In addition to the nuts and bolts of completing an appraisal, this guide will also offer best practice tips for efficient workflow. For example, organizing and captioning photos early in the process to help keep inspection details fresh. Likewise, draft the property description as soon as possible. Finally, if an income analysis is in scope, we recommend you take a first pass at the rent roll and expense analysis early on to surface missing data and allow time for follow-up information requests. Nailing down the subject description and operating data will help focus your comparable data research for sales, rents, expense data and cap rates. These steps also check-off several key appraisal tasks.
Organize and caption photos
Draft the subject description
Enter rent roll and expense data
Copy the Appraisal Template and Create a New Project
This step assumes you have copied the appropriate appraisal template from the StartDeck template library to your personal or team template library. From your template library, a new appraisal project is created. This is a straightforward task, as detailed here.
The project page is a home page for your appraisal and includes folders in Google Drive for your document, spreadsheet, images and addenda. Learn more about the project page here.
Tip: We recommend minimal customization and branding of templates at the outset. Learn the software first, then add to your customization.
Tip: We highly recommend a thorough review of the document template to understand the appraisal content and workflow. Familiarization is key for navigation and writing efficiency.
Browser Setup
Narrative appraisal work is an iterative process. Optimize your workflow with the Project Page, Doc and Sheet across three tabs:
The three tab setup follows the appraisal workflow:
Project Page: Client info and subject images
Doc: Appraisal and subject info
Sheets: Valuation
Start at the Project Page
The Project Page is the home page for your appraisal. Each appraisal is represented with a project tile found under My/Team Projects:
StartDeck > My/Team Projects > Project Tile
Think of project tiles as library cards for your work projects.
Click on the Edit icon to open the project page.
Project Page Workflow
Add Client Info
From the Project Page, click on Client Information and add client info to your contacts database. If the client is already in your database, search and select this client for the project. See how here. Client info will automatically merge to your appraisal.
Upload Subject Images, Add Captions and Organize
Click on Images and upload subject images and add captions (see how here). Science tells us that, on average, we forget about 70% of the information we learn within 24 hours (the "forgetting curve"). Actively captioning and ordering subject photos helps your memory of subject property details. This has other benefits: one of your workflow tasks will be completed and you will have better recall when writing the property description. Moreover if your are working with a supervising appraiser, they will have immediate access to subject photos.
Best Practice Tip: Upload, caption and organize subject photos as soon as possible following the inspection. See how here.
The appraisal report can be divided into two parts:
The front end, which includes the assignment, scope, market area, subject description, zoning and highest and best use.
The back end, which includes valuation premises, analyses and reconciliation.
Most of the front end work is done in Google Docs, while most of the back end work is done in Google Sheets.
Completing the front end (doc) sets the stage for the back end (sheet). In fact, all of the data entered through forms (StartDeck Writer sidebar) on the front end are automatically sent to the linked spreadsheet and populates adjustment grids and other sections. Likewise, sheet data is merged back to the document as merge fields and tables to complete the data workflow.
While this encapsulates the general workflow, writing a narrative appraisal is often an iterative process, working back and forth between the narrative (doc) and the analysis (sheet).
Best Practice: After completing subject photos on the Project Page and a first pass at the Rent Roll and Expense sections of the workbook (as noted above), focus on the front end and establish the assignment scope, market and property characteristics, zoning and highest and best use before working on the valuation analysis in Google Sheets.
Editing the Front End with StartDeck Writer
You are now ready to add information and edit your document. The workflow will circle back to the Project Page later. From the Project Page click the blue Edit document icon to open the document for editing.
Click a Doc or Sheet icon for real time preview.
Select Doc Edit or Sheet Edit to open files.
View all files in the project folder in Google Drive
Reminder: We recommend a three tab setup: Project Page, Doc and Sheet.
With the appraisal document active, open the StartDeck Writer extension and click on Forms and Fields (1) to enter data:
With StartDeck Writer Forms & Fields open, you can now quickly enter appraisal information with the assistance of forms with pre-set options. Learn more about Forms & Fields here. Fields are generally grouped under their respective document headings.
Wide Screen Setup
If screen space allows, we recommend keeping Google Docs Outline open on the left, and StartDeck Writer open on the right. Navigate on the left and enter data on the right.
Start at the Top
The 'Top' section contains all the fields for the cover page and some general info that applies to the entire report. Some of these fields automatically populate from previous steps, like your Vendor information, and the client information. The remaining fields to complete are:
Type of appraisal report
Property name
Property type
Short property description
Tip: It's a good practice to update document fields as you go along and review the merged data. This will help you become familiar with how the merge fields fit into the narrative. Update doc fields at the bottom of the sidebar:
Continue Section by Section
Open a form by clicking the "+" icon. Continue down the sidebar and complete each form to populate the front half of the document (up to and including Valuation Methods). Some sections feature tables from the linked spreadsheet — these can be added and updated at any time.
Of course not all of the front end data is generated by forms, and document writing and editing is required for many sections and is part of completing the front end.
