How do you document and report real estate valuations?

1 Purpose and scope

The first step in documenting and reporting real estate valuations is to define the purpose and scope of the assignment. This means stating why the valuation is needed, who the intended users are, what the effective date is, and what type of value is being estimated. For example, the purpose could be to sell a property, the intended users could be potential buyers, the effective date could be the current market conditions, and the type of value could be the market value. The purpose and scope should also specify the level of detail, the sources of information, and the assumptions and limitations of the valuation.

2 Property description

The next step is to provide a comprehensive description of the property being valued, including its location, size, features, condition, and ownership history. The property description should also include any relevant market data, such as comparable sales, rental rates, vacancy rates, and supply and demand trends. The property description should highlight the strengths and weaknesses of the property, as well as any opportunities and threats in the market. The property description should be supported by photos, maps, floor plans, and other visual aids.

3 Valuation methods

The third step is to explain the valuation methods used to estimate the value of the property. There are three main methods: the income approach, the sales comparison approach, and the cost approach. The income approach values the property based on its potential income stream, the sales comparison approach values the property based on similar properties that have sold recently, and the cost approach values the property based on its replacement or reproduction cost. The valuation methods should be chosen and applied according to the nature and purpose of the property, the availability and reliability of data, and the preferences and expectations of the intended users.

6 Valuation report

The final step is to prepare and deliver the valuation report, which is the formal document that communicates the valuation process and results to the intended users. The valuation report should include all the information and analysis that support the valuation conclusion, as well as any relevant disclosures and disclaimers. The valuation report should be structured, formatted, and written in a professional and logical way, using clear and accurate language. The valuation report should also be reviewed and signed by a qualified and competent valuer, who is responsible for the integrity and validity of the valuation.

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?