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The Appraisal Guide

TABLE OF CONTENTS

Introduction

  1. The Uniform Act
    Uniform Regulations
    General Criteria for All Appraisals
    The Uniform Act is Easy to Apply
    Uniform Act Requirements
    Appraisal Requirements of the Uniform Act

  2. Appraisal Formats
    Deciding the Appraisal Format (figure)
    Defining the Appraisal Problem

  3. Suggested Appraisal Formats
    Donations
    Low Value
    Value Finding Appraisal Format
    Benefits and Weaknesses
    Value Finding Appraisal
    (form)
    Short Form Appraisal (form)
    Benefits and Weaknesses
    Short Form Appraisal (form)
    Detailed Appraisal Format
    Minimum Criteria
    Benefits and Weaknesses

  4. Approaches to Value
    Which Approaches to Use and Rely On?
    Analysis and Reconciliation

  5. Comparable Sales Data
    The Comparable Data Map
    Sample Comparable Data Sheets
    Market Data Sheet (form)

  6. Specialty Appraisal Report
    Use of Specialty Appraisers and Reports
    When It Does Not Apply
    Principal Appraiser Responsibility
    Specialty Report Format
    Tenant-Owned Improvements
    Benefits and Weaknesses of Specialty Appraisals
    Specialty Report Contents

  7. Partial Acquisition

  8. Contaminated Properties Appraisal

    Appraisal Glossary

INTRODUCTION

Appraisal problems are often encountered by States, local agencies and appraisers because there is not a clear understanding of the relationship between the "Uniform Act" and the appraisal function on Federal or federally-assisted projects. This guide was developed to assist those involved to avoid potential appraisal problems. Three major topics will be covered:

THE UNIFORM ACT
APPRAISAL FORMATS
APPRAISAL GLOSSARY

THIS GUIDE PROVIDES THE FOLLOWING : If reasonable compatibility exists between State and Federal regulations and rules, as occurs in most jurisdictions,

  1. An explanation of when an appraisal is necessary and when it is not, such as in the case of donations and appraisal waiver,

  2. An explanation of various suggested appraisal formats, including how and when to use them, to aid the agency in acquiring property efficiently at reasonable appraisal costs,

  3. Information to permit the agency to assure that its appraisal practices and procedures are consistent with those of other acquiring agencies that acquire real property for Federal and federally assisted projects, and

  4. Information to maximize compliance with Federal requirements and the Uniform Act, which will help assure receipt of all the Federal funding to which the acquiring agency is entitled.

PLEASE REMEMBER :

This booklet is intended only as a guide . It is not possible to cover all conceivable appraisal situations that will be encountered.

When you have questions about a specific situation, you should ask for advice and guidance from the appropriate agency personnel (Federal, State or local).

This guide explains appraisal requirementsfrom the perspective of agencies operating under the Uniform Act. It does not cover or infringe upon additional State and local administrative or legal requirements and regulations that must be followed.

The Uniform Act

The Federal legislation that sets Federal acquisition appraisal standards is the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, Public Law 91-646, (the Uniform Act) specifically Sections 301 and 302 (42 U.S.C. §4651 and §4652), as amended by Public Law 100-17, Uniform Relocation Act Amendments of 1987 , Title IV.

Uniform Regulations

Regulations implementing appraisal standards of the Uniform Act are found in 49 Code of Federal Regulations Part 24 .

WHEN FEDERAL LAW AND REGULATIONS APPLY :

The Uniform Act applies to any Federal or federally-assisted program or project if Federal funding is to be used in any phase of the program or project.

Federal fundingfor the real estate acquisitionis not the key in determining whether or not Federal requirements apply to appraisals.

If Federal funds are going to be used in any part of the project, but not in acquiring right-of-way, the Uniform Act still applies to the appraisals and acquisitions.

The purpose of the Uniform Act is to ensure that all property owners are treated fairly and uniformly when it is necessary for their property to be acquired for any Federal or federally assisted program or project.

Even though the Congress of the United States enacted the Uniform Act in January of 1971, there may be some confusion as to what must specifically be done to comply with Title III.

Reviews of appraisals for compliance with the Uniform Act have revealed that many are unnecessarily long and complicated in relation to the particular valuation problem involved, and therefore more costly. At the same time, others are at the opposite extreme and do not contain the minimum detail, analysis and support needed for the more complex problems.

General Criteria For All Appraisals

All appraisals must conform to Title III of the Uniform Act and appropriate Federal regulations.

Appraisals may not include any payment of relocation assistance benefits or consider that such relocation payments will be made.

Appraisals must be independently prepared and each appraisal must be signed by the individual(s) making the appraisal and include the appropriate certification prior to submittal for review. An example of an appraiser's certificate may be found in the Short Form Appraisal sample.

Documentation by reference is acceptable when the referenced material is in the agency's files.

Qualifications of all appraisers and all technicians who contribute to the report must be in the agency's file or in the report. Fee (contract) appraisers hired to perform detailed appraisals must be State Certified.

Appraisals must be consistent with the Uniform Standards for Professional Appraisal Practice (USPAP) published by the Appraisal Foundation, and in some cases, the Uniform Appraisal Standards for Federal Land Acquisitions published by the Interagency Land Acquisition Conference and the Justice Department(1).

Appraisals must also comply with State approved requirements.

THE UNIFORM ACT IS EASY TO APPLY

The appraisal requirements of the Uniform Act are simple and easily implemented, if they are understood before beginning an appraisal.

Let's look at each of these appraisal requirements of the Federal law:

Uniform Act Requirements:

  1. REAL PROPERTY SHALL BE APPRAISED BEFORE THE INITIATION OF NEGOTIATIONS.
    The acquiring agency must have an approved appraisal before the initiation of negotiations.

    The approved appraisal must have been reviewed by a qualified review appraiser.

    The appraisal must meet the applicable minimum appraisal requirements.