Reminder: Draft the property description promptly following your inspection.
About Subject Photos
Subject photos are managed on the Project Page and inserted in bulk. See Subject Images.
We recommend inserting the subject photos last. This keeps the document as "light" and responsive as possible during the editing process. With the recommended three tab setup, your subject photos are always available for review from the Project Page.
Tip: Upload and organize photos first, insert to doc last.
Mobile Productivity: Enter front end data from your mobile device. All of the forms in the document are available on the Project Page from your phone or tablet.
How Forms and Fields are Organized
Forms are organized by document headings and follow the order of the document. In some cases, however, the fields under one heading in the document are populated from fields under a different heading. The most obvious example is the Executive Summary, which pulls data from various sections throughout the document. For example, all the site data is entered in the Site Description section which then populates the Executive Summary. Learn more about merge fields here.
The bluefields are doc fields and sourced from the StartDeck Writer sidebar, while green fields in the document are sheet fields and sourced from the linked spreadsheet, discussed below. Of course, all merge fields are formatted as black text when publishing the report.
Note: You can edit sidebar form entries at any time.
Workflow: When Update Doc Fields is run, in addition to populating merge fields in the document, all of the data in the sidebar is also sent to the linked spreadsheet. These data are used to populate analysis grids and other spreadsheet tables.
This section describes how to complete the valuation analyses in sheets. Before we get into the appraisal workflow, we'll explain worksheet fundamentals.
Open the Workbook
From the Project Page, Project Preview/Edit, select the Edit sheet icon or open the file directly in Google Drive.
Tip: Handy links to Google Drive are located throughout the platform.
Open StartDeck Tables
This is important!StartDeck Tables sidebar must be open to enable automation.
From the main menu: Extensions > StartDeck > Tables
Appraisal Workbook Table of Contents, Color Keys and More
The table of contents page lists all the unhidden sheets in the workbook, tab and font color keys, navigation icons, user settings and a punch list area.
The Actions control is found on most sheets in the workbook and central to workbook activities. On this sheet actions include updating the table of contents, highlight user input cells and user settings.
Worksheettabs have four color codes:
Green for general purpose and description sheets.
Light red for workbook system information, such as common lists, merge fields and data export sheets.
Blue for valuation analyses sheets.
Dark red for comp data sheets.
Text is formatted as
Blue for links
Green for info
There are two navigationicons common to most sheets:
The house icon, which will link back to the table of contents.
The compass icon, which will link back to the top of the sheet.
Settings:
Highlight input cells on/off: As a practical matter this should always be on until you have finished your work. This setting highlights user input cells as blue.
Toast Tips on/off: This should be on for new users. Small "toast" pop-ups will display with tips, explanations and directions in the lower right corner of your screen.
Workbook Navigation
The Table of Contents is also a navigation tool — simply click on a sheet name and a navigation link will display. The workbook is organized to follow the order of the report, from left to right. All sheets (except data sheets) have a home icon in cell A1 that will link back to the TOC.
Always refresh the TOC when sheets have been added, deleted, hidden or unhidden.
Most tables have instructions at the top or left side of the table, sometimes hidden to simplify the display. Look for plus signs left of the row numbers to unhide instructions.
Sheet Navigation Links
Sheets with multiple tables have navigation links at the top of the sheet, or in the case of analysis grids, links on the top left side of the grid. Most "down-line" tables will also have navigation links to the previous and next tables. Compass icons will always link back to the top of the sheet (cell A1).
Analysis Grid Navigation Links
Income Analysis Navigation Links
Keyboard Navigation
Compass icons serve as anchors for keyboard navigation. Starting in cell A1, control+down arrow will move the cursor downward to each major section of the sheet. “Down-line" tables located to the right are accessed with control+right arrow. Grey borders surround each table with a compass icon at each corner, allowing for keyboard circumnavigation of a table. Pressing control+down arrow from the bottom right icon will navigate to the next table.
Compass Sheet Navigation
Compass Table Navigation
Sidebar Navigation
Sidebar navigation is handy when you want to quickly go to a specific table from anywhere in the workbook. Click the sheet name to display tables for that sheet, then click on a table name:
Highlight Input and Selection Fields
Most sheets and tables have a blue Actions dropdown at the top-left corner. Actions will vary based on the worksheet's purpose but will always include Highlights on and Highlights off option. Highlighting input cells simplifies the UI for the appraiser and helps prevent overwriting cells with formulas. Highlight settings are global for the workbook.
Best Practice Tip: Keep highlights on while working.
Copy & Link Tables
Templates and projects do not contain linked tables by default, rather unlinked placeholder tables are displayed. Placeholder tables are replaced with linked tables as part of the work flow. Each table has a copy function available from the Actions menu: Select this option and press Control-C (Command-C on Mac) to copy the table. Switch to the document tab, place the cursor at the desired document location and paste as a link.
To copy a table select copy table from the Actions menu
Press Control-C or Command-c (mac) to copy
Note: Dropdown lists formatted as "chips" will display as normal text in the document.
