A typical multi-family property appraisal appointment will take anywhere from 30 minutes to an hour or more depending on the complexity of the property. The appraiser will inspect both the interior and exterior of the subject property, take photographs and measure the improvments. The appraisal report will contain as much information on the property and surrounding area as possible. Included will be a description of the exterior and interior as well as any additional features (pools, barns, etc.). There is a section of the report which describes the economic factors impacting the value and a discussion of the neighborhood, the lot size, shape, room count of the units (2 bedrooms, 1.5 baths, etc.) and lists the above grade living area of your multi-family property as well as any basement/lower level finishes.
Then the process of valuation begins. When applicable, a Cost Approach is provided. The appraiser uses various methods of estimating a cost to reconstruct the multi-family property, estimates the depreciation from all causes, and then adds to the depreciated cost the estimated value of the site. This approach is not always applicable, based on the age of the property. In the Income Approach, the rents are estimated from the market, the expenses are deducted, and the net operating income is capitalized into an indication of value. With smaller multi-family properties, a gross rent multiplier method may be more applicable.
The Sales Comparison Approach is the one approach that is almost always used. In this approach, properties that have sold are reviewed. The three or more properties that are most similar are compared to the subject on a feature by feature basis The appraiser will make adjustments to the comparables where the properties differ and a value estimate will be made based on an analysis of the adjusted sales prices.
Finally, the indicated values from the most applicable approaches will be reconciled into the final estimate of value.