How the Appraisal Report Writing Workflow Works
Appraisal report writing looks easy at first glance, but the lack of complexity belies the magnitude of the process.
First of all, a single report may contain more than a hundred data points that must be accurate and up-to-date. Second, the report should include photos, sketches, and comments from the appraiser and this can only be done through on-the-ground inspections and a comparables research that brings the appraiser through the neighborhood where the property being appraised is located.
Thus, it’s a collaboration between the appraiser and the agent who works to keep all the data together in one place.
If you’re looking to hire an appraisal back-office assistant or an appraisal report writer, you’re best served by an outsourced team that can work with you in real-time and still have hours left to complete the reports before you’re scheduled to submit them to your clients.
The process of writing up an appraisal report takes fewer than 10 steps in this workflow. We have also created an infographic for your convenience.
STEP 1: Getting the orders from the client.
The team receives the orders through email. Each order adheres to the following guidelines:
1. Order Details
This consists of the following information:
- Report Type (Restricted Appraisal Report or Appraisal Report) – When the intended users include parties other than the client, an Appraisal Report must be provided. When the intended users do not include parties other than the client, a Restricted Appraisal Report may be provided.
- Date Due
- Transaction Type
- Loan Number
- Fee Paid to Appraiser
- AMC Registration No.
Some of these are provided by the client while the rest are provided by the appraiser.
2. Intended Use
Appraisals are necessary when selling or transferring the ownership of a property. Appraisals are also requested to help resolve legal or tax issues. They are required for financing and credit transactions. When a property owner wants his property appraised to secure a loan, he or she is advised to inform the lender. Current federal regulations emphasize the need for independent appraisal or evaluation, which means the appraiser must not have a direct or indirect connection with the lender, borrower, and the property in question.
3. Specific Requirements (These should adhere to USPAP Guidelines.)
4. Service Level Agreement for Appraisals
5. Professionalism During Inspection
6. Report Delivery
8. Appraiser Independence Hotline
9. Support Information
STEP 2: Do a thorough research of the property.
Use an MLS service when doing research on the property’s public records and comparables. Get the public records of the subject and the comparable properties that will be included in the appraisal report.
Find the following information when doing research:
- Name of the Current Owner
- APN or Parcel Number
- MLS (Multiple Listing Service) Number
- Property Address
- Map Code
- GLA or Gross Living Area in square feet
- Sales History
- Property Characteristics (i.e., year built, bedroom/bathroom counts, stories, etc.)
- Lot Size in square feet
Download the Plat Map of the property from the multiple listing service. Then, upload it to the appraisal report.
💡 What’s a Plat Map? It’s a document drawn to scale, showing the divisions of a piece of land. It gives the legal descriptions of pieces of real property by lot, street, and block number.
💡 What are Comparables? They are properties with characteristics that are similar to the subject property whose value is being sought.
The outsourced appraisal assistant generates a list of comparable properties within the target area.
STEP 3: Appraiser selects the comparables to use for the appraisal report.
The appraiser picks the properties to include in the report based on the degree of sameness of the comparable’s characteristics with the subject property. After the appraiser identifies the list of comparables to use, the team of appraisal back-office assistants can start searching for the PDFs of the comparables to use. These PDFs may be generated from the MLS service.
The PDFs may contain the following information:
- Comparable property address, city, state and zip
- MLS number
- APN or parcel number
- COE and Off-Market Date
- List price and Sold price
- Number of bedrooms, bathrooms, and total rooms
- Parking space
- Year built, etc.
The PDFs may also include interior photos of each comparable. That will help the appraiser determine the view (if there is), quality, and condition of the comparable properties. The file may also contain short comments or details of the comparables, whether they were upgraded or remodeled.
STEP 4: Start building the appraisal report.
Your team can start building the appraisal report even when the property hasn’t yet been inspected. The appraiser has already selected the comparables to use. The characteristics of both the subject property and the comparables have been collected and ready for data entry.
