base the appraisal report on a requested minimum valuation or a specific valuation or the occurrence of a subsequent event.
  5. My analyses, opinions and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice.
  6. I have (or have not) made a personal inspection of the property that is the subject of this report including interior and exterior areas. I have (or have not) made a personal inspection of all properties listed as comparables in this report. I have noted any apparent or known adverse conditions in the subject improvements, on the subject site, or on any site within the immediate vicinity of the subject property of which I am aware and have made appropriate adjustments for these adverse conditions in my analysis of the property value. I have also commented about the effect of the adverse conditions on the marketability of the subject property. (If more than one person signs the report, this certification must clearly specify which individuals did and which individuals did not make a personal inspection of the properties.)
  7. I personally prepared all conclusions and opinions about the real estate that were set forth in the appraisal report. No one provided significant professional assistance in the performance of the appraisal or the preparation of the appraisal report to the person signing this report. (If there are exceptions, the name of each individual providing significant professional assistance must be stated and the specific tasks performed by them must be disclosed.)

The Board requires a statement to the effect that the market value (or other value required) is (amount) dollars, as of (date).

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You should include in this section those required maps, plats, and photographs that help in the valuation process in addition to those presented in the body of the report. Also, you can include such detailed data and information pertaining to the appraised property, its neighborhood, or market data, that takes up so much space that it detracts from a fluent comprehension. You might include the following:

* IV-1. Maps of the property - showing land boundaries and significant features including the location of the tract or tracts appraised.

* IV-2. Sales map(s).

IV-3. Detailed sales data - and/or forms and photographs.

* IV-4. Photographs - You should include pictures of the subject property. Where appropriate you should include photos of the best sales whenever possible. Pictures of improvements should show at least a front elevation, plus unusual features. Include views that show abutting properties on both sides as well as opposite the subject property. Except for the overall view, photographs may appear facing the discussion or description that the photographs concern. All graphic material should include captions.

IV-5. Other Pertinent Data - This may consist of property and vicinity statistical data, detailed soil descriptions, other photographs, deed records, etc.

* IV-6. Appraiser’s Qualifications - Qualifications should include appraiser’s certification number, professional experience, educational background and experience, and professional memberships at a minimum.