There is no doubt that the appraisal process is one of the integral components of modern property ownership nowadays. As an appraiser, you know that the real estate appraisal process acts as an effective means of communicating the value of a home or commercial property to all relevant parties, such as lenders and homeowners.
A property appraisal is a formal opinion of value. For financial planning, estate planning, or sale price decisions, individuals or trusted advisors often order an appraisal. And when an appraisal is used for obtaining an opinion of value of a home or commercial property for loan purposes, you know that federal regulation mandates the lenders or their agents to place an appraisal order. As an appraiser, you have to be meticulous as multiple parties rely on your opinion.
This is why many lending institutions, such as banks, use an Appraisal Management Company (AMC), such as AmeriMac Appraisal Management, to manage the appraisal process and maintain quality control. These appraisals also increase oversight and promote transparency.
Also, this is where appraisal forms are valuable as they ensure you follow the relevant protocols and procedures.
We know that the hundreds of data fields and checkboxes that usually make up a real estate appraisal report are enough to make anybody’s eyes glaze over. However, together all the inputs help determine the value of a home.
As an appraiser, you have many possibilities regarding how you report the results of your appraisal assignments to different stakeholders, such as banks and home sellers. Some of these choices are written appraisal reports, oral appraisal reports, limited written appraisal reports, or several standardized report forms. And it is worth noting that the appropriate property appraisal report format is usually determined by the client, considering the intended use of the appraisal as well as specific requirements of the regulatory agencies.
Also, you will probably know that available real estate appraisal formats change as professional appraisal standards or regulatory requirements in the country change. As a result, you need to be aware of the current reporting options as a professional real estate appraiser.
You probably know that many government-sponsored enterprises, including the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae), buy home loans in order to create a secondary investment market. Fannie Mae has developed a wide variety of appraisal report forms in an effort to standardize and streamline all its assets. This is because the enterprise is such an important part of this residential investment in the US.
Also, it is worth noting that loan insurers, like the Veterans Administration, also rely heavily on standardized appraisal forms and reports. Did you know that proprietary appraisal software is also configured to meet the various requirements of many standard property appraisal forms? This is why, as an appraiser who uses appraisal forms, you may also have to receive specialist training from professional groups as well as real estate schools. This will help you maintain the competency and skills required for this home appraisal specialty.
The Uniform Residential Appraisal Report (URAR) is the most commonly used single-family appraisal form, and it is also known as Form 1004. Keep in mind that Form 1004C is used for appraising single-family manufactured housing, while Form 1073 is used for condominium units. On the other hand, Form 1025 is for small multi-family investment properties.
We can divide appraisal forms into a few simple categories; however, the two main types are residential forms and commercial forms. Residential forms, as the name suggests, are used for various residential properties. Residential properties include condominiums, single-family homes, mobile homes, as well as 2-4 unit properties.
Exterior and Interior Inspection Forms
Form 1004 is easily the most common and widely used property appraisal form. And this is because the form is used for single-family residential properties. You use Form 1004 when you have to perform an exterior and interior inspection. You will usually have to use it when a lender, such as a bank, is ordering an appraisal for either a refinance or property purchase transaction.
Form 1073 is the second most commonly used property appraisal form for residential properties. This form is used for appraising condominiums. Essentially, it is the same form as Form 1004 and also serves the same purpose. However, keep in mind that the form is modified for condos.
And this means that the form includes fields that are related specifically to the condo project that the property owner is in and various other attributes that most single-family homes do not have.
Note that this report is designed to evaluate a property appraisal report completed by another appraiser. While the review appraiser analyzes and assesses all the information and conclusion from the original report, they don’t complete the inspection of the subject or comparable properties.
There are some important commercial appraisal forms that you will need to complete when appraising commercial properties.
Note that these two forms are used for the same kind of commercial property, multi-family properties (five units or more). Also, bear in mind that both these appraisals forms have the same “skeleton,” and we can say that Form 71A is a considerably more in-depth report than Form 71B.
The third commercial property appraisal form is called the GP Commercial form. “GP” stands for “General Purpose.” As you can imagine, you can use this appraisal form for any type of commercial property, such as office buildings, that is not too complicated. You can appraise properties like office buildings, single room occupancy buildings, and religious facilities using the GP Commercial form.
As a competent and diligent appraiser, you will have to adjust the scope of your appraisal assignment based on factors, such as professional ethics and the specific needs and preferences of your clients. You also have to choose an appropriate reporting option according to your clients’ intended use of value opinions.
Appraisal forms are important as they ensure consistency and improve the transparency of the whole process. This is why regulatory agencies in the US have developed standardized forms to report appraisals of many kinds of real property, such as condos. Also, remember that appraisal standards and forms tend to transform over time, as market forces, property types, and lending practices in the country change.