Page 1

There are five sections on page 1: Subject, Contract, Neighborhood, Site, and Improvements.

Subject: This refers to the Subject Property, which is the property/home for which the appraisal is being conducted. This section also notes the Borrower(s), Owner(s), Legal Description, and Lender/Client.

Contract: If the purpose of the appraisal is for a purchase, the appraiser will analyze the contract and report relevant information here.

Neighborhood: This section provides a general overview of the market area of the Subject Property. It typically includes the boundaries, reported as N, S, E, and W, and the current land use of the area.

Site: Information regarding the lot size, views, zoning, and utilities can be found in this section. For lenders, Highest and Best use, Zoning, and Flood Zone are important for loan purposes; they’re indicated in this section.

Improvements: Here there is an overview of the Subject Property’s characteristics, including things such as Attached or Detached property. Year Built. Foundation. Exterior Materials and condition. Interior Materials and condition. This section also gives the first glimpse of the room count and home’s square footage. The Appraiser will also recap additional features, amenities, renovations, needed repairs, and any adverse conditions to the home or immediate market area.

Page 2

Two sections are found on page 2: Sales Comparison Approach and Reconciliation.

Sales Comparison Approach: This is the most used approach in determining the value of a residential property. The Appraisal guidelines require three closed sales similar to the Subject Property to be noted on this page with Comparable Sale No. 1 being the most similar, Comparable Sale No. 2 the next most similar, and so on.

This is the section where the appraiser breaks down the Subject Property and Comparable Sales amenities, features, condition, etc., and makes positive and negative adjustments to bring all properties to an even playing field. The amount of the adjustment is based on the market’s perception of the value each item brings to the home and what indication of value it provided when the home was purchased. Example: Assume there’s a Subject Property that has an inground pool. Of the three Comparable Sales, two sold for $150K without a pool, and one sold for $175K with a similar inground pool. The market has deemed that the value of that inground pool is approximately $25K. The appraiser would make an adjustment to the two Comparable Sales that lack the inground pool for $25K.

Appraisers will also adjust for items such as View, Year Built, Condition, Basement area, Porches/Decks, Solar Panels, Outbuildings, Barns, etc.

Although the Sales Comparison grid shows a line for Sale Price/Gross Living Area, appraisers do not take that information into consideration in the opinion of value for the home, nor do they reconcile any information in regard to the Price Per Square Foot. This is information that was added when the appraisal reports were initially created, and it’s no longer applicable.

Reconciliation: In this portion of the report, the appraiser will review the three primary approaches to determine the value of a property, and indicate the opinion of value for each, if applicable. This area will also determine if the appraisal was made As Is or Subject To various requirements. Typcially, the latter would include Subject To repairs, inspections, or completion of construction. The last two lines of the page provide the Subject Property’s final estimated value and the effective date of that value.

Page 3

Additional Comments, Cost Approach, Income Approach and PUD Information will be found here.

Additional Comments: It is not uncommon for this section to be empty. Given the number of required comments in a report these days, this section simply isn’t large enough to contain all the necessary comments. Some appraisers will use this to note additional features of the home, reasons for the report being Subject To, or canned comments that are relative to all appraisal reports.

Cost Approach: This section is typically only completed for New Construction (0-12 months old), unless specifically requested by the lender or investor. Most appraisal reports will include a minimum of a Site Value in this section, but it is not required by appraisal guidelines.

Income Approach: This area is completed only for investment properties where the rental income can contribute to the final opinion of the value of the home.

PUD Information (PUD = Planned Unit Development): This section applies if a developer/builder is still in control of the HOA (Homeowner’s Association). It provides a breakdown of the complex/subdivision.

Pages 4-6

The last three pages of the appraisal report are certifications, scope of work, conditions, and comments as to what the appraiser’s signature indicates they followed. Items the appraiser is signing off on can include things such as the appraiser examined the contract, the appraiser visually inspected the interior and exterior of the Subject Property, the appraiser researched and verified the information regarding the Comparable Sales, and/or the appraiser has the knowledge and geographical competency to complete the appraisal and did not intentionally misrepresent any information in the appraisal report.

Listed on page 6 are the appraiser’s information, license number and expiration date, Appraised Value of the Subject Property, and the Lender.

Additional Pages

Some appraisal reports will include an additional Comparable Sale page providing a fourth Comparable Sale or Comparable Listings to support their value. There may also be additional Addendum pages that will include all the nuts and bolts of comments for the appraisal report. These may include how adjustments were determined, comments on which Comparable Sales were given the most weight and why, any items that add or take away from the value of the Subject Property, etc.

Photos of the Subject Property (interior and exterior) and Comparable Sales (exterior) are required. Additional Photo pages may be included that show deferred maintenance to be addressed or improvements outside of the Subject Property that contributed to the value (i.e., barns, outbuildings, a pool, etc.). A sketch showing dimensions and room layouts for all levels of the home is also required and should be included here.

Map pages may also be included. Most Lenders require a Location map (Subject Property’s location in relation to the Comparable Sales), Aerial Map, and Flood Map if available.

Finally, this section may also include the UAD Definitions page, additional Addendum pages with more canned comments, and a copy of the Appraiser’s License and/or E&O insurance.

Terminology in appraisal reports and daily communications may not always be clear to every reader. Here are general definitions of the most commonly used terms:

Subject – The Subject is the property for which the appraisal is being completed.

Comps – Short for Comparable Sales. Comps are other homes that have sold in the same market area or similar to the Subject. The goal is to find the Comps that are most similar to the Subject.

Adjustments – Negative and positive dollar amounts used to address amenities and features of the Subject in comparison to the Comps.

GLA – Gross Living Area – This is the appraisal term for the home’s square footage that is found to be above grade. (More info here.)

Above and Below Grade – Grade is the lay of the land the home sits on. Below Grade is any of the home that’s situated below ground level, such as a basement. Rooms or areas where two sides are underground is considered Below Grade. Above Grade includes any area sitting on top of the land, such as the first floor of the home and up. Above Grade and Below Grade areas are adjusted separately using different market calculations. (More info here.)

Effective Date – The date the appraiser was at the property. The appraisal report and all Comparable Sales revolves around the effective date of the report. If the basement is unfinished at the time of the inspection and the homeowner completes it two weeks later, the finished basement area will not be included in the appraisal report nor considered in the value of the home, since it was completed after the effective date of the appraisal.

Listing – A comparable property that is actively listed in the market area but has not yet been sold and closed.

As Is– The opinion of the home’s value as it stands on the day of the inspection. Adjustments are given to address any necessary condition issues or deferred maintenance. There are no repairs or items to address that will change the property’s value.

Subject To – The opinion of the value is subject to the items noted in the appraisal report being completed. If the property is New Construction and not complete, the value would be dependent on the property being completed to the plans/specs given to the appraiser and the value is subject to those items being done. The value is only valid if those Subject To items are completed.