    There are two exceptions when an appraisal is not required. An appraisal is not required 1) if the owner is donating the property and releases the acquiring agency from the obligation, and 2) if the acquiring agency determines that an apraisal is unnecessary under the provisions of 49 CFR 24.102(c)(2).

    NOTE: You do not always need long and complicated appraisals.

    Frequently acquiring agencies secure more appraisals with greater detail than are really required.

    Federal requirements do not mandate that long, detailed, and costly reports be secured on simple acquisitions where the remainder property is not affected or is only affected to a limited degree and/or the taking is not complicated.

    Guidance is provided herein as to the level of detail required for different types of takings.

  2. AN OWNER MUST BE PROVIDED THE OPPORTUNITY TO ACCOMPANY THE APPRAISER.
    The appraiser must give the owner or the owner's representative an opportunity to accompany the appraiser on the inspection of the property.

    This must be a reasonable opportunity to accompany the appraiser, giving adequate notice of time of the proposed inspection.

    All owners of any interest must be given the opportunity to accompany the appraiser, (This includes tenant owners of buildings, structures, and improvements upon the property to be acquired.)

    Extend the opportunity to accompany the appraiser to the owner(s), afterwhich the owner(s) designate a representative, if they so desire.

    In some instances it is advised but not required that written notice be given by Certified Mail, with return receipt to each owner, to protect the appraiser and the agency.

Appraisal Requirements of the Uniform Act:

  1. THE HEAD OF THE AGENCY SHALL ESTABLISH JUST COMPENSATION :
    The amount determined to be just compensation must be established by the agency before the initiation of negotiations, i.e., the first time price is discussed with the owner.

    Promptly offer to acquire for the full amount established as just compensation.

    The Agency must first have an approved appraisal of the fair market value, which sets the minimum offer of just compensation.

    The appraisal(s) for each parcel must be reviewed by a qualified review appraiser for compliance with:

    • The appraisal contract.
    • State law and requirements.
    • Federal law and requirements.

    The reviewer approves an acceptable appraisal as fair market value or writes his/her own supported estimate of fair market value if he/she does not agree with any appraisal.

  2. HE APPRAISER DISREGARDS DECREASES OR INCREASES IN VALUE DUE TO THE PUBLIC IMPROVEMENT
    Any decrease or increase in the market value which is caused by the public improvement or its likelihood prior to the date of valuation must be disregarded by the appraiser, except physical deterioration within the reasonable control of the owner.

    When property values go up or down because of the proposed public improvement, the appraiser must disregard such changed value when estimating the before value but not in estimating the after value as permitted by State law.

  3. OFFERS TO PURCHASE UNECONOMIC REMNANTS
    The appraiser should consider the possibility of uneconomic remnants and the agency must offer to buy any remainder that is of little or no value or utility to its owner.

    A remnant parcel can have a substantial value and still be an uneconomic remainder to the owner.

  4. SEPARATE DAMAGES FROM VALUE OF PROPERTY TAKEN
    The appraiser must separately state damages to the property remaining and value of the property taken.

  5. APPRAISE ALL BUILDINGS, STRUCTURES AND IMPROVEMENTS
    The appraiser must value all buildings, structures and improvements, including those owned by tenants, AS PART OF THE REAL PROPERTY if they will be required to be removed or will be adversely affected.

    These are to be considered as part of the real property.

  6. ENANT OWNED BUILDINGS, STRUCTURES AND IMPROVEMENTS
    These must be appraisedas part of the real propertybased on their contributory value as if they could remain in place, or their value for removal (salvage value), whichever is greater. Disregard lease terms that require tenant to remove buildings, structures or improvements and appraise as if they could stay trough their usual life as extended by normal maintenance.

  7. PPRAISE EQUAL INTEREST IN ALL BUILDINGS, STRUCTURES AND IMPROVEMENTS
    If any agency acquires any interest in real property it must acquire an equal interest in any buildings, structures and improvements located upon the real property, which the agency will require to be moved or will be adversely affected.

    This applies since the Uniform Act states that they shall "be deemed to be a part of the real property to be acquired".

    This also applies to tenant owned buildings, structures and improvements located upon the real property, even if tenant is required by lease to remove them at the end of the lease.

    Such buildings, structures and improvements to be valued at:

    • Contributory value as part of real property, or
    • Value for removal, (Salvage Value);

    Whichever is greater .

  8. EPARATE TENANT'S INTEREST IN APPRAISAL:

    When there is agreement as to ownership between the fee owner and tenant, the agency must make a separate offer to tenant for tenant ownedbuildings, structures and improvementsthus, they must be separated in the appraisal. THIS DOES NOT require a separation of tenant's leasehold interest unless required by State law or requirements.

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Appraisal Formats

There are no requirements for the use of a specific style or form of appraisal in the Uniform Act or the Department of Transportation Regulations (49 CFR Part 24). Both narrative and form appraisals are acceptable if they contain the necessary information and support.

MINIMUM PAYMENT PROVISION

Some jurisdictions have adopted a "minimum payment" policy, which simply means all nominal value acquisitions are offered at least a minimum acquisition amount. Agencies using this procedure typically offer a fixed minimum amount between $100 and $500 ($500 is the upper limit of federal-aid participation). This option may be administered in conjunction with any appraisal format or waiver process.

There are three different appraisal formats that are suggested for use on federally assisted programs. They are:

  • Value Finding Appraisal Format.
  • Short Form Appraisal Format.
  • Detailed Appraisal Format.

When each should be used depends on:

  • Type of property,
  • Type of problems involved,
  • Availability of good market data, and
  • Value of property - dollar amount (in some cases).

