Standards Rule 7-4

In developing a personal property appraisal, an appraiser must collect, verify, and analyze all information necessary for credible assignment results.
 

(a)

When a sales comparison approach is necessary for credible assignment results, an appraiser must analyze such comparable sales data as are available to indicate a value conclusion.

(b)

When a cost approach is necessary for credible assignment results, an appraiser must:

(i)

analyze such comparable cost data as are available to estimate the cost new of the property; and

(ii)

analyze such comparable data as are available to estimate the difference between cost new and the present worth of the property (accrued depreciation).

(c)

When an income approach is necessary for credible assignment results, an appraiser must:

(i)

analyze such comparable data as are available to estimate the market income of the property;

(ii)

analyze such comparable operating expense data as are available to estimate the operating expenses of the property;

(iii)

analyze such comparable data as are available to estimate rates of capitalization and/or rates of discount; and

(iv)

base projections of future income and expenses on reasonably clear and appropriate evidence.

Comment: An appraiser must, in developing income and expense statements and cash flow projections, weigh historical information and trends, current supply and demand factors affecting such trends, and competition.

(d)

When developing an opinion of the value of a lease or leased property, an appraiser must analyze the effect on value, if any, of the terms and conditions of the lease(s).

(e)

When analyzing the assemblage of the various component parts of a property, an appraiser must analyze the effect on value, if any, of the assemblage.  An appraiser must refrain from valuing the whole solely by adding together the individual values of the various component parts.

Comment: Although the value of the whole may be equal to the sum of the separate parts, it also may be greater than or less than the sum of such parts. Therefore, the value of the whole must be tested by reference to appropriate data and supported by an appropriate analysis of such data.

A similar procedure must be followed when the value of the whole has been established and the appraiser seeks to value a part. The value of any such part must be tested by reference to appropriate data and supported by an appropriate analysis of such data

(f)

When analyzing anticipated modifications to the subject property, an appraiser must analyze the effect on value, if any, of such modifications to the extent they are reflected in market actions.

(g)

When real property or intangible items are included in the appraisal, the appraiser must analyze the effect on value of such non-personal property items.

Comment: When the scope of work includes an appraisal of real property or intangible items, competency in real property appraisal (see STANDARD 1) or business appraisal (see STANDARD 9) is required. In addition, competency in other types of personal property outside of the appraiser’s specialty area may be necessary (see STANDARD 7 and the COMPETENCY RULE).