1. What is appraisal report?

2. What does an appraisal report contain?

3. Types of reports, (i) written and, (ii) Oral.
4. Types of written report; (i) Letter of Opinion
(ii) form and, (iii) Narrative.
 WHAT IS AN APPRAISAL REPORT
The single purpose of a written appraisal report is to inform, not impress. In so
doing, it should communicate the necessary data, reasoning, and opinions that
were part of the valuation process.
An appraisal report leads a reader from the definition of an appraisal problem
through reasoning and analysis of relevant descriptive data to a specific
conclusion.
The appraiser must present all facts, reasoning and conclusions clearly and
succinctly.
The length, type, content of appraisal reports are dictated by the client or
intended user, regulatory requirements, the courts, the type of property being
appraised, and the nature of appraisal problem.
Every appraisal report is prepared to answer a particular question and provide the
information needed by a client or intended user.
The report is designed to be a decision making tool regarding a problem to be
solved.
 WHAT DOES THE APPRAISAL
REPORT CONTAIN
Each report must reflect a credible estimate of value and must identify the
following:
The client and other intended users.
The intended use of the report.
The purpose of the assignment. Most often the appraisal is conducted to
determine market value for purpose of a sale or exchange.
The type of value reported and the definition of the value reported.
The effective date of the appraiser's opinions and conclusions.
Relevant property characteristics, including location attributes, physical attributes,
legal attributes, economic attributes, the real property interest valued, and Non
real estate items included in the appraisal, such as personal property, including
trade fixtures and intangible items.
All known: easements, restrictions, encumbrances, leases, reservations,
covenants, contracts, declarations, special assessments, ordinances, and other
items of a similar nature.
Division of interest, such as fractional interest, physical segment and partial
holding.
The scope of work used to complete the assignment.
 TYPES OF REPORTS
1. Written Report

A written appraisal report may be a narrative, a

letter, or a form. Regardless of the format of the
report, the appraiser must keep a file containing all
materials, data, and working papers and must be
able to reconstruct the reasoning and conclusions if
ever required to explain or defend the opinion
Cont. Types of report
2. ORAL REPORT

An unwritten appraisal report that includes a property description

as well as all facts, assumptions, conditions, and reasoning on which
the conclusion is based.

The appraiser may make an oral report when the circumstances or

the needs of the client do not warrant a written report.

After communicating an oral report, the appraiser should keep on

file all notes and data relating to the assignment and a complete
memorandum of the analysis, conclusions, and opinions.
 TYPES OF WRITTEN REPORT
1. LETTER OF OPINION REPORT OR LETTER REPORT

o The letter of opinion has limited utility, however, because it provides none of the
supporting data that the appraiser used to determine the value estimate and no
discussion of the particular methods used and how any differences in valuation
between methods were reconciled.

o A typical letter report sets forth only the conclusions of the appraisers
investigation and analyses. Much data and reasoning are omitted from a letter
report, but all minimum report writing requirements should be met.

o Although the usefulness of a letter report is limited, a client may desire and
specifically request that the appraiser communicate the opinion in a letter without
detailed documentation.

o The appraiser must keep all notes and data on file, with a complete summary of
the analysis, conclusions, and opinions.
Cont: Written Report

2. FORM REPORT

Form reports are designed in combination checklist and fill-in-the-blank

format and usually accompanied by one or more exhibits depicting the
subject property and comparables.
Form report allows for standardization of information and provides an
efficient and uncomplicated way to present a survey of background
research and data on the subject property and comparables.
The completed report should be consistent in its description of the
property and should provide all the data indicated by the listed categories.
The properties and neighborhoods compared should be as similar as
possible and all appropriate adjustments should be made.
If the form does not provided for the inclusion of appropriate data and
explanations, the appraiser must add these in an addendum.
Cont.. Form Report
A form appraisal report is unacceptable if the
appraiser fails to do :
a. Consider the purpose of the report, the value
definition, and the assumption and
conditions inherent in the report.
b. Question the client about any underwriting
criteria that conflict with proper appraisal
practice (age, encroachment, pinpointing).
c. Conduct an appropriate review before
signing the report.
 GENERAL CONTENTS OF FORM
REPORT
Part 1 - Property Description

Subject property includes basic information about the subject

property.
Neighborhood in which the subject property is located
including trends and other factors that affect the subject
property and its neighborhood.
Site data for the property under appraisal.
Description of improvements found on property under
appraisal.
Comments of appraiser regarding additional features of
property, condition of property improvements and adverse
environmental conditions.
Part 2 - Valuation Section