DETERMINE AND CHOOSE:

THE SIMPLEST FORMAT THAT FITS THE APPRAISAL PROBLEM BEFORE ASSIGNING THE APPRAISAL. DECIDING THE APPRAISAL FORMAT

LOW VALUE

(NO APPRAISAL REQUIRED)

USE VALUE FINDING APPRAISAL

  1. damages obviously minor

  2. lower value, but over waiver limits

USE DETAILED FORMAT APPRAISAL

  1. possible substantial damages or benefits

  2. possible change in highest and best use

  3. amount in excess of $15,000

Deciding the Appraisal Format

DETAILED APPRAISAL

  1. possible substantial damages

  2. probably over $5,000

CONSIDER USING VALUE FINDING APPRAISAL

  1. damage not substantial

  2. low total acquisition value

USE SHORT FORM APPRAISAL

  1. whole take of single family residential (SFR)

  2. adequate market data available

DETAILED APPRAISALS

  1. possibly substantial damages

  2. probably higher value

CONSIDER USING VALUE FINDING FORMAT

  1. no substantial damages

  2. possibly less than $5,000 value

LOW VALUE (no appraisal required) FACTS:

  1. vacant residential lots about $15,000

  2. commercial about $5.00 per sq. ft.

  3. single family residential about $60,000 each

Defining the Appraisal Problem

Before ordering an appraisal, the appraisal problem needs to be defined. This means define such things as:

Defining the appraisal problem before assigning the appraisal avoids:

1. DEFINE THE APPRAISAL PROBLEM
2. DETERMINE IF SIMPLE OR DETAILED
Options if SIMPLE:

1.Donation
2.Low Value/Appraisal Waiver
3.Value Finding Appraisal
4.Short Form Appraisal

(Appraisals must meet "minimum standards", per 49 CFR 24.103(a) 		Options if DETAILED:

1.Detailed Appraisal
per 49 CFR 24.103(a)(1)-(6)

3. ASSIGN THE APPRAISAL

REMEMBER:

DEFINE THE APPRAISAL PROBLEM BEFORE ASSIGNING THE APPRAISAL.

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Suggested Appraisal Formats

Donations

Appraisal Waiver

No appraisal is required, unless requested by the owner, if the property is being donated.

Minimum requirement

The owner must be informed of his/her right to recieve just compensation.

Low Value

Appraisal Waiver

No appraisal is required if the Agency determines that an appraisal is unnecessary because:

Minimum requirement

Necessary information to support compensation as determined by the acquiring agency.

Value Finding Appraisal Format

We encourage agencies to allow use of theValue Finding Appraisalformat to reduce appraisal time and costs.

A Value Finding Appraisal may be used when :

Value finding appraisals should normally be prepared by staff appraisers. Fee appraisers may be used when warranted.

Please note: The agency may elect to make a MINIMUM PAYMENT of up to $500.00 even if theValue Finding Appraisalreflects a lesser or even zero consideration.

Minimum Criteria

No particular format is prescribed for aValue Finding Appraisal, but the essential elements listed below must be included.

Use this appraisal format wherever it is reasonable.

Make certain that the appraisers understand the minimum requirements and use this format only where applicable.

A Value Finding Appraisal must contain as a minimum the following:

Use a Value Finding Appraisal when:

Benefits and Weaknesses of Value Finding Appraisal

BENEFITS

WEAKNESSES

The following pages show an example of a Value Finding Appraisal format. Your Agency does not need to use this form. It is simply an example of a Value Finding Appraisal format that meets minimum requirements.


VALUE FINDING APPRAISAL

(Simple acquisitions - land and improvements and cost to cure damages only)

PHOTOGRAPH AND SKETCH

PROJECT____________________________________
________________________________________

PARCEL_____________________________________
________________________________________

OWNER(S)____________________________________
__________________________________________
______________________________________

TENANTS_______________________________________
___________________________________________
___________________________________

OWNER(S) ADDRESS(ES)_______________________________
__________________________________________
______________________________

SALES HISTORY__________________________________________
_____________________________________
_______________________________

(Attach photo along top so any needed sketch can be made beneath photo)

PROPERTY DESCRIPTION & LOCATION____________________________________ ____________________________________________________________________
____________________________________________________________________

HIGHEST AND BEST USE ______ AS IS______ OTHER:______________________

LEGAL DESCRIPTION OF ENTIRE PROPERTY IS:______ IN THE TITLE REPORT ______ IN THE PARCEL FILE OR, IF NOT, THEY CAN BE FOUND:________________

REAL PROPERTY INTEREST BEING APPRAISED:____________________________

DESCRIBE LAND AND IMPROVEMENTS TAKEN (OR IN EASEMENT AREAS AND ANY COST TO CURE DAMAGES)_______________________________________________ ______________________________________________________________________

VALUATION OF LAND TO BE ACQUIRED (OR LAND AND IMPROVEMENTS IF COMPARED TO IMPROVED COMPARABLES)

UNIT OF COMPARISON NO. OF UNITS X PRICE PER UNIT = INDICATED VALUE
    X $ = $
    X $ = $
    X $ = $

BASIS FOR VALUE OF LAND (OR LAND AND IMPROVEMENTS): _____________________
__________________________________________________________________________

VALUE OF EACH IMPROVEMENT TO BE ACQUIRED (or cost to cure items) Basis of value must be clearly explained i.e. contributory value, cost new less depreciation, cost to cure. Show any calculations, source of data. List each improvement or cost to cure separately and explain value estimate.

(A) _____________________________________________
_____________________________________________
_____________________________________________ $_______________

(B) _____________________________________________
______________________________________________
______________________________________________ $_______________

(C) COST TO CURE:________________________________
______________________________________________
_______________________________________________ $_______________

(D) COST TO CURE:________________________________
______________________________________________
______________________________________________ $_______________

TOTAL FAIR MARKET VALUE OF LAND AND
IMPROVEMENTS TAKEN AND ANY COST TO CURE DAMAGES: $_______________

REMARKS OR ADDITIONAL EXPLANATION:
_______________________________________________________________________
________________________________________________________________________
________________________________________________________________________

CERTIFICATE OF APPRAISER

Date _______________________ Signature ___________________________________


Short Form Appraisal Format

(also called: simple, abbreviated, strip or fractional modified appraisal form)

A Short Form Appraisal may be used when :

Minimum Criteria

No specific format is prescribed. In this type appraisal both narrative and form type appraisals are acceptable.

