[Title 32 CFR 644.42]
[Code of Federal Regulations (annual edition) - July 1, 2003 Edition]
[Title 32 - NATIONAL DEFENSE]
[Subtitle A - Department of Defense (Continued)]
[Chapter V - DEPARTMENT OF THE ARMY (CONTINUED)]
[Subchapter J - REAL PROPERTY]
[Part 644 - REAL ESTATE HANDBOOK]
[Subpart B - Appraisal]
[Sec. 644.42 - Appraisal report.]
[From the U.S. Government Printing Office]


3242003-07-012002-07-01true644.42Sec. 644.42NATIONAL DEFENSEDepartment of Defense (Continued)DEPARTMENT OF THE ARMY (CONTINUED)REAL PROPERTYREAL ESTATE HANDBOOKAppraisal
Sec. 644.42  Appraisal report.

    (a) Preface. The appraisal report is an important document which 
serves as a material aid in the acquisition of required real estate 
interests. It is also an indispensable factor in justifying expenditures 
of public funds. It is essential that the report indicates conclusively 
that the appraiser has considered and analyzed all available data and 
used logical reasoning and judgment in developing his value conclusions.
    (b) Scope of Reports. (1) It is the Corps' practice that all 
appraisal reports will be prepared in narrative form. The report will 
include, as a minimum, all essential data which will disclose the 
purpose, the scope of the problem and the principal techniques and 
approaches employed. The report should contain all the pertinent 
supporting data required to sustain the appraiser's final conclusion of 
market value.
    (2) The use of preprinted narrative sales data sheets is authorized. 
Care should be exercised to properly relate each sale to subject in the 
narrative. Use of individual forms is also authorized for tabular 
exercises, such as the ``cost approach.'' In every instance the 
narrative should reflect the appraiser's reasoning.

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    (c) Narrative Report Format. (1) The following report format is 
taken verbatim from ``Uniform Appraisal Standards For Federal Land 
Acquisitions,'' published by the Interagency Land Acquisition 
Conference, 1973.

    B-1. Contents of appraisal report: The text of the appraisal report 
shall be divided into four parts as outlined below:

                          PART I--INTRODUCTION

    1. TITLE PAGE. This shall include (a) the name and street address of 
the property, (b) the name of the individual making the report, and (c) 
the effective date of the appraisal.
    2. TABLE OF CONTENTS.
    3. LETTER OF TRANSMITTAL.
    4. PHOTOGRAPHS. Pictures shall show at least the front elevation of 
the major improvements, plus any unusual features. There should also be 
views of the abutting properties on either side and that property 
directly opposite. When a large number of buildings are involved, 
including duplicates, one picture may be used for each type. Views of 
the best comparables should be included whenever possible. Except for 
the overall view, photographs may be bound as pages facing the 
discussion or description which the photographs concern. All graphic 
material shall include captions.
    5. STATEMENT OF LIMITING CONDITIONS AND ASSUMPTIONS.
    6. REFERENCES. If preferred, may be shown with applicable approach.

                          PART II--FACTUAL DATA

    7. PURPOSE OF THE APPRAISAL. This shall include the reason for the 
appraisal, and a definition of all values required, and property rights 
appraised.
    8. LEGAL DESCRIPTION. This description shall be so complete as to 
properly identify the property appraised. If lengthy, it should be 
referenced and included in Part IV. If furnished by the Government and 
would require lengthy reproduction, incorporate by reference only.
    9. AREA, CITY AND NEIGHBORHOOD DATA. This data (mostly social and 
economic) should be kept to a minimum and should include only such 
information as directly affects the appraised property together with the 
appraiser's conclusions as to significant trends.
    10. PROPERTY DATA:
    a. Site. Describe the soil, topography, mineral deposits, easements, 
etc. A statement must be made concerning the existence or nonexistence 
of mineral deposits having a commercial value. In case of a partial 
taking, discuss access both before and after to remaining tract. Also 
discuss the detrimental and hazardous factors inherent in the location 
of the property.
    b. Improvements. This description may be by narrative or schedule 
form and shall include dimensions, cubic and/or square foot 
measurements, and where appropriate, a statement of the method of 
measurement used in determining rentable areas such as full floor, 
multitenancy, etc.
    c. Equipment. This shall be described by narrative or schedule form 
and shall include all items of equipment, including a statement of the 
type and purpose of the equipment and its state of cannibalization. The 
current physical condition and relative use and obsolescence shall be 
stated for each item or group appraised, and, whenever applicable, the 
repair or replacement requirements to bring the property to usable 
condition.
    Any related personalty or equipment, such as tenant trade fixtures, 
which are not attached or considered part of the realty, shall be 
separately inventoried. Where applicable, these detachable or 
individually owned items shall be separately valued.
    d. History. State briefly the purpose for which the improvements 
were designed, dates of original construction and/or additions; include, 
for privately owned property, a ten-year record as to each parcel, of 
all sales and, if possible, offers to buy or sell, and recent lease(s); 
if no sale in the past ten years, include a report of the last sale.
    e. Assessed value and annual tax load. If the property is not taxed, 
the appraiser shall estimate the assessment in case it is placed upon 
the tax roll, state the rate, and give the dollar amount of the tax 
estimate.
    f. Zoning. Describe the zoning for subject and comparable properties 
(where Government owned, state what the zoning probably will be under 
private ownership), and if rezoning is imminent, discuss further under 
item 11.

