To:       Applicants for Licensure and Certification

            From:  Idaho Real Estate Appraisal Board

            Re:  Appraisal Reports

            The Board has a Checklist available for use in PDF format on its web site at the following address: Actual Appraisal Reports  

            We have noticed that several items are routinely missing or incomplete in submitted reports.  The often missing items are as follows;

  1. Land Value Support:  This seems to be particularly true of residential appraisal reports that the Board reviews.  The report must discuss the various methods that are available for use and state the units of comparison relative to the market.  The comparable land sales must be referenced, preferably in grid form and accompanied by an analysis of the rationale for adjustments and conclusion
    .
  2. Depreciation Analysis:  The Board feels it is important for applicants to demonstrate the ability to analyze physical depreciation from the real estate market in which the appraisal uses as a basis.  Depreciation extraction methods can be found in The Appraisal of Rural Property, 2nd Edition pages 219 & 220 and in The Appraisal of Real Estate, 12th Edition, pages 390 & 391.  Following is a short example format of a residential analysis;

      Item

 

 

 

Sale  Price

$175,000

$192,000

$188,500

Land Value

45,000

50,000

47,500

Imp, Contributory Value

130,000

142,000

141,000

Sale Date

Jan-05

Mar-05

Mar-05

Est Reconstruction Cost

175,000

190,000

190,000

Less Contributory Value

-130,000

-142,000

-141,000

Accrued Depreciation

$45,000

$48,000

$49,000

Percent Depreciation

25.71%

25.26%

25.79%

Effective Age (years)

26

22

25

Est Dep. per Year

0.99%

1.15%

1.03%
  1. Gross Rent Multiplier Analysis:  The appraisal report should clearly illustrate the derivation of Gross Rent and/or Gross Income Multipliers as well as demonstrate that the multipliers are being derived from property with similar characteristics as those of the subject.

    2.  

  2. Capitalization Rate Analysis:  Similar to the above discussion the derivation of the overall rates from the market should be presented in a clear format and be accompanied by discussion demonstrating the similarity and or adjustments necessary for proper utilization.

The above are examples of common deficiencies found in appraisal reports that have been submitted, that have led to increased time spent by applicants to become licensed.  An applicant needs to pay particular attention to the Checklist as mentioned above and make sure all items are covered.