In the document, paste the tables as a link.
Update Linked Tables
To update a linked table click the icon in the upper-right corner. Notice that dropdown lists formatted as "chips" in the spreadsheet display as plain text when the linked table is displayed in the document.
To update all tables at once, from the main menu: Tools > Linked objects > Update all
House Keeping
Google has been pretty good about allowing the connection shown below automatically, but it's worth checking if lists are not populating:
On the "Data Connections and Lists" sheet (far right tab) allow the connection:
Start with appraisal premises on the Appraisal Premises & More sheet. Up to four premises can be used, but most appraisals will require only one to two. The first should (almost) always be “As Stabilized" — this is the primary benchmark analysis. The second appraisal premise is typically "As Is" which is usually arrived at by adjusting the "As Stabilized" value (see Adjustments to Stabilized Value). Set entries for unused appraisal premises to "--".
Tip: Set Appraisal Premise 1 to As Stabilized
"As Is" and "As Stabilized" are often synonymous with established well-managed properties.
Appraisal Scenario 1: As Stabilized
Appraisal Scenario 2: As Is
Show more scenarios
All valuation worksheets have prominent Premises section at the top. Selecting the appraisal scenario will set the valuation premise ("As Stabilized", "As Is"), property rights and effective date for the analysis. This screenshot shows the portion of the Land Analysis Grid where the appraisal scenario is selected.
Selecting the appraisal scenario defined on the Appraisal Premises and More sheet will set the parameters for the valuation analysis.
In this example the valuation premise is "As Stabilized".
Property rights are lease fee.
The effective date of the valuation analysis is 1/25/23.
Hypothetical Conditions Often Apply
When the "As Stabilized" and "As Is" values are different, the appraisal will probably require a hypothetical condition. For example, if a property is 80% occupied ("As Is") while the larger market is generally at 95% occupancy ("As Stabilized"), the stabilized value will require a hypothetical condition that the property is 95% occupied. Some appraisers may prefer to set the stabilized value valuation date in the future to reflect the time necessary to reach stabilization. But doing so requires that all aspects of the appraisal be considered as of that future date which may introduce an unnecessary degree of speculation. Rather, we recommend a single hypothetical condition that the property is stabilized as of the current "As Is" valuation date.
Tip: Where possible, keep the valuation dates the same.
Set unused scenarios as "--"— this tells the software to ignore unused scenarios.
Per USPAP if the subject has sold within three years of the appraisal date the transaction should be analyzed. USPAP also requires analysis of current contract, offer, or listing of the subject. See USPAP Standards Rule 1-5 and Advisory Opinion (AO-1).
The transaction data is entered on the Transaction History sheet, then analyzed on the Reconciliation sheet. Note that the transaction can also be saved as a database record. Learn more here.
Follow sheet instructions to complete this sheet, if applicable.
When completing the Transaction History, start be selecting the type of transaction:
Closed Sale
Listing
Contract
Offer
Other
Next, select the subject Appraisal Scenario to compare with the transaction. This will typically be As Stabilized or As Is.
The premises for the selected Appraisal Scenario will populate automatically.
The Property Description sheet augments the data entered to document. Most of the property description is entered in the document, while gross building area, rentable area and other key measures are entered to the Property Description sheet or calculated on the sheet. These calculated fields will merge with the report document to complete the property description.
The Property Description sheet may be thought of as a hub for key data points.
Tip: Turn on highlights to distinguish input fields from calculated fields.
Complete these inputs:
Land Acres (square foot to acres calculation at right).
Land Units (number of zoned or approved development units such apartments, condos, building lots, etc.) — enter 1 if not applicable.
Gross Building Area (GBA). Rentable Area (RA) is calculated from the Rent Roll.
Year Built, Effective Age and Total Economic Life.
Upload the subject image using the Actions menu. The URL will display in the table. This is the primary image for the subject.
Subject image date.
Input fields are distinguished with blue highlight.
Multifamily Unit Mix
This table populates in part from the rent roll and user input directly to this table. Unit counts, average unit sizes and total multifamily square footage populate from the rent roll.
Complete data entry for Rooms, Bedrooms and Baths for each unit type.
Most appraisals will have a single income analysis and rent roll, however, if there are more than one, select the income analysis from the dropdown list.
Subject Location Map
Maps are automatically generated by Google Maps. The subject map is presented in the linked appraisal document. There are four map options:
ROADMAP (normal, default 2D map)
SATELLITE (photographic map)
HYBRID (photographic map + roads and city names)
TERRAIN (map with mountains, rivers, etc.)
The address populates automatically from data entered in the linked document via StartDeck Writer. If the map marker location is off, paste the geocode in the address field (overwriting the formula). Learn more about maps and geocoding here.
Subject Neighborhood Map
This map is the subject location map but has an additional setting that controls the zoom level of the map, which will vary from neighborhood to neighborhood. The settings range from 10 to 20, where 10 is the maximum zoom out and 20 is the maximum zoom in.
