• Jesse Ledbetter

How to read an appraisal: Part 6

Today's post will wrap up the left-hand side of the URAR 1004 before we move into how to read the analysis (everything to the right).

"Basement" - as explained in previous blogs, any portion of the home that has any portion below the grade of the soil MUST be reported here, and not in the "above grade" lines above. This is because Fannie Mae, lenders and appraisers know that the market reacts differently to below and above-grade living space (in a previous blog we analyzed the difference between two identical ranch homes, where the only difference was that one was buried). These lines allow the appraiser to address both the effect of the square footage of finished/unfinished on the top line, and then the effect of any specialized space (bathrooms, rec rooms, second kitchens, etc) on the lower line.


"Functional Utility" - this line gives the appraiser the ability to analyze any unique characteristics to the layout or usability of the home. Imagine two-story homes next to each other, with one exception - their floors are flipped (ie. one is typical, and the other has the kitchen and living area on the second floor - or a "raised ranch" style). This functional utility may have an impact on the marketability of the home, and will need to be analyzed.


"Heating/Cooling/Energy Efficient Items" - This reflects the features present, fuel source used, and any upgrades. Some heating sources have a negative appeal (like in-ceiling radiant heating that was popular in installations in the 1970s).


"Garage/Carport" - the parking situation of the subject property is then reported and analyzed. In some areas off-street parking is typical, in others, it is highly rare and sought after. In areas with high levels of break-ins, a garage may be worth far more than another area.


"Porch/Patio/Deck" - This line allows the appraiser to report and analyze the various forms of outdoor living space that may be available. In some markets, this can add value, in others its not expected or valued by buyers.


"Other" - The form ends with three blank lines that the appraiser can report any other features that might impact market value. These might include accessory dwelling units, pools, pool houses, finished space in a detached garage, barns, fireplaces, sheds, fences, etc. In some markets, these features add value, in others they don't. The market for barns in the inner city is pretty poor, and the market for pools in Florida is much stronger than that of Alaska.

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