Building appraisal report

PREPARATION OF BUILDING APPRAISAL REPORTPREPARATION OF BUILDING APPRAISAL REPORTPREPARATION OF BUILDING APPRAISAL REPORTPREPARATION OF BUILDING APPRAISAL REPORT

SEMESTER : VIISEMESTER : VIISEMESTER : VIISEMESTER : VII

• Name : FAIRUZName : FAIRUZName : FAIRUZName : FAIRUZ

• ROLL NO : BARC/8008/10ROLL NO : BARC/8008/10ROLL NO : BARC/8008/10ROLL NO : BARC/8008/10

• SUBJECT : SEMINARSUBJECT : SEMINARSUBJECT : SEMINARSUBJECT : SEMINAR

• SEMESTER : VIISEMESTER : VIISEMESTER : VIISEMESTER : VII

INTRODUCTIONINTRODUCTIONINTRODUCTIONINTRODUCTION

• Documentation / Report Documentation / Report Documentation / Report Documentation / Report prepared by professional

appraiser to determine the value of building property.determine the value of building property.determine the value of building property.determine the value of building property.

• Prepared when a person wants to buy a building propertyperson wants to buy a building propertyperson wants to buy a building propertyperson wants to buy a building property

• It tells the homeowner if the purchase is a good deal or the purchase is a good deal or the purchase is a good deal or the purchase is a good deal or

not.not.not.not.not.not.not.not.

• The report is also submitted to lenders, who can use the

valuation of the home to determine whether to grant the determine whether to grant the determine whether to grant the determine whether to grant the

loan.loan.loan.loan.

•After making a careful evaluation making a careful evaluation making a careful evaluation making a careful evaluation of the specific item

being appraised and the market conditions, the appraiser appraiser appraiser appraiser

writes his appraisal report. writes his appraisal report. writes his appraisal report. writes his appraisal report.

• In it he specifies the appraised value of the item. He also

specifies his methodology used to arrive at that valuemethodology used to arrive at that valuemethodology used to arrive at that valuemethodology used to arrive at that value

TITLE PAGETITLE PAGETITLE PAGETITLE PAGE

It should include following data :

• Property name and

identification

• Address or location of the

property being appraisedproperty being appraised

• Name and address of the

client

• Name and address of the

appraiser

• Effective date of the valuation

• Date of report preparation

IntroductionIntroductionIntroductionIntroduction Letter of transmittal includes :Letter of transmittal includes :Letter of transmittal includes :Letter of transmittal includes :

• It presents the appraisal report presents the appraisal report presents the appraisal report presents the appraisal report to the

client.

• Letters of transmittal are drafted in drafted in drafted in drafted in

• Property name or identification

• Effective date of the value estimate

• Type of value estimated

LETTER OF TRANSMITTALLETTER OF TRANSMITTALLETTER OF TRANSMITTALLETTER OF TRANSMITTAL

• Letters of transmittal are drafted in drafted in drafted in drafted in

proper business styleproper business styleproper business styleproper business style

• It is the part of an appraisal report & it

should not be confused with cover page

• The letter of transmittal is used to provide used to provide used to provide used to provide

a permanent recorda permanent recorda permanent recorda permanent record for identifying the

writer and intended reader

• Type of value estimated

• A statement providing location of the

property and a brief description

• Statement that all investigation and

analysis are done by appraiser

• Final estimation

• Signature of the appraiser.



TOWN HOUSETOWN HOUSETOWN HOUSETOWN HOUSE

TABLE CONTENTTABLE CONTENTTABLE CONTENTTABLE CONTENT

SUMMARY

SURVEY

CALCULATION

CONCLUSION

SUMMARYSUMMARYSUMMARYSUMMARY

• Provides summary of

the appraisal problem,

factors considered,

analyses performed,

and conclusions

reached.reached.

• Everything is

presented in bullet

form with brief

statements made

about each topic

covered.

SUMMARYSUMMARYSUMMARYSUMMARY

SURVEY : SURVEY : SURVEY : SURVEY : Market Analysis Market Analysis Market Analysis Market Analysis

• Located in Southern

portion of City

Lawrence, Kansas

Location

Lawrence, Kansas

• Lawrence is accessible

via interstate 70 on the

north & highway k-10

on the south which is a

major four lane highway

connecting Lawrence &

suburban Kansas city

SURVEY : SURVEY : SURVEY : SURVEY : Market Analysis Market Analysis Market Analysis Market Analysis

� Estimated population of

the city of Lawrence for

1990 was 65,608 persons1990 was 65,608 persons1990 was 65,608 persons1990 was 65,608 persons

� Lawrence Public school

consist of 15 elementary 15 elementary 15 elementary 15 elementary

schools,schools,schools,schools, 4 junior high & 2 4 junior high & 2 4 junior high & 2 4 junior high & 2