Cost approach analysis, including a breakdown of

reproduction cost figures.
Sales comparison approach analysis, including
itemization of factors contributing to price differences
between the subject property and comparable
properties.
Income approach analysis, using the right method for
the type of property.
Reconciliation statement, explaining how appraiser
correlated values derived by the appraisal approaches
used to arrive at a single final estimate of market value.
The appraiser signs the appraisal.
Cont. Written Report
3. NARRATIVE REPORTS

An important and frequently necessary tool in the valuation of complex

properties, however, particularly for establishing value as part of a legal
proceeding.
A narrative report gives the appraiser the opportunity to support and
explain the opinions and conclusions presented and to convince the
reader of the soundness of the final conclusion or value estimate.
The objective of a narrative appraisal report are to answer in writing, the
questions asked by a client and to substantiate those answers with facts,
reasoning, and conclusions.
In preparing a narrative appraisal report, factual and descriptive data are
presented in early sections, and subsequent analysis and interpretations
may refer to those facts and indicate how they influence the final value
estimate.
 STYLE AND FORMAT
An organized presentation for clients ease of understanding; order and detail
depend upon clients needs.
A. Generalized Outline (Order of Variable) Introduction, Title page; letter of
transmittal; table of contents; certification of value; summary of
important conclusion.
B. Premises of the appraisal, Qualifying and limiting conditions, including
general underlying assumptions; purpose of the appraisal; definition of
value and date of value estimate; property rights appraised.
C. Presentation of data, Identification of the property with photographs;
area, city, neighborhood and location of data; zoning and taxes; site
data; description of improvements; history.
D. Analysis of data and conclusions, Highest and best use of the land
though vacant; highest and best use of the property as improved; land
value; the sales comparison approach; the cost approach; the income
capitalization approach; reconciliation of the value indications to a final
value estimate.
 Sample of Certification of Value
I certify that, to the best of my knowledge and belief:

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 and limiting conditions, and are my personal
unbiased professional analyses, opinions, and conclusions.
I have no (or the specified) present or prospective interest in the property
that is the subject of this report, and I have no (or the specified) personal
interest or bias with respect to the parties involved.
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 has been prepared, in conformity with the ethics
and standards of practice.
I have (or have not) made a personal inspection of the
property that is the subject of this report. (if more than one
person signs the report, this certification must clearly specify
which individual did and which individuals did not make a
personal inspection of the appraised property.
No one provided significant professional assistance to the
person signing this report. (If there are exceptions, the name
of each individual providing significant professional assistance
must be stated.
Signature
Name of Appraiser
Position
 Sample of Limiting Conditions
1. This report is prepared at the request of (client) for the purpose of an appraisal
of market value to assist in ( ). It is not reasonable for any person other than ( )
to rely upon this appraisal without first obtaining written authorization from
(client) and this appraiser. The report is prepared on the assumption that no
other person will rely on it for any other purpose and that all liability to all such
persons is denied.
2. While expert in appraisal matters, the author is not qualified and does not
purport to give legal advice. It is assumed that:
a) a legal description as furnished by ( ) is correct;
b) title to the property is good and marketable;
c) there are no encroachments, encumbrances, restrictions, leases or
covenants that would in any way affect the valuation, except as
expressly noted herein;
d) the existing use is a legally conforming use which may be continued by
any purchaser from the existing owner, except as expressly noted
herein;
e) right of- ay, easements or encroachments over other real property and
leases or other covenants noted herein are legally enforceable.
3. Because these assumptions have been made, no investigation,
legal or otherwise, has been undertaken which would verify these
assumptions, except as expressly noted herein.
4. The author is not a qualified surveyor (and no legal survey
concerning the subject property has been provided). Sketches,
drawings, diagrams, photographs etc. are presented in this report
for the limited purpose of illustration and are not to be relied
upon in themselves.
5. The author is not qualified to give engineering advice. It is
assumed that there are no patent or latent defects in the subject
improvements, that no objectionable materials are present, that
they are structurally sound and in need of no immediate repairs,
unless expressly noted within this report.
6. No soil tests for either load bearing capacity or contamination
have been done, nor have tests been done of the heating,
plumbing, electrical, air-conditioning or other systems and, for the
purpose of this opinion, they are assumed to be in good working
order.
6. No investigation has been undertaken with the local zoning office,
the fire department, the buildings inspector, the health
department or any other government regulatory agency unless
such investigations are expressly represented to have been made
in this report. The subject property must comply with such
government codes and regulations and, if it does not comply, its
non-compliance may affect market value. To be certain of
compliance, further investigations may be necessary.
7. Market data has been obtained, in part, from documents at the
land registry office, or as reported by the real estate board. As
well as using such documented and generally reliable evidence of
market transactions, it was also necessary to rely on hearsay
evidence. Except as noted herein, a reasonable attempt has been
made to verify all such information.
8. Because market conditions, including economic, social and
political factors, change rapidly and, on occasion, without
warning, the market value expressed as of the date of this
appraisal cannot be relied upon to estimate the market value as of
any other date except with further advice of the appraiser.
9. The compensation for services rendered in this report does not include a
fee for court preparation or court appearance, which must be negotiated
separately. However, neither this nor any other of these limiting
conditions is an attempt to limit the use that might be made of this
report should it properly become evidence in a judicial proceeding. In
such a case, it is acknowledged that it is the judicial body which will
decide the use of the report which best serves the administration of
justice.
10. The appraisal has been prepared on the premise that the appraised
property is free and clear of all liens or encumbrances with the exception
of normal mortgage financing.
11. The distribution of the total valuation between land and improvements
applies only under the proposed program of property utilization and is
invalidated if the appraisal is used for any other purpose.
12. Information identified in this report as being furnished by others is
believed to be reliable, and has been checked to the best of the
appraiser's ability, although no responsibility is assumed for its accuracy
 GENERAL INFORMATION
The appraisal report is a detailed formal communication
of the appraiser's investigation of the property on
behalf of the client.

