2016_Yellowbook_AppraisalReportRequirements_revised_10_16_2018~27.pdf

2016 Yellowbook Requirements for Appraisal Reports, rev 10/15/18

Part I: Introduction

Title Page (2.3.1.1) pg 58

☐ Should include:

☐ Property Name ☐ Street address ☐ Agency assigned tract or parcel number ☐ Name and address of appraiser ☐ Effective date of the appraisal

Letter of Transmittal (2.3.1.2) pg 58

☐ Should include:

☐ Date of letter ☐ Identification of the property ☐ Identification of the property rights appraised ☐ A reference that the letter is accompanied by an appraisal report ☐ Effective date of appraisal ☐ Identification of hypothetical conditions ☐ Identification of extraordinary assumptions ☐ Identification of limiting conditions, or legal instructions ☐ Value opinion (in partial acquisitions, opinion of the value of the larger parcel before the acquisition and the remainder property after the acquisition, the difference)

☐ Appraiser’s signature

Table of Contents (2.3.1.3) pg 58

☐ Major parts of the report and subheadings should be listed

☐ Items in the addenda shall be listed individually inspection of the property appraised and that the property owner, or his/her designated representative, was given the opportunity to accompany the appraiser on the property on the property inspection. inspection;

☐ No one provided significant professional assistance to the appraiser.

☐ Shall include opinion of market value as of effective date of value (Before & After) ☐ Shall include appraiser’s signature

☐ The statements of fact contained in this report are true and correct.

☐ The reported analyses, opinions, and conclusions are limited only by the reported assumptions, limiting conditions, and are my personal, impartial, and unbiased professional analysis, opinions, and conclusions.

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

☐ I have performed no (or the specified) services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment.

☐ I have no bias with respect to the property that is the subject of this report or to the parties involved with the assignment.

☐ My engagement in this assignment was not contingent upon developing or reporting predetermined results.

☐ My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.

☐ No one provided significant real property appraisal assistance to the person signing this certification.

(If there are exceptions, the name of the individual providing assistance must be stated.)

☐ The appraisal was developed and the appraisal report was prepared in conformity with the Uniform Appraisal Standards for Federal Land Acquisitions;

☐ The appraisal was developed and the appraisal report prepared in conformance with the Appraisal Foundation’s Uniform Standards for Professional Appraisal Practice, and complies with USPAP's Jurisdictional Exception Rule when invoked by Section 1.2.7.2 of the Uniform Appraisal Standards for Federal Land Acquisitions and;

☐ The appraiser has made a physical inspection of the property appraised and that the property owner, or [his/her] designated representative, was given the opportunity to accompany the appraiser on the property inspection.

☐ Shall include opinion of market value as of the effective date of value (Before & After) ☐ Shall include the appraiser's signature

Appraiser's Certification (2.3.1.4) pg 58

Executive Summary (2.3.1.5) pg 59

☐ Shall report the major facts and conclusions that led to the final value

☐ Identification of property appraised

☐ Highest and best use (both before & after the acquisition if a partial acquisition)

☐ Brief descriptions of improvements (both before & after the acquisition if a partial acquisition)

☐ Indicated value by each approach ☐ Sales ☐ Income ☐ Cost

☐ Final opinion of value (both before & after the acquisition if a partial acquisition)

☐ Hypothetical conditions ☐ Extraordinary assumptions ☐ Limiting Conditions or instructions ☐ Effective date of value

Photographs (2.3.1.6) Pg 59 ☐ Improvements, if any, shall be of:

☐ Front elevation ☐ Any unusual features ☐ Views of abutting properties ☐ Views of the property directly opposite ☐ Interior photographs

☐ Should be numbered

☐ Should include a brief description of picture, date taken and person taking the picture

☐ Should show location of each photograph, including direction shown on a plat map, an aerial may be included

Statement of Assumptions and Limiting Conditions (2.3.1.7) pg 59

☐ Any A & L C’s that are necessary to the background of the appraisal shall be stated

☐ Any provided agency or special legal instructions shall be referenced (i.e.

hypothetical conditions & extraordinary assumptions)

☐ Copy of instructions shall be included in addenda

☐ Any encumbrances against the property shall be stated

☐ All encumbrances must be identified in this portion of the report

☐ Must avoid ‘boiler-plate’ assumptions

☐ Must avoid assumptions and limiting conditions of appraiser’s own conclusion

☐ No unauthorized hypothetical conditions, assumptions or limiting conditions

☐ In partial acquisitions, the appraiser should identify those hypothetical conditions, and assumptions & limiting conditions that apply to both the before and after acquisition appraisals, those that apply only to the appraisal of the larger parcel, and those that apply only to the remainder.

