Advisory Opinion 6 to the Uniform Standards of Professional Appraisal Practice was issued June 2, 1992 to distinguish between two categories of appraisal reviews: technical reviews and administrative reviews. This opinion has since been retired June 15, 2004, but still in a sense is relative to nature of the types of reviews.

A technical review is performed by an appraiser in accordance with Standard 3 of the Uniform Standards to form an opinion as to whether the analyses, opinions and conclusions in the report under review are appropriate and reasonable. An administrative review is performed by a client or user of appraisal services to exercise due to diligence in making a business decision (e.g., underwriting, purchase, sale). On occasion an appraiser may perform an administrative review to assist a client with these functions. An Appraiser or consultant may become a user of the appraisal, particularly when the report contains information that might not be available from other sources.

 

A technical review is

Performed by an appraiser Performed in accordance with Standard 3 of USPAP

An administrative review is sometimes called a compliance review. Those who perform administrative reviews may find the outline provided by Standard 3 to be helpful, but they are not bound to observe the standard. Advisory Opinion 6 states,

The administrative review is performed by a variety of individuals, including lawyers, accountants, loan underwriters, bank examiners, and corporate decision-makers... The individual performing the administrative review may not necessarily have the competence or information sources to perform an appraisal. After completing the administrative review, this individual is in a position to understand the strengths and weaknesses of the information leading to the value estimate in the report under review. With this and related information, the individual would be in a position to make decisions on issues such as: whether or not to pursue litigation; what book value to establish for an asset; whether to apply conservative or aggressive underwriting guidelines; whether to make or accept an offer to purchase, etc.

Before an appraisal is submitted to a review appraiser for a technical review, another individual acting as an initial screener may conduct a compliance review to check the calculations and determine whether the appraisal meets basic content specifications. If any discrepancies in, or omissions of, items specified in the appraisal contract or engagement letter are found during the compliance review, the review appraiser should determine how significant the errors are and whether the omissions are justified.

Richard C. Sorenson, MAI. Appraising the Appraisal, The art of appraisal review. Appraisal Institute

• Cost Approach to value is what it would cost to replace or reproduce the improvements as of the date of the appraisal, less the Physical Deterioration, the Functional Obsolescence and the Economic Obsolescence. The remainder is added to the Land Value.
  

• Comparison Approach to value makes use of other "bench mark" properties of similar size, quality and location that have recently sold. A comparison is made to the subject property.
  

• Income Approach to value is of primary importance in ascertaining the value of income producing properties, has little weight in residential type properties. This approach provides an objective estimate of what a prudent investor would pay based upon the net income the property produces.
  
  Then, after thorough analysis of all general and specific data gathered from the market, a final estimate or opinion of value is correlated.

Value is the usefulness or the worth of an item, or the quantity of something which can be obtained in exchange for something else. In real property appraising, the common denominator  is monetary: the final estimate of value is presented in terms of dollars. This is done because of the intangible nature of some considerations in valuation, and because the appraiser cannot make adjustments to value for any of these intangibles.

• buyer and seller are typically motivated;

• both parties are well informed or well advised,   and each acting in what he considers his own best interest;

•  a reasonable time allowed for exposure in the open market;

• payment is made in terms of cash U.S. dollars or in terms of financial arrangements comparable thereto; and

• the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

Sales prices may vary considerably from market value, particularly if some  of the elements of market value are not represented. For example, the seller who desires a quick sale may sacrifice some of the value of the property by offering exceptional favorable financing terms to the buyer who desires a unique property or a single-use property may be willing to pay an abnormally high price for the property because of its nature.