AI Reports® Available Now!
AI Reports® forms are available for use by all appraisers, not just Appraisal Institute professionals.
History of AI Reports®
When Fannie Mae and Freddie Mac updated their appraisal forms in 2005, it became abundantly clear that the only intended use acknowledged was mortgage lending. The redesigned 1004 Form contained a new sentence prominently displayed at the top of page one that changes the playing field for residential appraisers: The purpose of this summary appraisal report is to provide the lender/client with an accurate and adequately supported opinion of the market value of the subject property. Furthermore, the certification on page four of the 1004 reaffirms this purpose by stating that the intended use of this appraisal report is for the lender/client to evaluate the property that is the subject of this appraisal for a mortgage finance transaction as well as the intended user of this appraisal report is the lender/client.
Seeing a clear void for many other appraisal intended uses, the Appraisal Institute formed the AI Reports® initiative. The mission of the AI Reports® initiative is to develop appraisal report formats designed by appraisers and for appraisers.
In 2005, the Appraisal Institute released its first AI Reports® form, Summary Appraisal Report Residential, with a much-needed emphasis on the scope of work statement, which allows the appraiser to tailor the report more precisely to what is appropriate for each specific assignment. In early 2009, the Appraisal Institute released an updated Summary Appraisal Report Residential form, as well as three additional AI Report® forms. In 2011, the Residential Green and Energy Efficient Addendum was released. The most recent form, the Commercial Green and Energy Efficient Addendum, was released in February 2015.
Obtaining AI Reports®
AI Reports® are developed by the Appraisal Institute and made available to appraisers through appraisal software vendors. You can obtain AI Reports® forms by contacting any of the following vendors:
The Format
In lieu of developing a series of report formats intended for a specific use, the Appraisal Institute opted for primary report designs that are use and user neutral. These reports favor a more narrative and flexible reporting format, which is more conducive to various assignment types, such as:
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replacement cost for insurance purposes
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list price for potential sale (most often FSBO)
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probate
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estate planning
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litigation, property settlement, property division
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REO
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partial interests
In response to appraiser feedback, the membership section on page one of the forms has been amended to allow other professional affiliations to be noted. Additionally, the forms now include an AI Reports® logo, which does not include the words Appraisal Institute.
These formats were redesigned to accommodate the appraiser's perspective of what is needed to complete an assignment properly and what will make the report readable to clients. Furthermore, the appraiser is freed from items that were unique to lending or any other specific use. This approach allows the appraisal report to be value-centric instead of lending-centric.
The forms are:
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Unlike most prior residential form designs, the AI Reports® design does not commit the appraiser to data, certifications or limiting conditions that extend far beyond USPAP requirements. This allows the appraiser to have more control and flexibility.
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Letter size, which creates a more professional look.
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Observant of Appraisal Institute or other professional organization status and include the Appraisal Institute certification statements for Designated members, Candidates and Practicing Affiliates.
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Designed based on assignment parameters and scope of work (shown below), which better defines the factors the appraiser considered during the valuation process.
In addition, the forms:
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Clearly identify intended use and intended user(s)
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Prominently incorporate hypothetical conditions and extraordinary assumptions - concepts often omitted or understated in many residential assignments
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Place a stronger emphasis and clarity for scope of work
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Disclose persons inspecting
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Clearly describe valuation methodologies used
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Disclose significant assistance
A Modular Approach
To achieve consistency and logical presentation of information, the reports were designed to contain specific elements of an appraisal on each page. Therefore, elements that do not apply to a specific form or a specific assignment can be easily omitted. An example of this approach is the omission of the improvements page from the land report. The restricted use report only requires the first two pages, which include subject property identification, subject property history, reconciliations and conclusions, assignment parameters, and scope of work, along with the requisite certifications and limiting conditions. However, the other pages typically found in a summary report may be used by appraisers to document their efforts in the work file and included or excluded in the published report at their discretion.
Likewise, each approach to value cost, sales and income is managed within separate pages. This too allows the appraiser to include or exclude as the assignment warrants. Appraisers who initially felt the format was too intensive should be reminded of the flexible and optional nature of the content.
Other improvements:
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The report has more room for narrative comments throughout
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The market area analysis contains many familiar items
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The site analysis includes comparative elements to better relate the subject to the norm in its market
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The improvement section addresses the most relevant physical attributes
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The room grid omits total room count since there is no consistent tally or significance
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There is a separate room grid for areas not defined as gross living area
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Highest and best use analysis is more emphasized
In addition, the limiting conditions are not directed to mortgage market or lender requirements. They are more appraiser-centric, have room for custom limiting conditions, and include the market value definition (and source) per USPAP requirement. Certifications also are derived from strict adherence to USPAP. There is inclusion of Appraisal Institute certification, which is mandatory for Appraisal Institute Members, Candidates and Practicing Affiliates, as well as room for custom certifications.
Optional Pages
The following single pages are included in the forms for optional inclusion or exclusion:
Site valuation page
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Includes useful for properties with high land to value ratios.
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Outlines valuation methodology used: * sales comparison most often utilized * market extraction * alternative
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Shows a generous grid with adjustment on price per lot or price per unit of comparison.
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Grid labeled for comparisons vs. sales, since listings or pending sales may be used.
Cost approach page
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Identifies replacement cost or reproduction cost
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Uses a more comprehensive cost grid for various elements
Income approach page
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Includes derivation of market rent and gross rent multiplier
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Offers flexible rental period (e.g. rent/year, rent/month, rent/season, etc.)
Sales comparison approach
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Includes comprehensive grid:
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list price vs. sale price
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closing date and contract date (which is more relevant for time adjustments)
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adjustments line for bedroom and bathroom count
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below grade areas and other living areas are itemized
Related Documents
Green and Energy Efficient Addendum Resource Page - learn more about the newest addition to the AI Reports® suite and additional green resouces available through the Appraisal Institute.
AI Reports® Sofware & Vendors
Comments & Feedback
The AI Reports® initiative is an ongoing and evolving solution for practicing appraisers. Users are encouraged to send their feedback and suggestions to aireports@appraisalinstitute.org.
Disclaimer
The Appraisal Institute publishes AI Report® forms for use by appraisers where the appraiser deems use of the form appropriate. Depending on the assignment, the appraiser may need to provide additional data, analysis and work product not called for in the forms. The Appraisal Institute plays no role in completing the form and disclaims any responsibility for the data analysis or any other work product provided by the individual appraiser(s).