How to read an appraisal: Part 4
Many people skip to this page of the report to "find the number' that the appraiser came to. Today we will break down the form line by line.
The subject property is broken down on the left-hand side into 18 different components for comparison with comparable properties, and analysis. Below, some of these will be lumped together.
"Location / Site / View" - the URAR breaks down the "where" of the property into three separate lines. The common maxim of real estate is "Location, Location, Location..." but appraisers know that "Location" is a lot of things all wrapped up in one word, and we analyze each item individually.
The site is the size of the property itself. The appraiser will also take into consideration the shape, topography, and usability of the site. There is a huge difference between an acre of land that this a square, and one that is 1 foot wide and 43,560 feet long.
The location represents where the property is. Depending on the complexity of the assignment, it may be necessary to expand the search for comparables to different locations with different appeals and make an adjustment for that.
Finally, the view represents the influences on the property of what can be perceived. Busy highways, railroads, rivers, oceans, and mountains.
To see how these are different and need to be extracted imagine the following. Two homes are a tenth of a mile apart, on opposite sides of the same river. Both are riverfront properties of 1 acre in size.
Property 1, due to state regulations, the owner can not build a dock into the river on this side of the river. They own one acre of land, with 200 feet of frontage (nearly square) and the minimum lot size must include 100 feet of frontage. They can use the river, but not launch a boat.
Property 2 is allowed to build boat docks. The same acre only has 50 feet of frontage, however.
Here we see that the location, view, and acreage are all radically different despite being very similar. While they have the same river view, their use of the river is radically different. Further, the same acre is radically different as property 1 could possibly be subdivided into two lots (with a higher value likely) than the acre that can not. Before you say, "that never happens: I would disclose that I've appraised this very scenario, multiple times. There is a reason that Location, View, and Acreage are broken apart on the URAR 1004.
"Design / Age" - This portion attempts to report the measure of the difference in appeal between a newer built home and older, and between styles. Some styles of homes are more appealing (One level homes in 55+ communities for example) and need to be analyzed.
Next time we will dive into "Quality and Condition."