Whether oral, in a letter form, or narrative document,

the appraisal report must contain minimum elements
that are required for practical and professional reasons
that have evolved for many years ago based on theory
and practice.
In report writing the 10 basic elements of a written
appraisal report appraisers must understand the use
for, and the contents of the three types of written
appraisal reports.
ESSENTIAL ELEMENTS OF APPRAISAL
REPORT:

The form and content are generally governed by

good business practice and appraisal tradition.
Even the client contracts for a oral (verbal)
report of value, notes concerning the
essentials elements of the appraisal should be
maintained in appraiser's file.
 PRACTICAL AND PROFESSIONAL
CONSIDERATION
Extraneous data should be omitted
Incorporate pertinent data into the report in a
logical order and in nontechnical terms.
Appraisal reports should contain all the facts and
elements necessary to support the value opinion.
Appraiser's report must be relied upon to
demonstrate the best efforts of an investigative
reporter.
 THE ESSENTIAL ELEMENTS
The following should be included in every appraisal report:
1. The name of the client requesting the appraisal
2. An adequate identification and description of the property
3. A statement of the rights being appraised
4. The purpose of the appraisal and the intended use of the report
5. The date of valuation
6. A formal definition of the type of value sought.
7. A summary of the factual data used to make the appraisal.
8. The final estimate of value.
9. The assumptions and limiting conditions under which the appraisal was
made.
10. The appraiser's certificate and signature.
The elements of appraisal reports should define the appraisal problem and present at
least a summary of both the factual data revealed by the study and the analysis
that supports the stated opinion of value.
 Three general types
1. THE LETTER REPORT- a short business letter, defining the appraisal
assignment. Brief summary of the investigation, an opinion of the value
of the property. Length between three to six pages.

Should contain ALL the essential elements of an appraisal report.

Description of the subject is brief and only a summary of the factual
data and its analysis is presented.
Exhibits such as a plot plan, floor plan, and pictures may be attached.
Supporting data are included by reference only. e.g. comparable sales
data usually would be in the report itself with specific details retained
in the appraiser' file.
The assumptions, limiting conditions and appraiser's value conclusion
must be included, as they define the appraisal itself.
2. THE FORM (or short-form) REPORT

Usually designed in a checklist format on a printed

page.
Types of data commonly required are presented in
orderly of sequence that is easy to review.
Appraisal forms provide blank spaces for the appraiser
to use for additional analysis and comment.
Some agencies and appraisal services develop their
own forms for each property type.
Form defines the appraisal problem, presents factual
data revealed in the appraisal.
Demonstrates evidence of value through the cost,
market and income approaches.
3. THE NARRATIVE APPRAISAL REPORT