Add assessment data as indicated. Use the highlight to distinguish data entry fields. The tax rate formula is Assessment / 1,000 x Tax Rate — modify the formula as needed for your analysis.
Best Practice: Compare the taxes projected in the Income Analysis (if applicable) with the taxes calculated here. When these figures do not match, explain why in the narrative.
This discussion is presented in two parts: cost and depreciation.
Cost Inputs
The cost worksheet has an optional multipliers section if using cost services such as the Marshall & Swift cost manual. This section is hidden by default — click the plus sign left of row 10 to display.
Cost may be projected as a lump sum, per square foot, per linear foot or per unit. Enter the type of cost measure, the quantity and cost. These estimates are referred to as ‘Hard Costs’.
Soft Costs are added to Hard Costs and include Engineering/Architectural (typically estimated as a percentage of Hard Costs) while Permits/Legals costs are estimated as lump sums. Lease-up costs (see Lease-up Expenses) are applicable for income producing properties, but generally not for owner-occupied properties.
The final Soft Cost is Developer's Profit, typically estimated as a percentage of Hard and Soft Costs. This is different from builder's profit, which is baked into line item Hard and Soft Costs. Developer's profit may not be applicable for owner-occupied properties, based on local practices in your region.
Depreciation Estimates
Each cost estimate line, plus Hard and Soft Costs, is presented in the depreciation schedule. This allows for individual depreciation estimates.
Physical depreciation is calculated based on the age/life method.
Functional and External Depreciation are entered as percentage amounts.
The final input is the land value which completes the estimate of value.
Validation
The Validation table provides a set of checks to consider for the Cost Analysis. These basic tests of reasonableness provide a guide for analyzing the components and reliability of the analysis.
Validation is a baseline analysis that should be considered as a high level guide, not an indication of reliability.
For categories that do not apply, select NA.
Criteria may consist of a review and not a quantitative criterion. Quantitative criteria are defaults and should be adjusted for your local market conditions by the administrator of your account. This is template level work.
The Rent Roll is at the heart of the income analysis and populates the supporting tables which tease out characteristics of the subject's income stream.
The tables on this worksheet organized stepwise down and right of the main income and expense tables. The staggered layout allows rows and columns to be modified without disturbing other tables.
Navigation Links
The main navigation table is at the top of the sheet. In addition, there are navigation links to the next and previous tables at each table. The compass icon will always link back to the top-left corner (cell A1) of the sheet.
Reminder: The StartDeck Tables Sidebar must be open to enable navigation links. Why? We use a custom function (getSheetID) in our navigation links, which is only available when the sidebar is running. Why not use regular links? We'd love to, but regular links are static and do not adjust as rows and columns are added and removed. Our custom links are dynamic and maintain accuracy when rows/columns are added or removed.
Rent Roll View
Set the Rent Roll view from the Actions menu.
There are two view options for the Rent Roll: Compact and Focus. Compact is a condensed view for power users. All key tables and inputs are presented in a single scrollable view. Focus view on the other hand, separates the Income History, Rent Roll, Expense and Capitalization tables for individual view and undistracted analysis. The view can be changed at any time.
The income analysis employs the direct capitalization method and is intended for the “As Stabilized” (1) value premise. Premises are established on the Appraisal Premises worksheet.
Breakout Metric
The breakout metric (2) — gross building area, rentable area or per unit — sets the per unit breakout for expense projections and value indications.
Note: Expenses projected on a per square foot basis are based on the gross building area, regardless of the breakout metric.
Income Analysis Tables
The following section discusses each table in the income analysis.
Select years for which historic income is available in ascending order.
Enter historic income.
If available, enter year-to-date income and the number of months the income represents. Annualize lump sum amounts, such as taxes and insurance.
Rent Roll Instructions
Click the + sign left of the rent roll (row 62) to display data input instructions for the rent roll.
Rent Roll Actions
The Actions button at the top-left of Rent Roll includes several functions.
Highlight on/off.
Show/Hide rows/columns. The rent roll has capacity for 30 unique tenants or space types. Click show rows/columns to display all 30 income rows, hide to hide unused rows.
Copy Rent Roll. This action will select the rent roll income projections portion of the operating data.
Copy Expenses. This action will select the expense projections portion of the operating data.
Display multifamily rent projections. This action will display the multifamily rents projected from the multifamily lease analysis page. Use this handy reference tool to keep the multifamily rent projections consistent between the rent analysis worksheet and the rent roll.
The Rent Roll is flexible and can handle a variety of mixed-use income projections.
Enter the tenant name or multifamily space type.
Enter the number of units for this projection row. Commercial space is typically entered as one tenant (one unit) per row while multifamily units can be grouped by unit types (enter occupied and vacant spaces on separate rows — more on this below).
Enter the square foot area for the unit. Use an average square foot area for grouped units (the number of units is multiplied by the average square foot area as part of the Rentable Area calculation).
