How can you write a top-quality real estate valuation report?

1 Define the purpose

The first step in writing a real estate valuation report is to define the purpose and scope of the valuation. Why are you valuing the property? Who is the intended user of the report? What type of value are you estimating? These questions will help you determine the appropriate valuation method, data sources, assumptions, and limitations of your report. You should also state the effective date of the valuation, which is the date as of which the value is estimated.

2 Choose the method

The next step is to choose the most suitable valuation method for the property and the purpose. There are three main methods of valuing real estate: the sales comparison approach, the income approach, and the cost approach. The sales comparison approach compares the property to similar properties that have sold recently in the same market. The income approach calculates the present value of the future income generated by the property. The cost approach estimates the cost of reproducing or replacing the property, minus depreciation. You should explain the rationale for choosing your method and how you applied it to the property.

3 Collect and analyze data

The third step is to collect and analyze relevant data to support your valuation. Depending on your method, you may need to gather data on market conditions, comparable sales, rental rates, operating expenses, vacancy rates, capitalization rates, construction costs, depreciation factors, and more. You should use reliable and verifiable sources of data, such as public records, databases, brokers, appraisers, and industry reports. You should also analyze the data to adjust for differences between the property and the comparables, to estimate income and expenses, and to apply appropriate rates and factors.

4 Report the value

The fourth step is to report the value of the property based on your method and data. You should clearly state the value estimate and the type of value, such as market value, fair value, or investment value. You should also provide a range of values or a margin of error to reflect the uncertainty and variability of the valuation. You should explain how you arrived at your value estimate and how you accounted for any adjustments or assumptions.

5 Include supporting information

The fifth step is to include supporting information that enhances the credibility and transparency of your report. You should provide a description of the property, its location, its features, its condition, and its highest and best use. You should also include photos, maps, charts, tables, graphs, and other visual aids that illustrate the property and the data. You should also disclose any sources of information, any conflicts of interest, any limitations of the report, and any qualifications of the valuer.

6 Proofread and format

The final step is to proofread and format your report to ensure it is error-free, consistent, and professional. You should check your spelling, grammar, punctuation, and terminology. You should also use a clear and concise writing style, avoiding jargon, slang, and opinions. You should also use a standard format, such as the Uniform Standards of Professional Appraisal Practice (USPAP) or the International Valuation Standards (IVS), and follow the guidelines for structure, layout, and content. You should also include a title page, a table of contents, an executive summary, and a signature.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?