All elements of Value Finding Appraisal plus ---

A Short Form Appraisal must contain the following:

A Short Form Appraisal Can Save Time - Money - Filing Space

Use a Short Form Appraisal when:

Benefits and Weaknesses of Short Form Appraisal

BENEFITS

WEAKNESSES

A sample Short Form Appraisal begins on the following page.

SHORT FORM APPRAISAL

(Page 1)

          PROJECT______________           PARCEL_______________

1. OWNER(S):_______________________________________________________________
___________________________________________________________________________

2. ADDRESS(ES):____________________________________________________________
___________________________________________________________________________

3. LOCATION OF PROPERTY:__________________________________________________

4. ZONING:________ PRESENT USE:_________ HIGHEST AND BEST USE:____________

5. PURPOSE OF THE APPRAISAL IS TO ESTIMATE THE FAIR MARKET VALUE OF______
___________________________________________________________________________

6. RIGHTS TO BE ACQUIRED ARE:_____________________________________________
___________________________________________________________________________

7. AREA & NEIGHBORHOOD (Descriptions and Trends):_____________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________

8. DESCRIPTION OF LAND (Describe topography, drainage, elevation, timber; if farm, soils,
and irrigation.)_______________________________________________________________
__________________________________________________________________________

9. UTILITIES: PUBLIC WATER _____ , WELL____ , SPRING_____ ; SEWER_____ ,
SEPTIC TANK _____ ; NATURAL GAS _____.

10. ACCESS: SIDEWALK _____ ; PUBLIC ROAD _____ , PRIVATE ROAD _____ ,
CITY _____STREET _____ ; PAVED _____ , GRAVEL ______ ; DIRT ______.

11. TENANT(S) NAMES:_____________________________________________________
_________________________________________________________________________

LEASE TERMS:____________________________________________________________

12. IMPROVEMENTS (Describe each building separately); TYPE OF BUILDING, NO. OF
STORIES, CONST. TYPE {Fr, Br., etc.}, CONDITION, EFFECTIVE AGE, GROSS FLOOR
AREA, TOTAL NUMBER OF ROOMS, BATHS, BEDROOMS; HEATING/COOLING,
AMENITIES, ETC.)
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________

13. REMARKS & CONTINUATIONS FROM ABOVE:____________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________

SHORT FORM APPRAISAL
(Page 2)

14. PHOTOGRAPH OF THE SUBJECT:

Identify each and show from where taken, date and direction of camera pointing and by whom taken.

15. SKETCH OR PLOT PLAN: .

Show land dimension, improvements and dimension of improvement taken, north arrow, area to be acquired and location from which picture was taken and direction camera was pointing.

SHORT FORM APPRAISAL
(Page 3)

16. DIRECT COMPARISON OF MARKET DATA

Show separate (individual) + or - or % of all substantial adjustments.

  SUBJECT SALE SALE SALE
SALE PRICE Adjusted for favorable seller financing (cash equivalency): $ $ $ $
TIME ADJUSTMENT:        
SALES PRICE ADJUSTED FOR TIME:   $ $ $
PRICE PER UNIT OF COMPARISON: $ / $ / $ / $ /
LIST ALL OTHER ADJUSTMENTS AND DOLLAR OR PECENTAGES1:
NET OR COMPOSITE ADJUSTMENT        
INDICATED VALUE OF SUBJECT:        

(EXPLANATION AND COMPARISON MAY BE DONE IN NARRATIVE FORM IN LIEU OF ABOVE GRID, IF FACTUAL COMPARISONS ARE MADE AND SUPPORTED OR EXPLAINED FOR EACH ITEM OF SIGNIFICANT DIFFERENCE)

SHORT FORM APPRAISAL
(Page 4)

17. SALES OF SUBJECT IN LAST 5 YEARS - (Give price, date, grantor, grantee, deed reference and with whom verified.)

1Include any other significant item of difference such as (but not limited to), location, land size, shape, topography, landscaping, fencing, allotments, soil, and other contributing factors, IMPROVEMENTS: age, condition, size, number of baths, number of bedrooms, number of rooms, and garage.

18. EXPLANATION AND SUPPORT OF ADJUSTMENTS:

(List each adjustment you made on comparables separately and give all facts and assumptions used as basis of each adjustment and show your reasoning that leads you to each specific + or - or percentage or dollar adjustment.)

19. EXPLANATION AND SUPPORT OF DAMAGES:

(Support any damages by cost to cure method or set forth the reasoning which fully explains any damages). Add separate page if damages are involved.

SHORT FORM APPRAISAL
(Page 5)

VALUE OF EACH IMPROVEMENT TO BE ACQUIRED (or cost to cure items) Basis of value must be clearly explained i.e. contributory value, cost new less depreciation, cost to cure. Show any calculations, source of data. List each improvement or cost to cure separately and explain value estimate.

(A) _____________________________________________
_____________________________________________
_____________________________________________ $_______________

(B) _____________________________________________
_____________________________________________
_____________________________________________ $_______________

(C) COST CURE __________________________________
_____________________________________________ $_______________

(D) COST CURE __________________________________
_____________________________________________ $_______________

TOTAL VALUE OF LAND AND IMPROVEMENTS TAKEN AND
ANY COST TO CURE DAMAGES: $_______________

REMARKS OR ADDITIONAL EXPLANATION:
____________________________________________________________________________
____________________________________________________________________________

CERTIFICATE OF APPRAISER

I,_________________________________ hereby certify: That on __________________ date(s), I personally made a field inspection of the property herein appraised and have afforded the owner or a designated representative the opportunity to accompany me on this inspection. I have also, on date(s), personally made a field inspection of the comparable sales relied upon in making said appraisal. The property being appraised and the comparable sales relied upon in making this appraisal were as represented in the appraisal.