                   PART III--ANALYSES AND CONCLUSIONS

    11. ANALYSIS OF HIGHEST AND BEST USE. The report shall state the 
highest and best use that can be made of the property (land and 
improvements and where applicable, machinery and equipment) for which 
there is a current market. The valuation shall be based on this use.
    12. LAND VALUE. The appraiser's opinion of the value of the land 
shall be supported by confirmed sales of comparable, or nearly 
comparable lands having like optimum uses. Differences shall be weighed 
and explained to show how they indicate the value of the land being 
appraised.
    13. VALUE ESTIMATE BY COMPARATIVE (MARKET) APPROACH. All comparable 
sales used shall be confirmed by the buyer, seller, broker, or other 
person having knowledge of the price, terms and conditions of sale. Each 
comparable shall be weighed

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and explained in relation to the subject property to indicate the 
reasoning behind the appraiser's final value estimate from this 
approach.
    14. VALUE ESTIMATE BY COST APPROACH, IF APPLICABLE. This section 
shall be in the form of computative data, arranged in sequence, 
beginning with reproduction or replacement cost, and shall state the 
source (book and page if a national service) of all figures used. The 
dollar amounts of physical deterioration and functional and economic 
obsolescence, or the omission of same, shall be explained in narrative 
form. This procedure may be omitted on improvements, both real and 
personal, for which only a salvage or scrap value is estimated.
    15. VALUE ESTIMATE BY INCOME APPROACH, IF APPLICABLE. This shall 
include adequate factual data to support each figure and factor used and 
shall be arranged in detailed form to show at least (a) estimated gross 
economic rent or income; (b) allowance for vacancy and credit losses; 
(c) an itemized estimate of total expenses including reserves for 
replacements.
    Capitalization of net income shall be at the rate prevailing for 
this type of property and location. The capitalization technique, method 
and rate used shall be explained in narrative form supported by a 
statement of sources of rates and factors.
    16. INTERPRETATION AND CORRELATION OF ESTIMATES. The appraiser shall 
interpret the foregoing estimates and shall state his reasons why one or 
more of the conclusions reached in items (13), (14), and (15) are 
indicative of the market value of the property.
    17. CERTIFICATION. This shall include statement that Contractor has 
no undisclosed interest in property, that he has personally inspected 
the premises, date and amount of value estimate, etc.

                      PART IV--EXHIBITS AND ADDENDA

    18. LOCATION MAP. (Within the city or area)
    19. COMPARATIVE MAP DATA. Show geographic location of the appraised 
property and the comparative parcels analyzed.
    20. DETAIL OF THE COMPARATIVE DATA.
    21. PLOT PLAN.
    22. FLOOR PLANS. (When needed to explain the value estimate.)
    23. OTHER PERTINENT EXHIBITS.
    24. QUALIFICATIONS. (Of all Appraisers and/or Technicians 
contributing to the report.)

    (2) The following exceptions are made to the above format:
    (i) Estate, either a copy of the estate appraised should be included 
in the report or by reference in the report to the appropriate estate.
    (ii) Legal description must be included in the appraisal report, 
either in the body or as an exhibit.
    (3) Photographs of important buildings and unusual land conditions 
are considered an integral part of each appraisal report. Judgment 
should be exercised in conserving time and expense, and several small 
buildings can often be covered in one photograph. The use of color film 
and photographs is encouraged, especially wherein development cost 
either ``in-house'' or by outside firms is reasonable.
    (d) Brief Appraisals. (1) Brief narrative appraisal reports, of a 
one-to-four page composition, are authorized for use in many instances 
wherein the evaluation or per annum rental value does not exceed $3,600. 
The use of this type of report is encouraged and authorized for:
    (i) Family housing appraisals, (ii) inleasing of privately-owned 
quarters and outleasing of government-owned quarters to civilian 
tenants, (iii) the purchasing or leasing of undeveloped land, (iv) 
rentals of small office-type space (example: Recruiting facilities), (v) 
rights of way for utility lines and roadways, (vi) leases; easements, 
and (vii) other minor interests in real property.
    (2) Appraisals exceeding $2,000 per annum rental are subject to the 
Economy Act, and the fee value must be shown if improvements are 
included. A brief or short form-type of appraisal is adequate.
    (3) All appraisals will be supported by at least three comparable 
sales or rentals of similar properties. A narrative discussion of each 
will be included. In bulk acquisition projects the use of prepared sales 
data sheets is authorized and encouraged. Each sale or rental must be 
discussed and compared to the subject property within the narrative of 
the report.
    (4) Brief narrative appraisals will be reviewed under the same 
requirements as normal appraisal reports.