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Credible Appraisal Report



By: Joseph M Cornell, CMA, ASA, ISA

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Many years ago I was standing in front of a group of attorneys, who were talking about a document labeled “Appraisal” that had a list of items on it, and a corresponding column of figures, with the titles for the columns being “Item,” and “Value.”  There were three pages that were similar, without any other information being supplied.  As an appraiser, who was there to talk to these attorneys about appraisal reports and what makes them credible, I explained to them that if you were driving past a pasture that had a donkey standing in it that had a sign around its neck that said “Tractor,” that the sign did not make the donkey a tractor, even if the donkey had been painted green and white.

There are four generally recognized legs that support a credible appraisal:

1.Personal credibility; each appraiser must be able to establish his own personal credibility.

2.Proper appraisal standards, USPAP

3.Proper connoisseurship of the items being appraised; each appraiser must be able to establish and defend his/her own personal knowledge and connoisseurship of the items being appraised.  If you cannot properly identify an item you cannot properly appraise it.

4.Indisputable and recognizable logic; logic is the glue that holds a credible appraisal report together and makes it understandable and easy to follow.  Without proper appraisal logic, an appraisal report cannot possibly be considered to be credible.

An appraisal report that is not supported by these four elements can not considered to be credible.

The Congress of the United States founded an organization called the Appraisal Foundation, which resides in Washington DC.  Every year this organization puts out a large document that is called The Uniform Standards of Professional Appraisal Practice that is referred to as USPAP.  These are the standards that must be used by an appraiser for his/her appraisal report to be considered credible within the appraisal industry and by his/her peers.

Below, you will find a list of those items that are currently required to be in an Appraisal Report in order for it to be considered credible.

“Required” means that an Appraisal Report will fail the credibility test, if the required element is not present and properly presented, and not listed in the Table of Contents.)

Transmittal Letters are not a USPAP requirement but are highly recommended because they are a good tool to introduce yourself and the key information in regards to the Appraisal Assignment. Transmittal Letters should be a succinct summary of the essential elements of the Appraisal Report, and should include, at a minimum – the name of the client, the intended use and the intended users, the purpose of the Appraisal, the effective date and the date of the Appraisal, a brief description of the property being appraised, the type of value and the value definition, and the Value Conclusion. Based on circumstances, include brief verbiage of any other points that convey clarity and understanding. Signature required at end of letter. Executive Summaries are optional and if used, should contain similar information and be placed at the beginning of the body of the report.

Title Page (Required) This is a good place to put some basic information, if tastefully done, e.g., name of party retaining the Appraiser, name of the client, effective date, purpose of the appraisal, relevant value, date Report was prepared, Appraiser’s name, telephone number and address, etc.

Table of Contents  (Required) Always a good idea; containing location of the 22 necessary elements in every credible appraisal report. Not required by USPAP, but highly recommended and required in appraisal reports submitted to the IAG for review. It should include, but not be limited to, all the items in this document labeled “Required.”

(The following must be contained in every Appraisal Report. They do not have to be in any particular sequence but the report must flow in a logical fashion and be clear to all readers. The sequence below is suggested but not required – however be sure to include all required elements. All Appraisers develop their own style over time.)

Required-  Report identified as Self-Contained, Summary or Restricted Use.

Required -Name of party retaining the Appraiser

Required- Name of client, even if same as above

Required – Intended Users

Required – Intended Use

Required – Purpose

Required – Effective date of the Appraisal Report

Required– Date report was prepared (Day it is signed)

Required- Date and location of inspection, if applicable (if inapplicable, proper treatment for this set of circumstances must be correctly handled within the Appraisal Report as an appraisal report with extraordinary assumptions attached.

Required- Rights or interests in the property to be appraised (e.g., leasehold, fractional, undivided interest)

Required- Any known ownership restrictions, or legal restriction.

Required – Hypothetical Conditions, if any – should be clearly labeled and repeated in all appropriate sections of report

Required – Extraordinary Assumptions

Required – Highest and Best Use

Required – Most Appropriate Market

Required- Statement that the opinion of value is only for the stated valuation date and only for the stated purpose.

Description of the Property:

Required- General description of the Property to be appraised (automobile, motorcycle, firearm collection, antique furniture, etc.)

Required- More specific description of the property to be appraised (1996 Oldsmobile, Honda motorcycle, Winchester rifle, Victorian hall tree, etc.)

Required-Literal description of the property being appraised – Measurements/ dimensions (if important), Manufacturer/ artist (if known),  Materials (if known) (sometimes exact woods, and types of steel, etc. are very hard to identify, so be sure that  you are correct if you’re going to list the material from which the item was manufactured.), Distinguishing features and/or identifying details Markings, printing, identifying marks, tags, etc., Condition of property – note any damage or inappropriate repairs observed

Approaches to Value: 

Required – Define all three Approaches to Value

Required -Market comparison approach to value described

Required- Cost approach to value described

Required -Income approach to value described

Required Written consideration of all three approaches

Required – Reasoning for choosing any approach(es)

Required – Reasoning for excluding any approach(es)

Scope of Work:

Required- Scope of Work is very important for the Appraiser to develop this element of an Appraisal Report properly, consistently, and most importantly adequately. The statement relative to the Scope of Work should explain the approach you used to solve the Appraisal problem. It should say what you did, why you did it, and how you did it.


