The Appraisal Process can be broken down into 6 general steps and are as follows:

1. Problem Identification (identify intended use & users, effective date of the opinion of value and all relevant characteristics).

2. Identify the Scope of Work (determine what kind of data is needed to complete the appraisal competently).

3. Applicable Data Collection and Analysis (research market area data, subject property data and comparable property data).

4. Application of the Approaches to Value (use data collected in step 3 to complete the best suited approaches to value).

5. Reconciliation (explain findings and report findings).

6. Report Defined Value (submit completed report to the identified client(s) stated in the Scope of Work).

There are three approaches to value appraisers use:

1. Sales Comparison Approach – This approach is the most frequently developed approach in a market value assignment and compares the Subject property to similar (comparable) properties.

2. Income Approach – This approach to value typically applies to income producing properties (duplexes, multiplexes, etc) for which income and expenses are readily available and used to form an opinion of market value. But caution is encouraged since income and expense figures reflect a property’s past performance and will not necessarily reflect future projections.

3. Cost Approach – This approach is applicable for unique properties (government buildings, historical properties, etc) and newly constructed improvements when the type of value in the assignment is insurance value.

Appraisers pick comparable properties using a variety of factors such as square footage, quality levels, condition of improvements, acreage, sale date, etc. Due to many properties being unique, an appraiser may use selected comparable sales to bracket one or more of the Subject’s pertinent characteristics, and other sales to bracket the remaining characteristics, then reconcile their adjusted values to derive an opinion of value.