That to the best of my knowledge and belief the statements contained in the appraisal herein set forth are true, and the information upon which the opinions expressed therein are based is correct; subject to the limiting conditions therein set forth. That I understand that such appraisal may be used in connection with the acquisition of property for a project utilizing U.S. Department of Transportation funds.

That such appraisal has been made in conformity with appropriate laws, regulations, and policies and procedures applicable to appraisal of property for such purposes; and that to the best of my knowledge no portion of the value assigned to such property consists of such items which are noncompensable under appropriate established law.

That neither my employment nor my compensation for making this appraisal and report are in any way contingent upon the values reported herein. This limited appraisal assignment called for less than what would otherwise be required by the specific guidelines of the Uniform Standards of Professional Appraisal Practice (USPAP).

That I have no direct or indirect present or contemplated future personal interest in such property or in any benefit from the acquisition of such property appraised.

That I have not revealed the findings and results of such appraisal to anyone other than the proper officials of the acquiring agency or officials of the U.S. Department of Transportation and I will not do so until so authorized by said officials, or until I am required to do so by due process of law, or until I am released from this obligation by having publicly testified as to such findings.

That any decrease or increase in the fair market value of real property prior to the date of valuation caused by the public improvement for which such property is acquired, or by the likelihood that the property would be acquired for such improvement, other than that due to physical deterioration within the reasonable control of the owner, was disregarded in determining the compensation for the property.

That I have not given consideration to, or included in my appraisal, any allowance for relocation assistance benefits.

That my opinion of the fair market value of the property to be acquired as of the ____________ day of ___________________ 19 ______________ is $___________________ based upon my independent appraisal and the exercise of my professional judgement.

Date ____________________ Signature _______________________________

Detailed Appraisal Format

(also called: complete, narrative, long form, complex, complete before and after, or full blown appraisal)

Detailed Appraisal should be used when:

Detailed Appraisalsmust contain and/or address the provisions of 49 CFR 24.103(a) and follow USPAP Standards. ADetailed Appraisalmay use theUniform Standards for Federal Land Acquisitionsas a guideline as appropriate.

Minimum Criteria
{49 CFR 24.103(a) in italics below}

  1. The analysis must include consideration of any easements, leases or other title encumbrances,
  2. If the present use is not the highest and best use, show the basis for deciding that the property is legally and economically available and adaptable for a use other than the present use and that there is a demand.
  3. At least a 5-year sales history of the property,
  4. All relevant and reliable approaches to value consistent with commonly accepted professional appraisal practices.
  5. The sales comparison approach should be developed in almost all cases. In addition, the income and cost approaches should be developed when either of these approaches is reflective of what a typical buyer would consider relevant for that type of property,
  6. The income and cost approach should not be developed in lieu of a sales comparison approach except in very unusual situations. In the latter case, the lack of a sales comparison approach should be fully explained,
  7. An analysis and reconciliation of approaches to value that is sufficient to support the appraiser's opinion of value,Should identify the strengths and weaknesses of each approach as they relate to the final conclusion of value,
  8. A description of comparable sales, including a description of all relevant physical, legal, and economic factors such as parties to the transaction, source and method of financing, and verification by a party involved in the transaction,Specific items, if they affect the data's validity or indicated value, should include: date of sale, rental or offering; consideration paid, conditions of sale (motivation), persons whom these were verified, and when, location and total land area of the comparable, type of improvements and size, any easements and leases, mineral, water, and other rights included, analysis of highest and best use at the date of sale, zoning at the date of sale, date of the appraiser's inspection, and photographs of principal improvements,
  9. A statement of the value of the real property to be acquired,If a partial acquisition or an acquisition of less than fee title is involved, then prepare a similarly supported valuation of the remaining property interests after the acquisition,
  10. For a partial acquisition, a statement of the value of the damages and benefits, if any, to the remaining property, where appropriate, and
  11. The effective date of valuation, date of appraisal, signature, and certification of the appraiser.An example of an acceptable appraiser's certification is found on Page 5 of the Short Form Appraisal.

Benefits and Weaknesses of Detailed Appraisal Format:

BENEFITS

WEAKNESSES

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Approaches to Value

A sales comparison approach shall include:

Identification of comparable sales, listings, offerings, or rental data which are available.

Verification with the buyer, seller, broker, or other person having special knowledge of the price, terms, and conditions of transactions or the reason for not so verifying shall be stated. Similarities or dissimilarities of each comparable used to compare to the subject shall be discussed and individually adjusted in dollars or percentage for such items as:

Time and Location,
Physical and economic characteristics, and
Motivation for the transactions.
Substantial lump sum adjustments are not acceptable.

A cost approach , if applicable, shall consist of factual data, including:

An income approach , if applicable, shall Include VERIFIED MARKET DATA to support:

Capitalization of net income shall be at a rate prevailing in the market for this type of property and location.

The capitalization technique, method, and rate used shall be explained in narrative form, supported by a statement of the appraiser's sources of rates and factors.

Which Approaches to Use and Rely On ?

Sales Comparison Approach

The sales comparison approach should be developed and relied upon whenever there is adequate market data.

The approach shall include adequate research to identify all pertinent similar properties for which sales, listings, or rental data are available.

All comparable information will be confirmed by the buyer, seller, broker or other person having knowledge of the price, terms and conditions or the reason for not so confirming shall be stated.

Significant adjustments for similarities and dissimilarities such as time, location, physical and economic characteristics, and motivation for the transaction shall be individually explained.

Substantial lump sum adjustments are not acceptable.

