An appraisal report is a report prepared by a professional appraiser to determine the value of some type of property. Appraisal reports are prepared most frequently in real estate transactions to assess the worth of the home and land. Appraisal reports can also be prepared to determine the value of goods, such as fine art or jewelry or anything of value that is difficult to price.
An appraisal report is commonly prepared when a person wants to buy a house or qualify for a mortgage. In these situations, the appraisal report tells the homeowner if the purchase is a good deal or not. The report is also submitted to lenders, who can use the valuation of the home to determine whether to grant the loan.
If goods or items go up for auction, an appraisal report may be completed to determine the value of the goods. This can help buyers to decide whether to bid and buy or not. It can also help the seller set an opening bid, or can help a seller to price his item for the open market if he opts against selling in auction form.
Generally, appraisal reports are made by experts in their field. The qualifications for appraisers vary. Licensing may be mandatory in some parts of the world, such as certain states within the United States, or voluntary and granted by a professional organization, such as the Appraisal Institute of Canada.
A qualified appraiser assesses the condition of the goods when making his report. This can mean coming to a home to look for damage, improvements, or anything else that might affect the value of the specific house. With goods, it can also mean evaluating the item for specific criteria within the category. For example, in appraising diamonds, this can mean looking for inclusions, or imperfections, in the stone, while in appraising fine art it can mean looking for a signature or number on the painting or scanning for signs of damage.
The appraiser also uses market conditions to determine the appraised value of the home or goods. Industry standard usually stipulates what type of market data may be used and how. Market data may include the last known sale price of the home or item, and the prices of comparable items within the field.
After making a careful evaluation of the specific item being appraised and the market conditions, the appraiser writes his appraisal report. In it, he specifies the appraised value of the item. He also specifies his methodology used to arrive at that value.