Scope of Work (2.3.1.8) Pg 60

Shall identify the following in this section:

• Client

• Intended users

• Intended use

• Definition of market value (1.2.4)

• Effective date of value

• Property Characteristics (1.2.6) o Property interests appraised o Legal description o Property Inspections o Landowner contacts

• Assignment Conditions (1.2.7)

☐ Should describe the scope of investigation and analysis of the appraisal

☐ Geographical area and time span search for market data should be included

☐ Description of the type of market data researched and the extent of market data confirmation should be included

☐ Should state references and data sources relied upon (may show within applicable approaches to value)

☐ Applicability of all standard approaches to value shall be discussed and the exclusion of any approach explained.

☐ Clear explanation and discussion of any hypothetical condition or extraordinary assumption and the implications of such use must be in this section

Part II – Factual Data

Legal Description (2.3.2.1) pg 61

☐ Legal description shall be complete – if lengthy included in the addenda

☐ Should reference parcel or tract number to property if provided

☐ Legal description should be verified (1.2.6.2)

☐On the ground during physical inspection

☐With the owner of the property (if possible)

☐By comparing it with aerial or other maps available in city, county, or other governmental office

☐By comparing it with public records

Area, City and Neighborhood Data (2.3.2.2) pg 61

☐ Must be kept to absolute minimum and include only such information that directly affect the appraised property

☐ Should only include information that directly affects the subject property, together with the appraiser’s conclusions as to significant trends

☐ “Boilerplate” data should be excluded

☐ Changes in the neighborhood brought about by the government’s project shall be disregarded (see pg 61 for more info)

Property Data (2.3.2.3) pg 61

Site (2.3.2.3.1) pg 61

Description of:

☐ Present Use ☐ Accessibility and road frontage

☐ Assignment conditions cont.(1.2.7)

☐ Instructions ☐ Hypothetical conditions (HC) ☐ Extraordinary assumptions (EA)

☐ Clearly identify and explain the implications of any HC and EA

☐ Jurisdictional Exceptions

Shall include:

• An explanation of the intended use for the appraisal.

• A description of the property rights appraised.

☐ Land contours and elevations ☐ Soils ☐ Vegetation (including timber) ☐ Views ☐ Land area ☐ Land shape ☐ Utilities ☐ Mineral deposits ☐ Water rights associated with the property ☐ Easements ☐ Hazardous substances (1.3.1.1) ☐ Affirmative statement required if the property is located within a flood hazard area (should reference FEMA map)

☐ Discussing of the beneficial and detrimental factors inherent in the location of the property

☐ Statement must be included of the existence or nonexistence of commercially valuable mineral deposits

☐ Description of all improvements in narrative or schedule form, including their:

☐ Dimensions ☐ Square foot measurements ☐ Chronological and effective age ☐ Dates of significant remodel/renos ☐ Condition ☐ Type and quality of construction ☐ Present use and occupancy ☐ Description of all site improvements, i.e., fencing, landscaping, paving, irrigation systems and domestic and private water systems

☐ Should coordinate description with pictures and a plot plan and/or floor plan

☐ Fixtures (2.3.2.3.3) pg 62

☐ Description of all fixtures with a statement of the type and purpose of each

☐ When fixtures represent a substantial portion of the property’s value, retention of a fixture valuation specialist should be considered

Use History (2.3.2.3.4) pg 62

☐ Brief statement of use of property as vacant and improved

☐If improved, state the purpose for which the improvements were designed and the dates of original construction and major renovations, additions, and/or conversions.

☐ Ten-year record of all use and occupancy of the property

☐ If indeterminable – statement of that fact

Sales History (2.3.2.3.5) pg 62

☐ Ten-year record of all sales (including offers to buy or sell the subject if available)

☐ If none, last sale of property shall be reported

☐ Information reported shall include:

☐ Seller’s name ☐ Buyer’s name ☐ Date of sale ☐ Terms and conditions of sale ☐ Appraiser’s verifications of the sale and whether the transaction met the conditions required for a comparable sale under Section 1.5.2.2

Rental History (2.3.2.3.6) pg 63

☐ Last three years of rental and lease history

☐ All current leases should be reported, including:

☐ Date of lease

Improvements (2.3.2.3.2) pg 62

☐ Name of tenant ☐ Rental amount ☐ Term of the lease ☐ Parties responsible for property expenses ☐ Other pertinent lease provisions ☐ Appraiser must describe the verification process and whether the lease(s) meets the conditions required or a comparable lease

Assessed Value and Annual Tax Load (2.3.2.3.7) pg 63

☐ Current assessment and dollar amount of real estate taxes

☐ If the property is not assessed, an estimate of the assessment, tax rate and estimate amount of tax should be included

Zoning and Other Land Use Regulations (2.3.2.3.8) pg 63

☐ Identify zoning, must be in descriptive terms

☐ Other local land use regulations, such as:

☐ Set-back requirements ☐ Off street parking requirements ☐ Open space requirements

☐ Should make note any master, or comprehensive land use plan that may affect the utility or value of the property

☐ Must state if the property was recently rezoned and the appraiser must determine if the rezoning was a result of the government’s project. If so, the appraiser must justify this conclusion and disregard the rezoning.