Cost Approach

The cost approach should not be relied on unless the special purpose improvements develop the property to its highest and best use and a potential buyer would reasonably consider, as an alternative, the cost of acquiring a comparable site and reproducing the improvements. The cost approach should never add on the cost of the improvements to a site with a different highest and best use without addressing the incurable obsolescence inherent in this type of analysis.

If this approach is applicable, it shall consist of factual data beginning with reproduction or replacement cost and shall state the specific sources of all figures used. Physical deterioration, functional and economic obsolescence shall be individually supported in narrative form. All calculations must be shown.

The appraiser's opinion of the value of the land shall be supported by confirmed comparable sales in the same manner as in the sales comparison approach , above.

Income Approach

If the income approach is applicable, it shall include verified market data arranged to show and support, as a minimum:

Capitalization of net income shall be at a rate prevailing in the market for this type of property and location.

Capitalization technique, method and rate used shall be explained in narrative form and supported by a statement of the market facts which support such rates and factors and appraiser's analysis of such market factual data that leads to the conclusion of the capitalization rate.

Reliance on the cost or income approach should normally occur only when the property is truly an investment property ( income approach ) or special purpose property ( cost approach ) where market data is inadequate.

Analysis and Reconciliation

Analysis and reconciliation of the various approaches used must be included to explain the final conclusion of value.

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Comparable Sales Data

Sales data shall, as a minimum, include:

Source and method of any buyer financing,

The Comparable Data Map

The appraisal report shall show a map, or refer to one in the data book, which clearly indicates the location of the comparables used in estimating the value of the property. The map should have such clarity as to permit a reviewer to locate the properties in the field.

The agency concerned may for special reasons permit an exception to this provision.

Sample Comparable Data Sheets

On the following pages are examples of comparable data sheets. They may have to be adapted to the specific appraisal problem and units of comparison.

MARKET DATA SHEET

UNIMPROVED LAND COMPARABLE COMPARABLE INDEX NO. _______________

APPRAISER:__________________ SALE PRICE $:________________ PRICE PER__________ $_________

STATE PROJECT NO.__________________________ FEDERAL PROJECT NO._____________________

INSPECTION DATE(S):_____________________________________________________________________

GRANTOR:______________________________________ GRANTEE:_______________________________

DATE OF SALE:____________ TYPE INSTRUMENT:_____________ RECORD: BOOK ________ PAGE _____

DIMENSIONS:______________________________ TOTAL LAND AREA:_____________________________

ZONING:_______________________________ USES PERMITTED, AS ZONED:________________________

DESCRIPTION (Brief): _______________________________________________________________________
______________________________________________________________________________________
________________________________________________________________________________________

PROPERTY LOCATION/ADDRESS:___________________________________________________________

DESCRIBE ACCESS:_______________________________________________________________________

HIGHEST AND BEST USE AT DATE OF SALE AND CURRENT (If Different):___________________________

FINANCING (Effect On Sale Price, If Any):_______________________________________________________

CONDITIONS OF SALE:_____________________________________________________________________
_____________________________________________________________________________________

HOW DOES THIS PROPERTY COMPARE WITH TYPICAL PROPERTIES IN THE NEIGHBORHOOD?: ________________________________________________________________________________________

OTHER PERTINENT DATA AND COMMENTS:__________________________________________________
_______________________________________________________________________________________
________________________________________________________________________________________

VERIFIED WITH:

NAME:___________________ DATE:_______________ RELATIONSHIP TO SALE:____________________

NAME:___________________ DATE:_______________ RELATIONSHIP TO SALE:____________________

THIS SALE IS A SALE OF A REMAINDER PROPERTY FROM A FORMER RIGHT-OF-WAY OR OTHER EMINENT DOMAIN TAKING:

YES_______ NO_______ PROJECT:____________________________________________________

ATTACHED IDENTIFIED PHOTOS

MARKET DATA SHEET

IMPROVED LAND COMPARABLE COMPARABLE INDEX NO.________________

APPRAISER:_________________ SALE PRICE $:_______________ PRICE PER__________ $ ___________

STATE PROJECT NO.____________________________ FEDERAL PROJECT NO._____________________

INSPECTION DATE(S):_____________________________________________________________________

GRANTOR:____________________________________ GRANTEE:________________________________

DATE OF SALE:______________ TYPE INSTRUMENT:____________ RECORD: BOOK ______ PAGE_____

DIMENSIONS:___________________________________ TOTAL LAND AREA:________________________

ZONING:________________________________ IF RENTED, RATE: $________________ PER___________

USES PERMITTED, AS ZONED:______________________________________________________________

DESCRIPTION (Brief):_______________________________________________________________________
_________________________________________________________________________________________

PROPERTY LOCATION/ADDRESS:___________________________________________________________

DESCRIBE ACCESS:________________________________________________________________________

HIGHEST AND BEST USE AT DATE OF SALE AND CURRENT (If Different):____________________________

FINANCING (Effect On Sale Price, If Any):________________________________________________________

CONDITIONS OF SALE:______________________________________________________________________
_________________________________________________________________________________________

HOW DOES THIS PROPERTY COMPARE WITH TYPICAL PROPERTIES IN THE NEIGHBORHOOD?:
__________________________________________________________________________________________

HOUSE: AGE:______ YRS CONSTRUCTION QUALITY:______ CONDITION:______ LIVABLE AREA:_______

GARAGE/CARPORT:___________Sq.Ft. PORCH:__________Sq.Ft. OTHER: __________Sq.Ft.

