A development appraisal is working out whether a property deal makes money before you commit to it. That's all it is. The term sounds more formal than the thing itself.
You're answering one question. If I buy this at that price, spend what it takes to do the work, and sell it at the end, what's left?
Everything in an appraisal serves that. It starts with the finished value, the gross development value or GDV, which is what the property will sell for once the work's done. Then you take off everything it costs to get there.
The purchase price. Stamp duty, at the additional property rate if you already own somewhere, which adds 5% on top of every band. The build cost. Professional fees, usually around 12% of the build. A contingency, at least 10%. Finance, if you're borrowing. And selling costs at the end.
What's left is your profit, and profit divided by GDV is your margin. Around 20% is where most people want to be. Below 12% there's no room for anything to go wrong.
The other half of an appraisal is the bit that isn't arithmetic. Whether you can get planning. Whether there's an Article 4 direction. Whether it's in a flood zone or a conservation area. A deal that works on paper and can't get consent isn't a deal, and none of that shows up in the numbers.
A proper appraisal also tells you what would break it. Take 10% off the sale price and see what's left. Add 15% to the build. If either one on its own wipes out the profit, you're not buying an investment, you're hoping nothing goes wrong.
Most people do this in a spreadsheet, and there's nothing wrong with that. The problem is the inputs. Pulling comparable sold prices, checking planning history, looking up flood zones and working out a build cost takes an hour or two per property, and if you're looking at twenty deals to find one that works, that's a lot of evenings.
That's what Avalor does. Put in a postcode, the purchase price, the type of work and the floor area, and it pulls the sold prices, planning history, flood risk and build cost estimate, then gives you the margin and a verdict. Takes a couple of minutes, which means you can run twenty properties in an evening rather than one.