The appraisal process starts by identifying the problem and ends by reporting an opinion of value. This seven-step study outline follows the California Board of Equalization’s Basic Appraisal handbook. Other courses may group the stages differently.
Seven Steps in the Appraisal Process
- Identify the appraisal problem. Establish the property, rights being valued, purpose, definition of value, and effective date.
- Plan and collect data. Gather and verify property details, neighborhood information, and relevant market evidence.
- Analyze highest and best use. Consider which use is legally permitted, physically possible, financially feasible, and most productive.
- Estimate land value where needed. This is especially relevant to the cost approach.
- Apply appropriate valuation approaches. Consider the sales comparison, cost, and income approaches; use those appropriate to the assignment and available data.
- Reconcile the evidence. Weigh the reliability and relevance of the value indications to reach a final opinion.
- Report the appraisal. Explain the conclusion and its supporting analysis.
For the real estate exam, remember the order: define the problem before collecting evidence, then analyze before reaching a conclusion. Reconciliation means weighing evidence, not simply averaging three numbers.
Remember, an appraiser develops an opinion of value based on facts and data.