☐ If rezoning is probable, discuss in detail under Section 2.3.3.1 (HBU) The mere assertion by an appraiser that a property could be rezoned is insufficient.

☐ Must identify all other land use and environmental regulations that have an impact on the HBU and value of the property.

☐ Impact must also be discussed in the HBU analysis.

☐ Must discuss the impact of any private restrictions on the property, such as deed and/or plat restrictions.

Part III – Data Analysis and Conclusions

Highest and Best Use (2.3.3.1) pg 63

☐ Must clearly support the highest and best conclusion

Four Tests (2.3.3.1.1) pg 64

☐ The four criteria must be addressed, physically possible, legally permissible, financially feasible and highest value.

☐ As improved, if applicable

☐ Must describe the analysis developed under Section 1.4 concerning HBU as if vacant

☐ Must discuss the physical characteristics of a property that may influence use and value and should be described in adequate detail

☐ Must describe the legal constraints on the property that were identified and analyzed under Sections 1.3.1.3 and 1.4.5

☐ Should describe the zoning requirements and other legal constraints and their impacts discussed

☐ Must describe in sufficient detail if the HBU conclusion requires some other form of governmental approval and the probability of obtaining those approvals

☐ If HBU conclusion requires rezoning, the probability of the rezoning must be thoroughly investigated, analyzed and reported

☐ Financial feasibility of those uses which are both physically possible and legally permitted should be addressed.

☐ All feasibility or comparative studies developed under Section 1 should be described here

☐ Should discuss the use of the property as if vacant, which results in the highest value, and the analysis that supports that conclusion and should identify the timing of the use and the likely purchaser and user

☐ If improved, must address the HBU following the same process as described above

Larger Parcel (2.3.3.1.2) pg 65

☐ Analysis that led to the larger parcel determination and the determination itself must be reported

☐ Each of the three tests must have sufficient detail to fully understand the conclusion

☐ Determination of the larger parcel must be describe in every appraisal assignment

Applications of the Approaches to Value Land Valuation (2.3.3.2) pg 65

☐ Shall report the opinion of value of land for its HBU as if vacant

Sales Comparison Approach (2.3.3.2.1) pg 65

☐ In reporting the results of the sales comparison approach for land valuation, shall provide detailed descriptions of confirmed sales of lands that have the same or similar HBU

☐ Description of each sale transaction used as a comparable sale should at minimum include:

☐ Date of transaction ☐ Price paid ☐ Name of Seller ☐ Name of Buyer ☐ Size of property ☐ Location ☐ Zoning or other legal constraints ☐ Description of physical characteristics ☐ The person with whom the transaction was verified with

☐ Differences shall be considered and adjustments made to the sales

☐ Adjustments must be summarized in an adjustment grid

☐ Each adjustment should be supported with market data

☐ Data and analysis must provide sufficient detail to understand the data, analysis and the logic of the determination of the market value

Subdivision Development Method (2.3.3.2.2) pg 65

☐ If HBU is for subdivision, must address all of the factors and assumptions used in sufficient detail.

☐ Must clearly present the market support for each factor used in the analysis

☐ DCF prepared as part of the analysis must be included in the report

Cost Approach (2.3.3.3) pg 66

☐ Should be in the form of a computational data, arranged in sequence with reproduction or replacement cost and should state the source

☐ Entrepreneur’s profit must be considered and discussed and should be derived from market data whenever possible

☐ If services of a contractor or professional was retained, this data should be referenced and included in the addenda

☐ Dollar amount of depreciation from all causes shall be explained and deducted (see

1.5.3 for discussion on estimating depreciation under these Standards)

Sales Comparison Approach (2.3.3.4) pg

☐ Must contain a sufficient description of the comparable sales

☐ Comparable sale pictures must be included and should show the date taken and name of the person taking the picture

☐ Each comparable sale shall include:

☐ Buyer’s name ☐ Seller’s name ☐ Date of sale ☐ Legal description (may be abbreviated if lengthy or reference made to a tax parcel number)

☐ Type of sale instrument

☐ Document recording information

☐ Price ☐ Terms of sale ☐ Location ☐ Zoning ☐ Present Use ☐ Highest and best use ☐ Brief physical description of the property

☐ Plot plan or sketch of sale should be included

☐ A photograph shall be included

☐ Comparable sales map shall be included

☐ Qualitative adjustments must have more extensive discussion

☐ It is essential to have both overall superior and overall inferior sales to the subject

☐ Shall include an explanation of the comparative weight given to each sale

☐ A comparative adjustment chart or graph is required

☐ All comparable sales must be verified… typically requires confirmation by the buyer, seller or other person knowledge of the price, terms and conditions of sale. (4.4.2.3)

☐ Not all property transactions can be used as potential comparable sales in valuations for federal land acquisitions.

