Certified General Appraiser cheat sheet

Bundle of rights: fee simple absolute is the most complete interest; lesser estates (leased fee, leasehold, life estate, easement) are carved from it and valued separately.

Four agents of production: land, labor, capital, and entrepreneurship/management. Land's share of total income is the residual after returns to the other three.

Value is created by four forces: utility (D-U-S-T: demand, utility, scarcity, transferability). All four must be present for market value to exist.

Market value components: most probable price, informed buyer and seller, neither under duress, payment in cash or equivalent, reasonable exposure time, both acting prudently.

Price is the amount paid; cost is expenditure to create; value is the present worth of future benefits. The three are not interchangeable.

Investment value is value to a specific investor with specific criteria (tax position, financing, synergy); it can differ from market value for the same property.

Insurable value typically excludes land, foundations, and excavation; use the policy definition rather than a generic replacement-cost figure.

Assessed value is a statutory, jurisdiction-defined figure for ad valorem taxation; it may be a fraction of market value and is not an appraisal conclusion.

Real property = land plus improvements plus the bundle of rights; personal property is movable and is valued separately (trade fixtures, business assets).

USPAP is the Uniform Standards of Professional Appraisal Practice, issued by the Appraisal Standards Board (ASB); it is not a valuation methodology text and does not prescribe which approach to use.

The Ethics Rule has four parts: Conduct, Management, Confidentiality, and Record Keeping. Record keeping requires retaining workfiles at least five years after delivery, or two years after final disposition of a judicial proceeding.

Competency Rule: an appraiser must identify the problem and have the knowledge and experience to complete it competently, or disclose the deficiency and take steps to complete it competently (assistance, research, extra study).

Scope of Work Rule: identify the problem, determine and perform the scope of work necessary and sufficient to produce credible results, and disclose the scope in the report. Client expectations alone do not set scope.

Standards 1 and 2 govern development and reporting of a real property appraisal; Standards 7 and 8 govern personal property; Standards 9 and 10 govern business valuation.

The Jurisdictional Exception Rule applies only when a law or regulation of a jurisdiction precludes compliance with part of USPAP; the report must cite the exception and the law.

An appraisal must state the intended use and intended user(s); a report prepared for one user is not automatically suitable for another.

USPAP requires analysis of all agreements of sale, options, and listings of the subject property that were available in the normal course of business; prior sales of subject and comparables within specified periods must be analyzed and reported.

Extraordinary assumptions and hypothetical conditions must be clearly disclosed, labeled, and their effect on value stated; a hypothetical condition is contrary to what is known to exist.

Cost approach: value = reproduction or replacement cost new − physical deterioration − functional obsolescence − external obsolescence + land value (or as-is site value).

Cost new can be estimated by quantity survey, unit-in-place, or comparative-unit method; the sales-comparison method of cost estimation uses known costs of similar structures.

Depreciation is the difference between cost new and value; it is measured by market extraction, age-life (effective age ÷ total economic life), or breakdown (curable/incurable, physical/functional/external).

Sales comparison: adjust comparables to the subject; apply adjustments to the comparable's price for differences in the subject's favor (add) or against it (subtract). Sequence: property rights, financing, conditions of sale, market conditions (time), then physical/location.

Gross adjustment and net adjustment grids are screening tools; a comparable with very large net or gross adjustments is weak evidence, not automatically invalid.

Income approach direct capitalization: V = NOI ÷ R. Derive R from comparable sales (R = NOI ÷ sale price) or from a band-of-investment/mortgage-equity analysis.

Yield capitalization / DCF: discount each year's cash flow plus reversion at a market-derived discount rate; the discount rate reflects risk and return expectations, not the going-in cap rate.

Gross rent multiplier: GRM = sale price ÷ gross monthly rent; value = GRM × subject gross monthly rent. Use only when rent-to-price relationships are consistent.

Reconciliation is not averaging: the appraiser weighs the reliability and relevance of each approach given the property type, data quality, and intended use, and explains why one is most persuasive.

Market analysis vs. marketability study: market analysis examines supply and demand for a property type in an area; a marketability study examines the likely absorption of a specific project at a specific price or rent.

Highest and best use is the reasonably probable and legal use that is physically possible, appropriately supported, financially feasible, and results in the highest value.

The four tests are applied in order: legally permissible, physically possible, financially feasible, and maximally productive. A use failing an earlier test is not carried forward.

Highest and best use must be concluded both as though vacant (site value) and as improved (property value); the two can differ and both must be reported.

Financial feasibility is tested by residual land value, ratio of value to cost, or the use's ability to produce a positive return to land after all costs and required profit.

Interim use is a temporary use that is not the highest and best use but is reasonable until a higher use becomes feasible.

Supply and demand analysis uses demographic drivers (population, households, income, employment) and competitive supply (existing, under construction, proposed, plus vacancy and absorption).

Market rent is the most probable rent a property should command in a competitive market; contract rent is the actual rent in the lease. The difference is leasehold/leased-fee advantage.

Exposure time is the estimated length of time the property interest would have been offered on the market prior to the hypothetical sale at market value; it is stated as of the effective date and is not the same as marketing time.

An appraisal report may be written (Appraisal Report or Restricted Appraisal Report) or oral; the report type depends on the intended use and intended users, not on the appraiser's preference.

An Appraisal Report must state the information and analyses required by Standards 1 and 2 and summarize the conclusions; a Restricted Appraisal Report may state conclusions with minimal supporting detail but may be used only by the named client.

Every report must identify: client and intended users, intended use, purpose and type of value, effective date, property identification, property rights appraised, and scope of work.

The effective date of value and the date of report are different; the value opinion speaks as of the effective date even if the report is signed later.

Certification must be signed by the appraiser and must include the required statements (personal inspection or disclosure, no undisclosed interest, compensation not contingent on a predetermined result, compliance with USPAP).

Workfile contents: all data, analyses, and documentation relied upon, including drafts; retain at least five years after delivery or two years after final disposition of a judicial proceeding.

A letter of transmittal summarizes the assignment but does not substitute for the report body; the report must be self-contained for the intended user.

An extraordinary assumption is presumed true and, if false, could change the value opinion; a hypothetical condition is known to be false at the effective date and must be labeled.

If the appraiser is asked to value a property interest outside their competence (e.g., a specialized going-concern), the Competency Rule requires disclosure and steps to gain competence before accepting or completing.