Select the method of rent projection ($/Type). There are four options:
SF/Yr — Rent per square foot per year
SF/Mo — Rent per square foot per month
Unit/Mo — Rent per unit per month
Annual — Annual lump sum
Enter contract rent for occupied units.
Enter $0 in the contract rent column for vacant units. This is important: a $0 entry in the contract rent column identifies the unit(s) as vacant. This is why vacant units are entered on separate lines from occupied units.
Enter market rent (even if contract rent will be applied). This provides a side-by-side comparison of contract and market rents.
Select the rent to apply in the projection. There are three options:
Contract Rent
Market Rent
Blend — "Blend" is average of market and contract rent. When to use a blended rent is a rather broad discussion that deals with probability. At a high level, think in terms of what is most likely to occur with the lease over the course of a typical holding period, say 7 to 10 years. If the tenant is solid and the rent is not too far from market rates, either high or low, then odds are the contract rent is the most probable income stream for the space. If the rent is substantially below market, it's likely the tenant will keep the lease as long as the lease allows. In that case the landlord is usually stuck with the contract. If the lease is high, be cautious. The higher the lease (meaning higher than market), the more likely the tenant will attempt to renegotiate. Even when bound by contract law, leases that are substantially above market can be risky cash flows. Knowledgeable buyers will often discount above market rents as speculative income. In these cases, applying a blended rent may be appropriate. A more straightforward use of blended rents is when a contract rent is expected to revert to market rent in the near future.
Select the Space Type # for the projection. This is important:Space Types are used to categorize vacancy and occupancy, contract rents, lease expirations and more. The Space Type categories are high level descriptions designed to fit a broad range of spaces. Don't worry too much about a precise category, the main thing is to be consistent.
Select the lease type (commercial space only). There are four options. Again, these are high level categories.
Net Lease: This lease type passes most or all of the property's fixed and variable operating expenses to the tenant.
Modified Net Lease: This lease type passes most but not all of the property's fixed and variable operating expenses to the tenant. The landlord is responsible for some portion of the expenses and therefore still falls under the Net Lease category.
Gross Lease: Sometimes referred to as Full Service. This is a lease where the landlord pays most or all of the property's fixed and variable operating expenses.
Modified Gross Lease: This lease type passes some of the property's fixed and variable operating expenses to the tenant, however the landlord is responsible for most of the expenses and therefore still falls under the Gross Lease category.
Enter start and end dates for commercial leases and optionally, for multifamily leases. If the space is rented without a contract, enter the date of the appraisal as the start date and leave the end date blank. Dates are used in supporting tables to surface recent leases and in the schedule of lease expirations.
Enter Vacancy and Collection Loss as a percentage.
The projection of overall Vacancy and Collection Loss is entered as a percentage on the Rent Roll. Actual vacancy and occupancy rates are detailed in the "Space Types and Occupancy" table where vacancy/occupancy rates are broken out by space types for analysis automatically by the software.
The subject's expense history is one of the most valuable and important guides for projecting the subject's expenses in the appraiser's tool box.
Appraisal Expense Chart of Accounts
Similar to categorizing income streams by space types, expenses are consolidated and analyzed by specific expense categories, organized by the Expense Chart of Accounts. Expenses can be highly nuanced and vary by property type. Further, detail and categories will vary from property to property. The Chart of Accounts (COA) used in StartDeck's commercial and multifamily appraisal templates are as follows:
Appraisal Chart of Accounts (COA)
Taxes
Insurance
Utilities
Repairs & Maintenance
Management
Other Expense
Reserves
Each of these categories is a bucket for subcategories:
Appraisal Chart of Accounts (COA)
Main Category
Subcategories
Taxes
Taxes (Lump sum bucket)
Property Taxes
Business Taxes
Insurance
Insurance (Lump sum bucket)
Property Insurance
Liability Insurance
Flood Insurance
Utilities
Utilities (Lump sum bucket)
Electricity
Water and Sewer
Oil/Gas
Trash Removal
Internet and Cable Services
Other Utilities
Repairs & Maintenance
Repairs & Maintenance (Lump sum bucket)
Landscaping and Groundskeeping
HVAC Maintenance
Plumbing Repairs
Electrical Repairs
Roof Repairs
Painting and Decorating
Elevator Repairs and Maintenance
Pest Control
Cleaning
Supplies
Janitor Salary/Apartment
Parking Lot Maintenance
Management
Management (Lump sum bucket)
Offsite Management
On Site Manager Salary
On Site Manager Apartment
Management Fees
Staff Salaries and Wages
Employee Benefits
Office Supplies and Equipment
Office Internet Service & Software Subscriptions
Advertising
Phone
Legal & Professional (Accounting, Appraisal, Consulting)
Business Licenses
Security
Misc. Management
Leasing Commissions
Advertising Costs
Tenant Screening and Background Checks
Other Expense
Other Expense (Lump sum bucket)
Reserves
Reserves (Lump sum bucket)
Reserve for Replacement
Contingency Fund
The list of subcategories, as long as it is, is not an exhaustive list, hence the“Lump sum bucket”category as a catch all.