� 2010201020102010 year year year year information

indicates approx. 36,739 36,739 36,739 36,739

householdshouseholdshouseholdshouseholds

Population : Employment :Education :

1990 was 65,608 persons1990 was 65,608 persons1990 was 65,608 persons1990 was 65,608 persons

� In year 2000 In year 2000 In year 2000 In year 2000 the

estimated population was

80,098 (22 % increase 22 % increase 22 % increase 22 % increase

from year 1990 )

� In year 2010 In year 2010 In year 2010 In year 2010 the

estimated population was

87,643 ( 9% increase 9% increase 9% increase 9% increase

from year 2000 )

schools,schools,schools,schools, 4 junior high & 2 4 junior high & 2 4 junior high & 2 4 junior high & 2

high schoolshigh schoolshigh schoolshigh schools

� Haskell's Indian Nation

University & the university of

Kansas are the 2 university 2 university 2 university 2 university

present in Lawrencepresent in Lawrencepresent in Lawrencepresent in Lawrence

� Local & cultural attraction

includes Clinton Lake & Clinton Lake & Clinton Lake & Clinton Lake &

Perry LakePerry LakePerry LakePerry Lake

present.present.present.present.

householdshouseholdshouseholdshouseholds

� It indicates 57% of 57% of 57% of 57% of

householdshouseholdshouseholdshouseholds in Lawrence

have income greater have income greater have income greater have income greater than

$ 35.000$ 35.000$ 35.000$ 35.000

� Unemployment has

historically been in 3% to

5% but due to economic due to economic due to economic due to economic

conditions, it higher at conditions, it higher at conditions, it higher at conditions, it higher at

present.present.present.present.

• Table shows the historical results historical results historical results historical results

from 2001 to 2012from 2001 to 2012from 2001 to 2012from 2001 to 2012 in the city

Lawrence

• There has been a drop in the drop in the drop in the drop in the

smaller size residential smaller size residential smaller size residential smaller size residential

SURVEY : SURVEY : SURVEY : SURVEY : Building Permit AnalysisBuilding Permit AnalysisBuilding Permit AnalysisBuilding Permit Analysis

smaller size residential smaller size residential smaller size residential smaller size residential

construction industry in last few

years

• Multifamily has not seen a drop Multifamily has not seen a drop Multifamily has not seen a drop Multifamily has not seen a drop

other than from the major ramp

up year 2008 to now

• Multifamily increaseMultifamily increaseMultifamily increaseMultifamily increase is due to

attractive interest rated that are

present available

� Site is 152,460 square feet &

long rectangular in shaperectangular in shaperectangular in shaperectangular in shape

� Terrain is level to gently

sloping

� Access is via seven curb cuts

SURVEY : SURVEY : SURVEY : SURVEY : Site DescriptionSite DescriptionSite DescriptionSite Description

Access is via seven curb cuts

on the south side of West

26th Street.

� Consists of mixed zoningmixed zoningmixed zoningmixed zoning

� Eastern side Eastern side Eastern side Eastern side consists of

commercial building commercial building commercial building commercial building while

WesternWesternWesternWestern side side side side consists of

residential buildingsresidential buildingsresidential buildingsresidential buildings

SURVEY : SURVEY : SURVEY : SURVEY : Environmental ConsiderationEnvironmental ConsiderationEnvironmental ConsiderationEnvironmental Consideration

SURVEY : SURVEY : SURVEY : SURVEY : Flood Hazard MapFlood Hazard MapFlood Hazard MapFlood Hazard Map

SURVEY : SURVEY : SURVEY : SURVEY : Description Of ImprovementDescription Of ImprovementDescription Of ImprovementDescription Of Improvement

• It gives the detailed detailed detailed detailed

descriptiondescriptiondescriptiondescription of building

property

• It mainly gives the details details details details

of building materialof building materialof building materialof building material used by of building materialof building materialof building materialof building material used by

the building property

• Appraiser informs about

the changes needed to be changes needed to be changes needed to be changes needed to be

done in the building done in the building done in the building done in the building

property

• Appraiser estimates the estimates the estimates the estimates the

costcostcostcost for building property

• The apartment buildings are wood frame construction with painted lap siding and a small portion being brick.

• The foundations are all concrete slab on grade construction.

• The roofs are pitched and covered with asphalt shingles.

• Interior inspection of the subject did not indicate any areas of roof leakage

• Each unit has central air conditioning and forced air gas heat along with a 40 gallon hot water heater.


• Each unit has central air conditioning and forced air gas heat along with a 40 gallon hot water heater.

• Interior space is partitioned utilizing drywall construction.

• In addition, the property does not feature water sprinkler fire protection systems.

