UNIFORM STANDARDS OF PROFESSIONAL APPRAISAL PRACTICE (USPAP) COMMERCIAL APPRAISAL REPORTING OPTIONS

 

As of 2018, the State of California allows restricted use appraisals to be prepared for business professionals under specific circumstances.  
This report format is suitable for knowledgeable parties (CPAs, Brokers, Lawyers). 

‚Äč

COMPLETE APPRAISAL

All valuation methods reviewed and applicable methods applied.

                    

A. SELF CONTAINED REPORT -   Used/required for larger commercial loans with outside funding and subject to field review of multiple underwriters and appraisers.  Developed and intended for professional review.   An easily transferable report.  Pertinent for larger complex projects and proposed projects.  Detailed narrative report, with elaborate discussion of market trends, Highest and Best Use, adjustment factors, with all  Zoning, Tax, Income and Expense, and supporting documentation in Addenda. Examples: 200 Unit Apartment Complex, 35,000 SF Industrial Facility,  Proposed Retail Center.  Suitable report format for loans over $1,000,000.  

                               

          

B. SUMMARY REPORT -  Used/required for most underwriting.  An easily transferable report.  Narrative report with a summary discussion of market trends and adjustment factors.   Examples: 25 Unit Apartment Complex, 20,000 SF Industrial Facility, Existing Strip Retail Center.   Suitable report format for loans under $1,000,000.  

 

 

C. RESTRICTED USE REPORT - Used for internal underwriting.  Generally a non-transferable report. Assumes client has detailed knowledge of asset class.  Letter of opinion stating conclusions with limited data and information presented, backed by data on file.   Examples: 15 Unit Apartment Complex, Existing Four-Tenant Strip Retail Center, small vacant land parcel.  Suitable report format for knowledgeable parties (CPAs, Brokers, Lawyers) for loans under $500,000.  

 

The Uniform Standards of Appraisal Practice has changed the report options that it allows.  Limited Appraisals are no longer part of USPAP.  

 

LIMITED APPRAISAL

Less applicable valuation methods such as cost approach may be set aside, as long as valuation is not affected. Less appropriate for FDIC lending and report is less likely to be accepted elsewhere. 

 

A. SELF-CONTAINED REPORT - Effectively impossible as Self-Contained and Limiting the Appraisal are concepts that conflict.  Detailed narrative report, with elaborate discussion of market trends and adjustment factors, with all zoning, tax, income, expense, and market trend supporting documentation in addenda.  

 

B. SUMMARY REPORT -  Assumes client has detailed knowledge of asset class.  A less easily transferred report.  Narrative report with a summary discussion of market trends and adjustment factors, with departure provision invoked.  Used for internal decision making and underwriting.  Examples:   Cash flow analysis only of newer strip retail center, where cost approach pertains.  Sales Comparison Approach only for owner user building that could be leased out and has income approach potential.  Please note that special purpose properties (retirement centers, large hotels) can but should not be appraised on a limited basis.  

 

                                                                                              

C. RESTRICTED USE REPORT - Used for internal decision making and underwriting.  Assumes client has detailed knowledge of asset class.  A less easily transferred report.  Letter of opinion with limited data and information presented, backed by data on file.    Examples:   Cash flow analysis only of newer strip retail center, where cost approach pertains.  Vacant land for estate tax purposes without elaborate Highest and Best Use discussion.