FOUNDATION:____________ EXTERIOR WALLS:___________ ROOF:___________

YARD IMPROVEMENTS: (Patios, Swimming Pools, etc.)_____________________________________________

HEAT (Type):__________________________________ A/C (Type):__________________________

OTHER FIXTURES:_________________________________________________________________________

INTERIOR: BATH BR LR DR KIT DEN UTIL FAM FRPL POR CONDITION

1st FLOOR: ___________________________________________________________________

2nd FLOOR: __________________________________________________________________

OTHER PERTINENT DATA AND COMMENTS:____________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________

VERIFIED WITH:

NAME:_____________________ DATE:______________ RELATIONSHIP TO SALE:_____________________

NAME:_____________________ DATE:______________ RELATIONSHIP TO SALE:_____________________

THIS SALE IS A SALE OF A REMAINDER PROPERTY FROM A FORMER RIGHT-OF-WAY OR OTHER EMINENT DOMAIN TAKING:

YES______ NO_______ PROJECT:_______________________________________________________

ATTACHED IDENTIFIED PHOTOS

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Specialty Appraisal Report

Aspecialty reportis any specialized expert's report estimating value of a portion of a property, which the principal appraiser considers or relies upon in whole or in part in estimating contributory value of such specialized items.

Use of Specialty Appraisers and Reports

When another person is supplying information that the principal appraiser intends to include or rely on in the appraisal report, the other person becomes a specialty appraiser.

The specialty appraiser must have knowledge of the particular items involved in order to value and support their cost new, the physical deterioration, the functional and economic obsolescence and explain the reasoning to support each item.

Specialty reports are used to assist the principal appraiser in estimating the contributory value of specialty items in relation to the total fair market value of the property being appraised as well as these items comparable on sales being used. Specialty appraisals may be for items such as:

When it doesNOTapply

The use of specialty reports is not usually necessary when an estimate for incorporation in an appraisal report is being obtained from local regular suppliers of specialized services such as:


Principal Appraiser Responsibility

The principal appraiser is ultimately responsible for the incorporation of the specialty report, or portions thereof, into the prime appraisal. The principal appraiser must not simply "add on" such specialty reports, but must decide what value the specialty items contribute to the fair market value of the entire property. When possible, the principal appraiser should perform an independent research and analysis to support the accuracy and reasonableness of the specialty report.

Specialty Report Format

No specific format is prescribed for specialty reports. Specialty report content is dependent upon the valuation problem involved, its complexity and the availability of data.

Regardless of the format or form used, the report needs to contain all the information that is essential to explain, substantiate, and document the estimate of value of the property being appraised.

Tenant-owned Improvements

If tenant-owned buildings, structures, or improvements are included in the specialty appraisal, they must be appraised according to their contribution to the fair market value of the entire property, or their value for removal (salvage value), whichever is greater.

Benefits and Weaknesses of Specialty Appraisals

BENEFITS

WEAKNESSES

Specialty Report Contents

The specialty report should normally contain, as a minimum, the following:


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Partial Acquisition

In the event of a partial acquisition or the acquisition of less than fee title the valuation of the remaining interest or interests is to be supported to the same extent as that of the entire property except when it is obvious that there are no damages or benefits to the remaining property except for minor cost-to-cure items.

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Contaminated Properties Appraisal

When encountering a potentially contaminated property, the appraiser should be guided by the Appraisal Foundation's Advisory Opinion G-9 , which was published on December 8, 1992.

The appraiser's primary responsibility is to notify the agency of any potential or possible indications of contamination he or she discovers, either in on-site inspection(s) or in background research.

The Advisory Opinion addresses the appraiser's participation in multi-disciplinary groups addressing a contaminated property. We expect this is the usual and typical method used by most SHAs in addressing contaminated properties. We endorse it and recommend it be continued.

TheRemediation and Compliance Cost EstimationandValue Estimates of Interests in Impacted Real Estatesections discuss the responsibilities of the appraiser in valuing a contaminated property. An appraiser may reasonably rely on the findings and opinions of qualified specialists in environmental remediation and compliance cost estimation. Those estimates must be treated like any other specialty valuation and be evaluated, analyzed and blended into the main appraisal, if an "as is" value is required. Please note, however, that the Advisory Opinion allows the SHA to have the appraiser value a known contaminated property as if "clean", leaving the handling of the contamination factor to others in the SHA.

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Appraisal Glossary

APPRAISAL - A written statement independently and impartially prepared by a qualified appraiser setting forth an opinion of defined value of an adequately described property as of a specific date, supported by the presentation and analysis of relevant market information.

The supporting data should be of sufficient depth to show the analysis and reasoning to document the appraiser's conclusions, developing and relying on the market approach if adequate market data is available, and if not, using other appropriate appraisal techniques supported by market data.

ACCEPTED APPRAISAL - An appraisal accepted by a qualified review appraiser of the agency concerned.

The review should normally include a field inspection of the subject and comparables, and a determination by the reviewer that the appraisal meets applicable State and Federal standards, criteria and regulations, and substantially complies with the contract between the agency and the appraiser.

APPROVED APPRAISAL - An accepted appraisal that is approved by the agency concerned and used in support of the review appraiser's recommended fair market value.

The review appraiser's fair market value recommendation should include the reviewer's comments and any additional data or support considered.

BUILDINGS, STRUCTURES, OR OTHER IMPROVEMENTS - An item located upon real property that cannot be removed without incurring a substantial loss in value to itself or to the underlying or related real property.

BUILDING - Refers to a constructed edifice designed to stand, more or less, permanently, covering a space of land, usually covered by a roof and more or less, enclosed by walls and serving as a dwelling, storage building, factory, shelter for animals and thus generally designed for some type of occupancy.

STRUCTURE - Includes other things that are built covering or upon a space of land, not designed for occupancy, such as fences, monuments, fixtures, and paving, regardless of whether considered real or personal property under local laws. An item which can be readily moved without incurring a substantial loss in value to itself or the underlying or related real property isnota structure. Items such as motor vehicles, vessels, trailers with only temporary hookups and not used as a permanent residence, merchandise, household goods and small fixtures, machinery and equipment that can readily be moved without any loss in value to the item or real property are not structures.