Several types can only be used under certain circumstances or for limited purposes.

Extraordinary verification must be taken for questionable sales, i.e. government sales, sales to environmental or other public interest organizations (4.4.2.4)

Income Capitalization Approach (2.3.3.5) pg 67

☐ Shall include adequate factual data to support each figure and factor used

☐ Estimated gross economic (or market rent), or income

☐ Allowance for vacancy and credit losses

☐ An itemized estimate of total expenses

☐ Itemized estimate of the reserves for replacements, if applicable

☐ Capitalization rate of net income shall be at the prevailing rate for the particular type of property and location

☐ Subject property’s historical income and expense information (if available) should be included in this section

Reconciliation and Final Value Opinion of Market Value (2.3.3.6) pg

☐ Must explain:

☐ The reasoning applied to arrive at the final opinion of value ☐ How the results of each approach to value were weighed in that opinion ☐ Reliability of each approach to value

☐ Shall state the final opinion of value as a single amount, including contributory value of fixtures, timber, minerals, and water rights if any. Avoid summation appraisal.

Factual Data – After Acquisition (Partial Acquisition Only) (2.3.4) Pg 68

Similar to Sections 2.3.2.1 to 2.3.3.6 but on the remainder property and includes the following:

Acquisition Analysis (Partial Acquisitions Only (2.3.6) pg 70

The requirements in Sections 2.3.6.2 and

2.3.6.3 are identified to meet obligations under the Uniform Act.

Recapitulation (2.3.6.1) pg 70

☐ Must report the difference between the value of the larger parcel and the value of the remainder

Allocation and Damages (2.3.6.2) pg 71

☐ Damages, as such, are not appraised.

However the appraiser shall briefly explain any damages to the remainder property and allocate the difference in the value of property before and after the acquisition between the value of the acquisition and damages to the remainder.

☐ Should note such allocation is an accounting tabulation and not necessarily indicative of the appraisal method employed.

☐ If damages have been measured by cost to cure must justify the cost to cure and demonstrate the cost to cure is less than the damage.

☐ Shall identify any special or direct benefits accruing to the remainder property and explain how and why those benefits have occurred

☐ Quantitative adjustment is appropriate when there are adequate market data to reliably quantify the effect of a sale characteristic in terms of a percentage or dollar amount.

☐ Qualitative adjustment may also be appropriate – and necessary – where market data does not support a quantitative adjustment

Exhibits and Addenda (2.3.7) pg 71 Legal Instructions pg 71

☐ Must be presented

Special Benefits (2.3.6.3) pg 71

Should be arranged in detailed form to show:

Location Map pg 71

☐ Should display the location of the appraised property with the city or area it is located

☐ Should include a north arrow and identification of the subject property

Comparable Data Maps pg 71

☐ Should include a north arrow and the locations of both the comparable sales and the subject property

Detail of Comparable Sales and Rental Data pg 71

☐ May be included in the body of the report

☐ Photographs must be included

Plot Plan pg 71

☐ Should help to visualize the property and the scope of the appraisal considerations

☐ Should depict the entire subject property, including dimensions and street frontage

☐ Structural improvements should be shown in their approximate locations

☐ Dimensions of improvements should be noted

☐ Should include a north arrow

☐ Location from which each picture was taken with an identification number and the direction should be identified

☐ In partial acquisitions:

☐ Should identify the remainder area and its dimensions.

☐ Should show any significant features of the government project

Floor Plan pg 72

☐ Only required when necessary to describe a unique property or value opinion

Title Evidence Report pg 72

☐ Title evidence report should be included if provided, if lengthy can be referenced

Other Pertinent Reports and Exhibits pg 72

☐ Any written instructions

☐ Specialist reports

☐ Pertinent title documents (leases or easements)

☐ Any charts or illustrations referenced in the body of the report

Qualifications of Appraiser pg 72

☐ Qualifications of all appraisers or technicians who made significant contributions

See page 72 for leasehold acquisitions Project Appraisal Reports (2.5) pg 73

☐ A separate opinion of market value must still be developed for each acquisition; but the results of each valuation can be in one report. See page 73 for more on the report requirements

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