The most formal of the written appraisal report. Ranging

from a dozen to a hundred pages or more in length.
Most often required by large corporations and government
agencies.
Preferred when the report user needs a self-contained
document. All the pertinent facts discovered in the
investigation under one cover.
High standard is expected of this report.
The preparation of a narrative report is a test of
competence for appraiser.
Users of narrative reports have developed/define ideas of
what they want in these report.
 OUTLINE OF THE NARRATIVE
REPORT
Acceptable format for narrative appraisal
reports divide the report into three main
sections. The middle section divided into two
parts, separating description from analysis
and conclusion.
1. The introduction
2. Description, analyses, and conclusion
A. Introduction
1. Title Page
2. Letter of transmittal
3. Table of contents
4. Photograph of the subject
5. Summary of salient facts and conclusion

B. Description, Analysis, and Conclusion

1. Identification of the property.
2. Objectives of the appraisal.
3. Property rights appraised
4. Date of value estimate
5. Purpose of the appraisal and definition of value sought
6. Intended use of the appraisal report
7. Description of neighbourhood and community.
8. Description of land, zoning, community services, and
taxes
9. Description of improvements
10. Highest and best use analysis
11. Analysis of data by the value approaches
a. The cost of Approach
b. The market approach
c. The income approach
12. Reconciliation and final conclusion of value
13. Qualifying and limiting conditions
14. Certification of value opinion, with signature of the
appraiser
15. Qualifications of the appraiser
Addenda or Supporting Material
1. Maps and Photographs
2. Plot plan of subject property
3. Diagram of Improvements
4. Statistical data
5. Sales data sheets and sale location maps
a. Appraisal reports often mix the features of the three
types of reportsletter reports sometimes extend in
length to become what could be called short narrative
reports.
b. Other written reports will often mix the features of the
letter, form and narrative appraisal reports to best suit
the needs of the client or the style of the appraisal.
L EGISLATIVE A DVOCACY
 Adoption of Philippine Valuation Standards
by NGAs Where do we go from here?

1. Select a Partner Agency = BSP

2. Agree scope of study in principle
3. Undertake Study into valuation procedures and
requirements for adopting Standards
4. Report on Findings, including
Recommendations
5. Assist NGA to implement change
6. Roll-out to other NGAs
7. Passing of VRA (2010?) and Adoption by NVA
 VRA in the 14th Congress
(Nov. 11, 2009)
Senate Bill No. 3519
Sen. Panfilo Lacson; Sen. Rodolfo Biazon;
Sen. Edgardo Angara; Sen. Manuel Lapid;
Sen. Miguel Zubiri; Sen. Noynoy Aquino

House Bill No. 7094

Rep. Liwayway Vinzons-Chato;
Rep. Erico Fabian; Rep. Erico Fabian;
Rep. Rod Valencia; Rep. Sonny Angara;
Rep. Ed Zialcita
 Proposed Valuation Reform Act
2010? (VRA)
OBJECTIVE:
To establish a consistent real property valuation system based on internationally
accepted valuation standards, concepts, principles & practices.

POWERS & FUNCTIONS:

National Valuation Authority (NVA) will be created as the primary agency on
matters concerning valuation of real property - Property Valuation Office (PVO)
within BLGF will serve as the interim nucleus of the NVA.
Will provide leadership & policy direction to LGUs, NGAs, private sector
institutions & individuals dealing with valuationincluding the development &
maintenance of valuation standards, the regulation of valuation activities and
other related mattersvaluation education and continuing professional
development.
Expected impact A harmonized valuation processes among government
agencies, & private sector; Consistency in land valuation by eliminating wide
disparities of values; Improved public & investor confidence that will stimulate the
land market.
 Objectives of the VRA Bill
Promote, develop and maintain a just, equitable,
nationally consistent real property valuation
based on internationally accepted standards,
concepts/ practices.
Establish and adopt a set of Philippine Valuation
Standards based on international valuation
standards
Adopt a single real property valuation base for
valuing/appraising real property for taxation and
as basis for various real property transactions by
all government agencies
 Creation of the National
Valuation Authority
Train government assessors and appraisers
Promote valuation profession, training and
development
Maintain a roster of government appraisers
and assessors, and a national database of real
property transactions; and
Promote continuing studies, information base
on global and country trends/developments in
real property transactions
 Single Valuation Base/Uniform
Standards

Eliminate wide disparities & therefore achieve

consistency in real property valuation
Predictability of valuation with positive impact
for planners
Harmonize the real property valuation among
the different government agencies
Sam Quiniano
0915-8850096