Required – Information analyzed and Appraisal Procedure

The following are required, as appropriate

Value characteristics as appropriate

Comparables, if used – Date of sale (all relevant dates should be included.)

Price realized of comparables

Adjustments for differences between items

Required -Is highest and best use discussed?

Statement as to relative markets

Context of the relevant market

Relevant market (highest and best use)

Required – Research conducted (not necessarily in great detail as this should be done in the Scope of  Work)

Relevant time frame

Required -Analysis

Type of Value:

Required -Type of value clearly stated and defined

Definition of Value

Required-Appropriate value conclusion indicated

Required-Clearly stated and properly defined

Required – Limiting Conditions:

Limiting conditions can drastically decrease an Appraiser’s liability; consequently, they are very important. They should always be discussed with an attorney, and improved and reworded as an Appraiser’s experience dictates and grows and as situations dictate. (The following Limiting Conditions are only a few of those that most appraisers use. This is not a definitive list.)

General limiting conditions, e.g., furniture was not moved or disassembled, artwork was not removed from frame, etc.

Specific limiting conditions (car engine not running but the Appraiser is advised that the motor runs well.)

Limitations on subject property inspection (poor lighting conditions, etc.)

State continuing obligations (statement as to when they Appraiser’s obligations are finished, and when, if any, a new Agreement is required for the Appraiser to do additional work.

Statement that the submission of the Appraisal Report completes the contractual obligation of the Appraiser, if this is the case.

Required -Assumptions: (These can be many, and are as useful as the Limiting Conditions. The Appraiser should spend time in developing those assumptions that will protect him and his work from being misunderstood, mischaracterized, or being properly understood, in the context of the Appraisal Assignment; also, assumptions can greatly reduce an Appraiser’s legal liability and legal exposure.) Here is a very small list of some possible assumptions; do not assume that this list is exhaustive, but rather, develop your own list based upon the relevant in appraisal assignment:

1 Any item(s) appraised is assumed to be what it purports/appears to be.

2 The appraiser assumes no responsibility for matters of a legal nature affecting the subject item, any third party involved, any unknown facts and/or the title thereto. The appraiser renders no opinion as to the title, which is assumed good and marketable. The item is appraised as though under responsible ownership. The Client/agent is anyone who initiates the appraisal with or without permission of the owner, e.g., courts, lawyer, insurance company, purchaser, lender, lien holder, etc.

3 Unless otherwise stated, it is assumed that neither is any item(s) appraised in this report an income producing item(s) nor does any item(s) have the potential to produce income. It is assumed that no item in this Report is a one-of-a-kind.

4 All sources of information used by the Appraiser, to include the Client/Owner, published information, and other sources are assumed to be credible and may be relied upon.

5 All items appraised are assumed salable, but not necessarily at the appraised value.

6 Unless otherwise noted, it is assumed that there is no provenance available on any item(s) appraised and no search has been made to establish any provenance.  Any provenance provided is assumed to be reliable.

Required – Privacy Statement (this Statement should indicate that all information provided by the Client is confidential, and will not be used or disclosed by the Appraiser, unless ordered to do so by a Court or by written permission obtained by the Client.)

Required-Appraiser’s Qualifications and Credentials

Valid and properly worded

Logically arranged

Education of Appraiser

Appraisal Background

Appraisal experience

Accreditation and/or certification, along with designations

  Required – Appraiser’s Certification as follows: (Signature, and date of signature are also required for the certification.)

All The statements of fact herein contained are true and correct.

The reported analyses, opinions, and conclusions are limited only by the reported assumptions, scope of work agreed to with the Client, and limiting conditions, and are my personal, unbiased professional analyses, opinions, and conclusions.

I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest or bias with respect to the parties involved.

I have no bias with respect to the property that is the subject of this report or to any party or parties and/or anything involved, whatsoever, in this assignment.

My compensation is not contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event.

My analyses, opinions, and conclusions were developed, and this report is intended to be in conformity with the Uniform Standards of Professional Appraisal Practice.

I have made a personal inspection of the property that is the subject of this report.

No other person has made a significant contribution to this report. (Or if another person has made a significant contribution to the report that person’s name should be indicated.)

Works Consulted (Bibliography)

Alphabetical order of the items listed in the bibliography

Germane (only those relevant to this report)

Consistent style (grammatically correct)

Grouped by type

Publications consulted

Authorities and experts consulted


Galleries, retail sources, auction houses

Internet sources used


Technical terms defined or listed in glossary

(Glossary should include pertinent appraisal terminology relevant to the type of item being appraised, and appraisal terminology.)

Photographs (if required) Minimum size 3″x 5″

Numbered and properly referenced, if needed

Graphs, Exhibits, Tables (if applicable) ; Titled/captioned appropriately

Overall Appearance and Language:

Required-Not misleading

Required -Contain sufficient information to enable the intended users to understand the report properly

Required -Departures from specific requirements of USPAP Standard and the reasons for said departure, excluding any of the usual valuation ” approaches are not allowed for advancement or student appraisals.

Readable font size (11 pt. minimum)

Pages numbered

The requirements as contained in this document are not necessarily self-explanatory and may need to be discussed item by item for clarification and proper understanding.  If the reader has any questions, they should consult the author for further information.  All readers of this document use it at their own risk and liability, as the information herein contained may not be current and all-inclusive.