What is Included in an Appraisal Report?

Appraisals are vital reports in the real estate market, because they are relevant to buyers, sellers, and lenders. The value that an appraiser determines in their appraisal report ultimately sets the guideline for what a lender is likely willing to lend to a potential buyer. Given that is such an important element of any real estate transaction, it is useful to know what a typical appraisal report contains. Here are more details about the contents of an appraisal report.

Elements to be included in the Appraisal Report

In the Appraisal Report, the appraiser documents:

• The property's interior and exterior condition, from the layout, amenities and features, modernization updates, and the overall construction quality.
• An estimate of the GLA (gross living area) in square footage by measuring the exterior of the home.
• Living areas only, and excludes finished basements and non-living areas such as garages, which are instead documented and considered in value separately.

The information in an Appraisal Report will guide the appraiser throughout the comparison and valuation process. In most cases, the appraiser only considers permanent structures and real property. As most small sheds and above-ground swimming pools are not permanent fixtures, they are usually excluded from the valuation as well.

Two Appraisal Methods

There are two appraisal methods used for residential properties, the cost approach and sales comparison. The former is applied to newly built properties, where the costs to build are known. The figure given is an estimate of how much it would cost to replace the structure if it were destroyed. A sales comparison determines the home's market value by comparing it to similar properties recently sold in the area. As no two properties are ever alike, the appraiser must make paperwork adjustments to the comps (compared property) to make their features more in sync with the subject property. The resulting figures show what each comp would have sold for if it had the same specs as the subject.

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