There are two ways to enter expense history:
Directly to the expense table section of the income analysis (overwriting formulas).
Use the Historic Expenses worksheet (recommended).
Historic Expense Worksheet
This worksheet contains tables to reorganize those expenses to match the appraisal expense categories. Restructured expenses are automatically imported to the expense section of the income analysis. These tools provide a convenient way to organize historic expense data.
Enter or paste the source data (expense label and amount) to the first two columns (H, I) of the table. Paste only two columns: do not paste over the third column in the table (formulas).
If a historic expense item is an atypical amount, not representative of normal stabilized operation, adjust the amount by overwriting the formula in the Adjusted column. Adjusted amounts are automatically highlighted.
In the Appraisal Expense Label column, select the label that best matches the expense. When source data is not broken down into subcategories, use the "Lump sum bucket".
Repeat this to organize up to three years of expense data. The summary table “Restructured Historic Expense Data”will automatically populate with data from each table. This table then imports automatically to the expense table of the income analysis, described below.
Expense Projections
The Expenses table is located directly under the Rent Roll table on the Income Analysis worksheet.
By default historic expenses will automatically populate this table from the Historic Expenses worksheet. Optionally, data may be entered here by over writing the formula in cell F151, indicated by the year 2021, outlined in the diagram above.
Enter projected expenses on a lump sum, per square foot, per unit or percentage of income basis.
Select the method of expense projection to align with the amount entered in step 3. There are four options:
Annual — Annual lump sum
SF/Yr — Amount per square foot per year
Unit/Yr — Amount per unit per year
% EGI — Percentage of Effective Gross Income
The Breakout Metric is based on the selection made at the Premises and Metric Breakout section, at the top of the sheet.
Expense reimbursements apply to commercial space only. Selected reimbursements are calculated based on the percentage of commercial space at the property. Multifamily space is not included in reimbursement calculations. Further, calculated reimbursement amounts are adjusted for vacancies. For example, assume a building has 50% commercial space and 50% multifamily space and commercial tenants reimburse taxes which run $20,000 per year. Vacancy at the property is 5%. The reimbursement is calculated at $20,000 x 50% commercial space = $10,000, less 5% vacancy = equals a reimbursement of $9,500 for taxes.
In a mixed-use case, if the vacancy/collection loss rate is different for commercial space compared to the overall building, enter the override amount here. Reimbursements will be adjusted by the vacancy/collection loss override amount.
Your actual reimbursements may differ from tenant to tenant and require separate side calculations. In that case enter the calculated amounts in the reimbursement column, over writing the formulas.
Enter the range of expense ratios shown by the market, excluding outliers and qualify the subject's expense ratio as slightly below, below, similar, slightly above, or above. This is a mini comparison analysis that serves as a test of reasonableness and will merge to the narrative as part of the expense analysis.
Enter the range of cap rates shown by the market and other methods including Band of Investment, Debt Cover Ratio and surveys. We recommend excluding outliers. This is another mini comparison analysis that serves as a test of reasonableness and will merge to the narrative as part of the cap rate development section. Select the comparison and if below or above the market range, discuss and support this in the narrative.
The Breakout Metric is based on the selection made at the Premises and Metric Breakout section, at the top of the sheet.
The validation table provides a set of checks to consider for the Income Analysis. These basic tests of reasonableness provide a guide for analyzing the components and reliability of the analysis.
This is a baseline analysis that should be considered as a high level guide.
This table automatically populates where applicable and completes the Analysis column based on the criteria.
Quantitative criteria are defaults and should be adjusted for your practice standards by the administrator of your account. This is template level work.
There are four supporting tables which draw out additional detail from the rent roll. These tables categorize income characteristics by space types entered when completing the Rent Roll (see bullet #9).
For single tenant properties, these tables may not be applicable.
This is an important table which breaks out occupancy and vacancy and will reveal strengths and weaknesses by space types.
The vacancy/occupancy breakout metric is based on the selection made at the Premises and Metric Breakout section, at the top of the sheet.
Enter the market range for vacancy and collection loss. This is a mini comparison analysis that serves as a test of reasonableness and will merge to the narrative as part of the subject/market vacancy discussion.
This table displays the average contract rent in place at the subject, by space type. All contract leases are included in this table, old and new.
Select the predominant lease type in place for commercial space. This has no bearing on this table but populates the narrative and provides context for the subject and market rent discussion.
Square footage amounts are for leased space only.
Rents are weighted averages based on the contract rent and area of each lease.
Enter asking rents for comparison purposes, when applicable. Clear the checkbox to hide this column (Actions > Hide rows and columns).
This table is not included in the narrative by default, but can be added as needed. The schedule of lease expirations is a measure of anticipated turnover or lease renewal which provides insight to the subject's risk profile. This applies to commercial space only.
Select the number of years to display. The table has a five year maximum.
Square footage and percentages are for commercial space only.
