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TYPES OF APPRAISALS
Real estate is one of your most significant assets, and our staff at Knight & Company Appraisals can help you determine its true value and devise strategies to increase that value over time.
Impartial and highly credible, our members can provide the most creative, insightful solutions to optimize property value — from suggesting targeted renovations to advising on the latest green-building trends.
Partnering closely with our clients, the appraisers at Knight & Company can focus on the most complex valuation projects, including marketing analysis, forecasting and budgeting. Our services are varied and flexible to meet your individual requirements.
What is an Appraisal?
An appraisal is a formal, impartial estimate or opinion of value, usually written, of an adequately described property, as of a specific date, and supported by the presentation and analysis of relevant data. It is prepared as a result of a retainer, for reliance by identified parties, and for which the appraiser accepts responsibility.
Types of Appraisal Reports
While professional standards do not dictate the form, format or style of reporting, the appraiser is bound by certain recognized rules as to content. The extent to which this content is detailed will determine the appropriate type of appraisal report to be prepared. Typically, types include a bound narrative - from concise and briefly descriptive to comprehensive and detailed - and a form report generally used to support a residential mortgage application.
Any limitations imposed on the assignment may affect the level of risk accepted by each party to the assignment. In every case, however, the appraiser must comply with the standards of professional practice.
Most commercial appraisals are prepared in either a Full Narrative Format, Concise Narrative Format or our exclusively designed "Knight Format".
Full Narrative Reports, appropriate where all aspects of an assignment are researched and reported. No modification or exclusion of a Standard Rule (requiring what is referred to as an Extraordinary Limiting Condition) is permitted in a Full Narrative report.
A Concise Narrative Report is intended to comply with the reporting requirements set forth under the Canadian Uniform Standards for a short narrative appraisal report. It is distinguished from the more comprehensive Full Narrative Appraisal Report format only in the level of detail contained in the report. As such, it presents only summary discussions of the data, reasoning and analyses that were used in the appraisal process to develop the appraiser's opinion of value.
A Form Report is generally represented by its standardized format combining check-off boxes and narrative comment. This format is traditionally employed for all residential appraisals.
What Appraisal Reports Contain
- The Estimate (or Opinion) of Value
- The Effective Date of the Appraisal
- The Certification and Signature
- The Purpose of the Appraisal
- The Qualifying Conditions
- The Condition of the Neighborhood
- An Identification of the Property and its Ownership
- An Analysis and Interpretation of the Data and the Assumptions Made
- The Processing of the Data by One or More of the Three Approaches to Value
- Other Descriptive Support Material Such as Maps, Plans, Charts, Photographs, etc.
The Residential Appraisal Form Report
This is a form completed by the appraiser on a residential property. The report includes general information, such as who owns the property, the address, legal description, taxes, assessed value and age of the dwelling. It also describes the neighborhood in terms of its age, distances to schools and shopping centres, common types of dwellings, services and utilities available, etc.
How Value is Estimated?
There are three basic methods of arriving at an indication of value:
- Cost Approach — estimates the cost to build a new building identical to the subject being appraised, at current prices, subtracting accumulated depreciation and adding the estimated land value.
- Income Approach — relates to income-producing property and is based on the theory that value is the present worth of the income stream which the property is capable of producing when developed to its highest and best use. The net operating income from the property is capitalized into value by an appropriate method and rate.
- Direct Comparison Approach — is based on the theory that an informed purchaser would pay no more for a property than the cost of acquiring another existing and equivalent property. The value estimate is based on the selling price and listings of comparable properties.
To arrive at a final estimate of value, the appraiser selects the value indicated by the approach most appropriate for the property and supported by the most reliable, factual and relevant market data, which has been analyzed and verified. These approaches to value are then reconciled into a final opinion of value.
Knight & Company Appraisals offers fully accredited appraisers with extensive experience in the appraisal of residential, agricultural, and commercial property, including:
- Single Family Residences
- Country Residential Acreages
- Agricultural Operations
- Commercial and Industrial Buildings
- Apartment Complexes
- Office Buildings
- Condominium Conversions
- Development and Vacant Land
- Hotels, Motels and Other Hospitality Properties
- Service Stations
- Going Concern Valuations
- New Construction Commercial Appraisals