An understanding of relocation appraisal concepts and proper completion of the Worldwide ERC Summary Appraisal Report are integral elements in developing an opinion of the anticipated sales price for a relocating employee’s home and in building better lines of communication among all persons involved in the relocation appraisal process.

The relocation appraisal is but one component of an employee home purchase program in which an employer will purchase the home under specific circumstances that vary from company to company. The appraiser is charged with estimating an anticipated sales price within a defined marketing period. In those instances when the employer—or an Relocation Management Company acting on the employer’s behalf—purchases the employee’s home, the purchase offer is based upon this anticipated sales price. Most often, the anticipated sales prices of two relocation appraisals are averaged to calculate the offer amount.

The Worldwide ERC Summary Appraisal Report calls for a robust, detailed analysis, including narrative portions throughout and requiring a high level of reporting. Some clients do not get a home inspection unless it is recommended by the appraiser. In this circumstance, an experienced appraiser can be critical with regard to potential liability.

An important distinction in a relocation appraisal is the determination of anticipated sales price. How we make that determination incorporates perhaps one of the most distinctive aspects of the relocation appraisal: the concept of forecasting. Worldwide ERC’s form defines forecasting as “the process of analyzing historical trends and current factors as a basis for anticipating market trends. (In order to reflect any impact these trends will have on the subject property’s marketing time and sales price, a forecasting adjustment must be consistently applied to each comparable sale.)” In other words, to determine the most realistic price, relocation appraisers analyze what has happened in the past compared with the current market and form an educated opinion as to what will happen during a predetermined marketing period, the length of which is typically set by client policy.