Calculated cap rates should be used in conjunction with market extracted cap rates and survey data. We do not recommend calculated cap rates be used independently of other methods.
The Cap Rate Development table includes two methods; Band of Investment and the Debt Coverage Ratio Method.
This table consolidates all the leases from the Rent Roll and prepares them as comparable records that can (optionally) be saved to your database.
Note: Lease data provided to an appraiser for appraisal purposes are considered confidential information and should not be disclosed in other appraisals without permission. The possible exception to this is if the same lease data is available from other sources. Some appraisers will anonymize lease data in the absence of permission. Be cognizant of and follow USPAP ethics requirements. Regardless of the inclusion or exclusion of lease data in a report, subject leases are an important source of market knowledge for an appraiser.
The first row of the table is for multifamily data and consolidates up to five multifamily space types (1-BR, 2-BR, etc.) from the rent roll as a single database record. The remaining rows in the table are for commercial leases, where each lease is saved as an independent database record.
Prep-work
Prior to saving these data to your database, there are six fields, listed below, that require manual data entry. Use keyboard navigation from the top row of the table.
Select leases to save as comparables. The first row is reserved for multifamily.
Navigate to columns that require manual input:
Lease Term
Occupancy Expenses
Concessions
Tenant Improvements
Lease Escalations
Record Notes (optional — we recommend the appraiser name, date and the verification source)
This table is rather complex and requires careful use of inputs and projections. At a high level, the model first projects the stabilized cash flow estimate into the future. This forms a baseline stabilized cash flow projection. Next, the actual cash flow of the subject is projected into the future, but with assumptions for leasing up to stabilized occupancy. The difference between these two projections forms the basis for the lease-up expense estimate.
Understand that it is not only lost income, but also additional expenses associated with vacant space that form the estimate of lease-up expense. Further, there are risk factors to consider.
How far into the future do the projections go? To the point in time where the actual cash flows can achieve stabilization. If the subject is 80% occupied and the larger market is at 95% occupancy, it is the period of time necessary for the subject to reach 95% occupancy. The model provided has a four year period maximum.
Lease-up estimates may require a hypothetical condition for the analysis. For example, ‘This analysis assumes the subject can reach stabilized occupancy in two years.’
The first section of the lease-up analysis provides merge field statements for the narrative and the selection of an income analysis (if your appraisal happens to have more than one income approach) for stabilized, baseline cash flow projections.
The lease-up expense calculation table. In the example below the subject's actual occupancy is 80%, while 95% is typical of the market.
Select the first year that begins with stabilized occupancy, and any remaining years. For example, if you estimate that the lease-up period will be two years, select 'Year 3' as the first of stabilized cash flow and exclude year three from calculations. Also select year four to exclude that year from the cash flows. If stabilization was expected in year two, then years two, three and four would be selected.
The first box outlines the stabilized baseline cash flow projections. Enter income growth for each year of the projection period up to but not including the stabilized year.
The second box outlines the actual cash flow projections. Enter the lease-up percentage for each year of the projection period up to but not including the stabilized year. In this example, the subject is at 80% occupancy and stabilized occupancy is 95%. In this example have projected 10% additional occupancy during year one of the lease-up projection, and 5% in year two, bringing total occupancy up to 95% (stabilized) by the end of year two.
The next set of inputs addresses additional expenses associated with vacant space:
Extra vacancy expenses may include taxes, insurance, electricity, heat, security, maintenance and other charges typically covered by the tenant.
Extra marketing expenses and commissions may apply to the lease-up effort.
Fit-up for tenant occupancy is another category of expenses that may apply. These extra expenses are added to the subject's normal schedule of expenses during the lease-up period.
At the bottom of this section, the NOI during the lease-up period is compared with the stabilized baseline NOI; the difference being the NOI loss during the lease-up period.
This final section may or may not apply, depending on local practices. The model provides for optional NOI recapture risk. This factor addresses the fact that future income projected from lease-up efforts is worth less than current stabilized cash flows. Moreover, there is potentially a risk of cost overruns that may further increase the lease-up expense. By adding a risk factor to the NOI loss, the model increases the lease-up expense. This in turn increases the adjustment from the stabilized value to the as is value.
The final input (again, this is optional) is a discount rate for the future cash flows, recognizing that future cash flows are worth less than present cash flows and is a typical factor in discounted cash flow models. Use your judgment here. In our view if a discount rate is used at all, it should be a "safe" (low) rate since the income loss represents a cost to a developer, not profit. Further there are risks associated with lease-up cost overruns, permitting and zoning issues, project delays, and market fluctuations. Some market participants may not discount lease-up costs at all; rather they may budget for cost overages.
Deferred Maintenance Estimate
Deferred maintenance refers to material maintenance tasks that have been neglected and which most buyers would address immediately upon acquisition. Examples of deferred maintenance include roof repairs, energy efficiency improvements, HVAC system replacements, plumbing and electrical upgrades, exterior and interior upgrades and renovations.
Other Adjustments
Other adjustments may be necessary for unfinished construction, remediation of hazardous waste or some other expense necessary to bring the property up to normal, or stabilized operation.
