Land Banking Appraisals

Prop 123 Land Banking Appraisals: Colorado Housing and Finance Authority (CHFA) Instructions for Real Estate Appraisers

1. The appraisal and resulting report must be prepared in accordance with the most recent Uniform Standards of Professional Appraisal Practice (USPAP).
2. The appraisal must be completed and signed by a Certified General Appraiser licensed in the State of Colorado.
3. All PDFs must be sent unlocked, with the ability for CHFA staff to highlight and comment.
4. CHFA must be directly named as an intended user or indirectly included as an intended user via “and assigns,” for any appraisal submitted to CHFA.
5. In reporting the results, the appraiser must communicate each analysis, opinion, and conclusion in a manner that is not misleading. 
6. The appraisal report must be written and contain enough information and analysis to support CHFA’s decision to engage in the transaction.
7. The appraisal report must clearly state and define the specific kind of value being appraised.
8. The appraisal report must clearly state the real property interest being appraised.
9. The appraisal report must clearly state the effective date of valuation.
10. The value opinion must clearly be described as in an “as is” or “as completed” condition. 
11. All extraordinary assumptions and hypothetical conditions must be separated from the general assumptions and limiting conditions, they must be prominently stated within the report, and their impact on value must be clearly stated.
12. Personal property (a.k.a. FF&E), business enterprise value, and other intangibles (i.e. nonphysical assets such as favorable mortgages, franchises, and mineral rights) must be separately valued from the real estate to the extent required by USPAP.
13. Interior and exterior photographs of the subject property must be included in the report unless otherwise stated in the engagement letter.
14. Any known problems with the subject property must be reported and analyzed.
15. Any unusual/atypical occupancy at the subject must be reported and analyzed.
16. Three-year sales history of the subject property, including any contract price, must be reported and analyzed.
17. Fully discuss any reasons and reconcile any difference between a recent sales price or pending contract and the appraised value.
18. If the subject property is under contract, the Purchase and Sale Agreement (PSA) must be provided in the addenda.
19. The Assessor’s property information for the subject must be provided in each appraisal, including any replat, partial sale, or assemblage.
20. A Flood Plain map (including panel data) must be included with subject’s location identified.
21. The site’s highest and best use must be analyzed both as vacant and as improved/proposed, if the proposed use is known.
22. A most likely buyer must be stated in the highest and best use.
23. Appraisals must include, at a minimum, the underlying land value without consideration of, or contributory value from, any existing improvements. The only exception is the inclusion of demolition costs, where applicable.
24. A minimum of three (3) land sales must be provided for appraisal.
25. Photographs of all comparable properties used in the appraisal must be included (plat maps or other identifiers may be utilized in lieu of photographs of land sales).
26. CHFA may request clarification, additional market support, or consideration of relevant information when comparable sales appear insufficient.
27. For existing/proposed multifamily properties, the sales comparison grid must analyze at minimum the price per existing/proposed unit. Other metrics may be provided in addition to the sale price per unit. (i.e. sale price per square foot or per acre).
28. Except for appraisals of land, at least two (2) approaches to value must be provided. In the event a second approach is less applicable, placing less weight on the second approach is acceptable.
29. A detailed and comprehensive property profile/description must be provided for each comparable sale or rental property used in the report.
30. Location maps of comparable land sales, improved sales and rentals must be provided.
31. Single-family residential appraisals will not be accepted unless the proposed use is 1-4 units. In the event of an application for/appraisal of multiple parcels, each proposed with 1-4 units, but applying as a singular economic unit (such as a subdivision), a single-family residential appraisal will not be accepted.
32. Once an appraisal has been submitted, CHFA requires that any revisions to the appraisal must be approved by CHFA’s Underwriter and/or Appraiser prior to submission of the revised appraisal.
33. Due to recent economic and market fluctuations, all commercial appraisals must be no more than 12 months old at the time of submission. 
34. Acknowledgement of these requirements should be included in the addenda.
35. A copy of the engagement letter should be included within the appraisal report.