Choosing the Right Appraisal Desktop Opinion vs Full Summary Report

by Dennis Hoff, President of Hoff Appraisal Associates

In the intricate world of asset appraisal, selecting the appropriate type of appraisal report is critical for ensuring accurate and reliable valuations. This decision is particularly vital for insurance companies, banks, and business brokers working with owners and sellers. As President of Hoff Appraisal Associates, I aim to clarify when a Desktop Opinion Appraisal is suitable and when a Full Summary Report Appraisal is the better choice.

Understanding the Appraisal Types
Before delving into the specific scenarios, it’s essential to understand what each type of appraisal entails.

Desktop Opinion Appraisal
A Desktop Opinion Appraisal is a streamlined valuation method where the appraiser provides an estimate of value based on available data and without a physical inspection of the asset. This type of appraisal relies on documentation, photographs, and market data to form an opinion.

Full Summary Report Appraisal
A Full Summary Report Appraisal is a comprehensive evaluation that includes a detailed physical inspection of the asset, extensive market research, and a thorough analysis. This report provides a complete narrative, including methodologies, market conditions, and the rationale behind the appraiser’s conclusions.

When to Opt for a Desktop Opinion Appraisal
Insurance Companies
For insurance purposes, a Desktop Opinion Appraisal can be appropriate in situations where a quick valuation is needed, and the asset is standard or well-documented. This might include:

Routine Policy Renewals: When updating coverage on assets that haven’t significantly changed in condition or market value, a Desktop Opinion can provide a quick and cost-effective valuation.
Initial Coverage Assessments: For smaller or less complex assets, where a detailed inspection isn’t necessary, a Desktop Opinion can suffice.
However, it’s important to note that for high-value or unique items, a Full Summary Report might still be required to ensure accuracy and comprehensive coverage.

Banks may choose a Desktop Opinion Appraisal for the following scenarios:

Collateral Valuation for Smaller Loans: When the asset in question is collateral for a smaller loan, and the risk is minimal, a Desktop Opinion can provide a rapid and cost-efficient valuation.
Periodic Reviews: For periodic reviews of existing collateral, especially when there’s confidence in the stability of the asset’s value, a Desktop Opinion can be useful.
That said, for large loans or high-risk assets, a more detailed appraisal will likely be necessary.

Business Brokers
Business brokers might find a Desktop Opinion Appraisal useful in the following contexts:

Preliminary Valuations: When initially assessing a business for potential sale, a Desktop Opinion can offer a quick snapshot of value to guide further discussions.
Market Comparison: For comparing similar assets quickly to establish a ballpark figure before proceeding with a more detailed appraisal.
When to Opt for a Full Summary Report Appraisal
Insurance Companies
A Full Summary Report is essential for insurance companies in the following cases:

High-Value or Unique Assets: For valuable, unique, or complex assets, a comprehensive appraisal ensures all factors are considered, providing a reliable basis for coverage.
Claims Settlements: In the event of a claim, especially large or disputed ones, a Full Summary Report provides the necessary detail to support accurate settlements.
Banks should consider a Full Summary Report Appraisal in these situations:

Large or High-Risk Loans: When the loan amount is substantial or the collateral is high-risk, a detailed appraisal provides a solid foundation for lending decisions.
Regulatory Compliance: To meet stringent regulatory requirements, especially for commercial loans, a Full Summary Report ensures thorough documentation and due diligence.
Business Brokers
For business brokers, a Full Summary Report is indispensable when:

Selling High-Value Businesses: For businesses with significant assets or complex valuations, a detailed appraisal ensures the accuracy needed to attract buyers and justify asking prices.
Due Diligence: During the due diligence phase, a Full Summary Report provides potential buyers with the confidence that the valuation is thorough and accurate, facilitating smoother transactions.
Choosing between a Desktop Opinion Appraisal and a Full Summary Report Appraisal depends on the specific needs and circumstances of the insurance company, bank, or business broker. While Desktop Opinions offer speed and cost-efficiency for routine or low-risk scenarios, Full Summary Reports provide the depth and detail required for high-value, high-risk, or complex assets.

At Hoff Appraisal Associates, we pride ourselves on delivering precise, reliable valuations tailored to your needs. Whether you require a quick Desktop Opinion or a comprehensive Full Summary Report, our team of experienced appraisers is here to guide you every step of the way. Contact us today to determine which appraisal type best suits your situation and ensure your decisions are backed by expertise and accuracy.

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