Total Adjustments to Stabilized
This table totals all of the above adjustment tables and carries over to the Reconciliation worksheet, where the adjustments are applied.
The Reconciliation worksheet is where we consolidate value estimates from various approaches for up to four appraisal scenarios. Our primary analysis is the "As Stabilized" scenario, which serves as the baseline for estimating "As Is" value.
The reconciliation process involves two key aspects:
Approach Relevance: Assessing how well each approach aligns with buyer behavior.
Data Quality and Quantity: Evaluating the quality and quantity of data available for each approach.
To facilitate this process, we've provided analysis tools in the Reconciliation Work area at the bottom of the worksheet.
Value Estimates
Value estimates from all approaches are consolidated at the top of the worksheet.
Hide unused approaches
Select the worksheet name to populate the table.
Reconciliation Table
This table is where final value estimates are entered and if applicable, a comparison to a subject transaction.
All subject transaction data is entered on the Transaction History worksheet, including the analysis scenario best suited for comparison (e.g., “As Stabilized” or “As Is). Per USPAP if the subject has sold within three years of the appraisal date the transaction should be analyzed. USPAP also requires analysis of current contract, offer, or listing of the subject. See USPAP Standards Rule 1-5 and Advisory Opinion (AO-1).
Enter final value conclusions and pre-adjustment conclusions here.
If the analysis is unimproved land, select these check-boxes. This will enable land unit values and disable improved unit value calculations.
If applicable, select an income analysis. This will populate the table with income and expense data and generate an implied cap rate and EGIM multiplier for the reconciled value. These indicators can then be considered as a test of reasonableness for the final value estimate.
Marketing Time, Exposure Time and Buyer profile entries in this section provide context for the value estimate and typical buyer profile (and merge with the linked doc). See marketing and exposure time definitions. The buyer profile is also carried forward to the Reconciliation Work Area and is a key consideration in the reconciliation process. The type of buyer profiles are:
Owner-user
Owner-User-Investor
Local Investor
Regional Investor
National Investor
International Investor
Validation
Validation checks are limited to the As Stabilized value estimate. Validation will check for final values that are outside the range indicated by the approaches applied.
Reconciliation Work Area
These tables provide useful tools for rating the strength of "As Stabilized" valuation analyses (only) and guidelines for weighting different approaches based on the most probable buyer profile and strength of the analyses. This work area should not be used for non-stabilized valuation scenarios. These tables guide the user through analysis of the strength of the approaches applied, analysis of how the approaches align with typical buyer behavior, and finally a weighting process of the value indications from different approaches is applied.
These are general guidelines and not hard rules. Judgment is required as buyer profiles and relevance ratings are approximations, and in many cases, more than one type of buyer competes in the market for a given property, and motivations can vary.
The first step is to select the appraisal scenario for the As Stabilized value estimate (by default this is Scenario 1). This will populate values from each approach and the buyer profile identified in the Reconciliation table (see bullet #6 above).
Next, rate the strength of each analysis applied for the "As Stabilized" appraisal scenario by considering only the quantity and quality of data utilized. We are not considering the relevance of approaches in this table. Note that rating will affect the color coding in the relevance and weighting tables. The relevance table considers the strength of the analysis and the relevance to a typical buyer. For example, you may have excellent data for the cost analysis, but this approach may have little bearing for an investor focused on cash flow.
In the Analysis Weighting table, consider the relevance of each analysis based on the most probable buyer profile and assign weights accordingly. The Relevance Guidelines table is provided (lower left) to help with analyses weighting, as well as descriptions of buyer profiles (bottom of sheet) and how different approaches may be more suitable for certain types of buyers.
The weighting table does not produce a final value indication and should not be relied on as such. Final value indications are always a matter of appraiser judgment, not a mathematical equation. Rather, the weighting table is a tool to offer perspective for the approaches applied.
The Appraisal Data Table and Appraisal Data Export #
The Appraisal Data Table summarizes key data points from the appraisal in a readable table. Think of it as a self-contained executive summary of the entire report. This table will display up to four appraisal scenarios and a transaction for the subject. Optionally, these scenarios and/or transaction may be saved to your database.
A transposed copy of this table is presented on the Appraisal Data sheet for external database export.
Assuming you have followed our best practice tip and written the corresponding narrative associated with each table as you progressed through the workbook, you are now ready to add subject photos, review the report, make final edits and check spelling, formatting, page breaks and update the table of contents.
Best Practices:
Review the checklist worksheet.
Update doc, sheet, image fields and maps before publication.
Hide merge field color coding before publication
Make sure all the linked tables are updated: From the main menu in Docs: Tools > Linked Objects > Update all.
Format Merge Fields as Black Text
This is also referred to hiding merge fields.
From the StartDeck Writer sidebar: Select Forms & Fields then click Hide Fields at the bottom of the sidebar.
From the Project Page: Select Project Preview then click on the Show/Hide toggle.