All in all, the appraisal report contains more than 100 data points that must be accurate and up-to-date. Some of the information will include the following:
- Property Address (complete address)
- Borrower’s Name
- Current Owner’s Name
- Block/Lot/Tract Number
- Assessor’s Parcel Number or APN or Tax ID
- Current Year Tax
- Neighborhood Name or Nearest Neighborhood
- Map Reference
- Census Tract
- Occupant (Owner/Tenant/Vacant)
- Property Rights Appraised (Fee Simple)
- Assignment Type (Purchase (Sold) / Refinance)
- Lender Information
STEP 5: Appraiser video calls appraisal report writers during on-site inspection.
Appraisal back-office assistants create the sketch of the property based on the information that the appraiser provides during a video call. The appraiser measures the square footage of the subject property and the dimensions of each room. This assures both the appraiser and the client that the measurements in the sketch have been drawn to scale.
Interior and Exterior Photos
After taking a yardstick or measuring tape to the property’s dimensions, the appraiser takes photos of each room, every corner and side, as well as the exteriors of the property. Example views include the property’s front, rear, and street view; the kitchen, dining area, and breakfast area; the living room, bathrooms, and bedrooms; all the carbon monoxide and smoke detectors; the hot water heater and HVAC systems; and the laundry area, to name a few.
Provide the actual inspection questions to the appraiser.
This is the reason why an outsourced team of appraisal back-office assistants must be on a live call with the appraiser while doing his or her inspection. Aside from doing the actual sketch and making sure that all photos are saved, the appraisal report writer has to ensure that the following questions are relayed to the appraiser:
- Who is/are the occupant/s?
- How much is the homeowners association HOA fee? This amount may be found in the MLS listing, but not all the time.
- Does the property have a great view? For example, does it overlook a lake, a lush forest or a cityscape?
- Ask the appraiser to gather comments from locals on the site or location.
- Is there a concrete/crawl space?
- What’s the effective age of the property?
- Is there a heating/cooling system? Mention if there’s a solar power system or not.
- What’s the condition and quality of the property’s exterior and interior architecture?
- Is functional or external obsolescence probable considering the present condition of the property?
Appraiser dictates comments for the subject property.
An experienced appraiser would be able to provide insights on the property — like, what its appealing qualities are and any characteristic that may be a hurdle in valuing that property at an amount closer to the seller’s or buyer’s desired price.
STEP 6: Driving the comps.
When valuing a property, all other factors must be considered, including the value of comparable properties. Some appraisers prefer to use the sales comparison method. The appraiser tries to get an idea about the value of surrounding similar properties based on the price they were sold or purchased.
When driving the comps, the appraiser does a drive-by appraisal wherein he or she dictates the exterior condition of the comparable properties, takes exterior photos, and provides additional comments about each property and the neighborhood.
The appraiser is required to certify or swear as true that they performed the following:
- Use current market based data to determine every adjustment;
- Personally inspect and measure the subject (property);
- Accurately describe the condition of the subject and neighborhood;
- Personally inspect each of the comparables, at least from the street, and;
- Take and use in the appraisal, an original photograph of each comparable.
STEP 7: Complete the appraisal report.
Make sure the following are included in the report:
- Adding the preliminary adjustments in the market grid
- Addendum comments
- Subject photos
- Comparable photos
- MLS photos
- Location map
- Plat Map, Certificate, E&O, and etc.
STEP 8: Appraiser dictates the adjustments, AMC, and appraised value of the subject.
It’s not acceptable for an appraiser to only provide a statement noting that an adjustment has been made. If possible, the appraiser’s analysis must also include descriptive comments about a current contract or listing for the subject or the comparable sales, the current ownership, and any prior sales or transfers.
STEP 9: Send the appraisal report to appraiser via email.
You may download the full infographic here. Please mention Fair Trade Outsourcing as your source and link to this blog post or our homepage. Thank you!
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