IMPROVEMENT - refers to additions to or betterments of real property that enhance its value or involve the expenditure of labor or money and are designed to make the property more useful or valuable as distinguished from ordinary repairs.

CONTRIBUTORY VALUE - Is the dollar amount that buildings, structures, or other improvements contribute to the fair market value of the total property.

Contributory value is normally synonymous with "value in place".

FAIR MARKET VALUE - For the purpose of valuing the property, including land and any building, structure and improvement thereon, acquired under the power of Eminent Domain by the Federal government or using Federal-aid or Federal grant funds, Fair Market Value is the amount of money (cash or its equivalent) which, as of the date of valuation:

  1. An informed and knowledgeable purchaser willing, but not obligated, to buy the property would pay to an informed and knowledgeable owner willing, but not obligated, to sell it. ,
  2. Taking into consideration all uses for which the property is suited and might in reason be applied; including, but not limited to the present use or highest and best available use taking into consideration the existing zoning or other restrictions upon use and the reasonable probability of a change in those restrictions.
  3. Allowing a reasonable period of time to effectuate such sale.
  4. Disregarding any decrease or increase in fair market value of such real property prior to the date of valuation caused by the public improvement for which such property is acquired, or by the likelihood that the property would be acquired for such improvement, other than that due to physical deterioration within the reasonable control of the owner.
  5. Disregarding the fact that the owner might not want to part with the land because of its special adaptability to the owner's use.
  6. Disregarding the fact that the taker needs the land because of its peculiar fitness for its purpose.
  7. Disregarding any "gain to the taker", i.e., not giving consideration to the special use of the condemnor as against others who may not possess the right of Eminent Domain.
  8. Including the value of any buildings, structures, or improvements located upon the land, which are required to be removed or which it is determined will be adversely affected by the use to which such real property will be put, regardless of whether such building, structure or improvement is classified as real or personal property under local law. Such buildings, structures and improvements are valued based upon their contribution to the fair market value of the real property to be acquired or their value for removal from the real property (salvage value), whichever is greater. This includes tenant owned buildings. structures, or improvements, even if the tenant has a right or obligation to remove the building, structures, or improvements at the expiration of the lease term and even if classified as personal property under local law.
  9. Fair market value, based upon adequate recent comparable sales and offering data is usually themeasure of just compensation.
JUST COMPENSATION --- What is it?

As used in the Constitutional Provision as a limitation upon the power of Eminent Domain implies a full and complete equivalent (usually monetary) for the loss sustained by the owner whose land has been taken or damaged.(2)

It is the what the owner has lost and not what the condemnor has gained.(3)

Fair market value is usually the practical standard used. Normally fair market value approaches just compensation demanded by the Fifth Amendment.(4)

The United States Supreme Court has stated that it has been careful not to reduce the concept of just compensation to formula. The court has tried to find working rules and standards including market value, that will do substantial justice, but the court "...has refused to make a fetish even of market value since it may not be the best measure of value in some cases...."

JUST COMPENSATION --- How is it detertmined?

  1. The amount of just compensation is established by the head of the agency. This amount is in no event less than the agency's approved appraisal of fair market value and which:
  2. Disregards any project caused decrease or increase in the fair market value of the real property taken.
  3. Separately states, the just compensation for real property acquired and the amount of damages, if any.
  4. Identifies and includes allowable benefits.
  5. Considers whether or not the remaining property, or portion thereof is an uneconomic remnant.
  6. Includes compensation for all buildings, structures and other improvements located upon the property which are required to be removed, including such buildings, structures, and other improvements owned by a tenant, even if classified as personal property under local law and includes:
    1. The fair market value of such buildings, structures, and improvements as part of the real property; or
    2. The fair market value of tenant owned improvements for removal from the real property, (salvage value), whichever is greater; and
    3. Does not include any allowance for relocation assistance benefits.

OWNER - Any persons, corporation, agency or body having an interest in the real property, including not only the fee owner(s), or owners of various interests or estates in the property as well as leasehold and/or tenant owner(s).

"Owners" also includes a contract purchaser of any estate or interest, or one who possesses such other proprietary or equitable interest in the property acquired which, in the judgement of the head of the agency, should be considered an ownership.

REAL PROPERTY - In Federal and Federal-aid projects, Title III, Section 302 requires that all buildings, structures and improvements located upon the property to be acquired, or which will be adversely affected, be considered real property, even if owned by a tenant who is required to remove such buildings, structures or improvements at the expiration of the lease. This would apply even if the buildings, structures or improvements were considered relating to landlord and tenants or taxation.

SALVAGE VALUE - The term "salvage value" means the probable sale price of an item, if offered for sale on the condition that it will be removed from the property at the buyer's expense, allowing a reasonable period of time to find a person buying with knowledge of the uses and purposes for which it is adaptable and capable of being used, including separate use of serviceable components and scrap when there is no reasonable prospect of sale except on that basis.

UNECONOMIC REMNANT - A parcel of real property in which the owner is left with an interest after the partial acquisition of the owner's property, and which the acquiring agency has determined has little or no value or utility to the owner.

NOTE:

An uneconomic remnant may have substantial "market" value and still have little or no value or utility to the owner.

VALUE FOR REMOVAL - Defined as "Salvage Value", see above.

  1. This publication deals with direct Federal acquisitions. State or local acquisitions have to take into consideration State laws and decisions regarding the method of valuation such aspaying for the part taken,consideration of special or general benefitsand whether such are deducted from damages and the value of the part taken.

  2. US v. Miller, 317 US 369, 87L Ed 336,63 S Ct. 276

  3. Shoemaker v US 147 US 282, 37 L Ed 170, 13 S Ct. 361

  4. US v Toronto, Hmilton and Buffalo, 338 US 396

Electronic version of Publication No. FHWA-PD-93-032

To provide Feedback, Suggestions or Comments for this page contact Kathleen Facer kathleen.facer@fhwa.dot.gov.

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