Purpose of the Appraisal Report
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We have lost track of the purpose of the appraisal process
This is an open letter to anyone who may have an interest in the residential real estate market. This includes buyers & sellers, homeowners, mortgage companies & brokers, real estate brokers & agent, loan officers, FHA/HUD, Fannie, Freddie and others.
We have lost track of the purpose of the appraisal process. The purpose of the appraisal process is to provide an opinion of the estimated value of the property. The appraiser is hired to provide his/her opinion of the estimated value of the property usually by the intended mortgagee. Federal & state laws and regulations prohibit the appraiser from discussing the completed appraisal with anyone except the client, usually the intended mortgagee. This means that the appraiser can not discuss the appraisal report with the buyer, seller, homeowner, real estate agent, loan officer or anyone else without the prior permission of the client.
The appraiser is required to provide an independent evaluation of the subject property without bias or influence from any outside entities including the intended mortgagee and all of the others cited above. It is a violation of both state & federal regulation for anyone to influence or attempt to influence the appraiser in the completion, development or conclusions of the appraisal report. You may disagree with the appraisers’ conclusions and even the content of the appraisal report however it is the appraisers’ opinion of the estimated value and no one can attempt to influence or change the conclusions in the report. The client (usually the intended mortgagee) may request the appraiser to correct errors & omissions which are in the report and may request additional information or clarification as long as it is not an attempt to influence or change the conclusions in the report. If the client is unhappy with the quality (not the conclusions) of the report they may get a second report.
USPAP , the appraisers bible, states that the appraiser is expected to perform valuation services competently in a manner that is independent, impartial, and objective. It goes on to state “An appraiser must perform assignments with impartiality, objective, and independence, and without accommodation of personal interests. Must not advocate the cause or interest of any party or issue.
The opinion of estimated value is one person’s estimate, the appraiser, at a given time, the date of the appraisal, under the guidelines and instructions of the client and scope of work as outlined in the report. The fact that some parties may disagree with the conclusions in the report does not make the report bad or incorrect. Everybody is entitled to their opinion. Other appraisers or individuals may come to a different opinion of value, however it is just their opinion. Appraisers are not hired to provide a report which accommodated the needs of the client or any other party.