• Floor coverings in the units are a combination of vinyl, carpet and tile.

• Walls and ceilings are generally painted drywall.

• Bathrooms feature a stool, tub/shower insert, medicine cabinet, towel bars, exhaust fan etc

• Kitchens have stainless steel sinks, disposal, adequate wood cabinets, electric range, refrigerator and dishwasher.

• The landlord provides a washer/dryer set for all of the subject units. Each of the units has a 40 gallon gas fired

hot water heater


SURVEY : SURVEY : SURVEY : SURVEY : Floor PlansFloor PlansFloor PlansFloor Plans

Single bedroom 615 sq. ft Two bedroom 800 sq. ftSingle bedroom 615 sq. ft Two bedroom 800 sq. ft

Two bedroom 1150 sq. ft Three bedroom 1556 sq. ft

SURVEY : SURVEY : SURVEY : SURVEY : PhotographsPhotographsPhotographsPhotographs

SURVEY: High And Best Use ConclusionSURVEY: High And Best Use ConclusionSURVEY: High And Best Use ConclusionSURVEY: High And Best Use Conclusion

HIGH AND BEST USE CONCLUSION

• The site is located at West 26th Street in the southern portion of Lawrence.

• The site contains an estimated 152,460 square feet or 3.50 acres.

• The subject is rectangular shaped in configuration and access is via seven curb cuts on the south side of West 26th Street.

• The site is generally level to gently sloping and has all utilities available for development.

• The building property has a mixed zoning

• Eastern side of the building consists of commercial building while western consists of multi dwelling residential building

• Both zoning designations would allow for multifamily development.

• Therefore the eastern portion of the site would allow for retail, office and multifamily and the western portion allow for Therefore the eastern portion of the site would allow for retail, office and multifamily and the western portion allow for Therefore the eastern portion of the site would allow for retail, office and multifamily and the western portion allow for Therefore the eastern portion of the site would allow for retail, office and multifamily and the western portion allow for

multifamily developments.multifamily developments.multifamily developments.multifamily developments.

HIGH AND BEST USE CONCLUSION

CALCULATION : Valuation MethodologyCALCULATION : Valuation MethodologyCALCULATION : Valuation MethodologyCALCULATION : Valuation Methodology

• The process of determining the value of a building property is known as Valuation Valuation Valuation Valuation

Methodology.Methodology.Methodology.Methodology.

• The traditional methods of processing market data into a value indication include:

IIII Cost Approach Cost Approach Cost Approach Cost Approach IIII Sales Comparison Approach Sales Comparison Approach Sales Comparison Approach Sales Comparison Approach IIII Income Capitalization ApproachIncome Capitalization ApproachIncome Capitalization ApproachIncome Capitalization Approach.

1.1.1.1. COST APPROACH : COST APPROACH : COST APPROACH : COST APPROACH :

• It is an approach in which total cost of the property is estimated by summing up the cost summing up the cost summing up the cost summing up the cost

of land and structureof land and structureof land and structureof land and structure

• Basic steps in the cost approach are :

a) Estimate land value as though vacant and available to be put to its highest and best use

b) Estimate reproduction or replacement cost of structures

c) Estimate accrued depreciation

d) Deduct depreciation from reproduction or replacement cost

e) Add depreciated reproduction or replacement cost to the value of the land

•• It involves the comparison with the

subject property of similar properties

that have recently been sold or similar

properties currently on the market.

• The sales comparison approach

focuses on the similarities and

CALCULATION CALCULATION CALCULATION CALCULATION : Sales Comparison Approach: Sales Comparison Approach: Sales Comparison Approach: Sales Comparison Approach

focuses on the similarities and

differences among comparable sales

that affect value

• A total of five sales of multifamily

buildings in Lawrence were included

in this report

• Selection where on the basis of their

location, size, design and features

CALCULATION CALCULATION CALCULATION CALCULATION : Sales Comparison Approach: Sales Comparison Approach: Sales Comparison Approach: Sales Comparison Approach

• Introduce this section with a

summary of the income

approach and its foundation,

including the principle of

anticipation.

• Include a discussion of the

CALCULATION : INCOME APPROACHCALCULATION : INCOME APPROACHCALCULATION : INCOME APPROACHCALCULATION : INCOME APPROACH

Include a discussion of the

theoretical basis and the

relationship of the income

approach to the highest and

best use of the property.

• Points out income and

expenses

• Estimates conversion of

improvements suggested in the

highest and best use section is

reflected within this approach..

INCOME APPROACH: INCOME APPROACH: INCOME APPROACH: INCOME APPROACH: Net Operating IncomeNet Operating IncomeNet Operating IncomeNet Operating Income

CONCLUSIONCONCLUSIONCONCLUSIONCONCLUSION

Business

Building appraisal report