Frequently Asked Questions
Question:
Is it acceptable to readdress or transfer a completed appraisal report?
Response:
No. Once a report has been prepared for a named client or clients, the
appraiser cannot readdress (transfer) the report to another party. Simply
changing the client name on the report cannot change or replace the original
appraiser-client relationship. Therefore, this action is misleading.
However, you can consider the request as a new assignment. In so doing,
you may establish a new appraiser-client relationship and appraise the property
for this new client.
Question:
I recently purchased a home and
was required to pay for an appraisal by my mortgage company.
Why cant the appraiser give me a copy of the report?
Response:
The appraiser is governed by the client relationship.
The client is the party or parties who engage an appraiser (by
employment or contract) in a specific assignment.
In most instances, however, the
homeowner can obtain a copy of his appraisal report by requesting it from the
lender.
Question:
I purchased my home in the last
(6 months, 12 months, 18 months) and would like to use my appraisal to obtain
(refinancing; a 2nd mortgage). Why won't the lender use this
appraisal?
Response:
Markets change over time. The
users of appraisal reports such as mortgage companies, banks or other
financial institutions establish the time periods within which they will accept
the opinions stated in an appraisal report.
Fannie Mae (FNMA), for example, will use the value opinion stated in a
report for a period of up to 4 months from the date it was completed (the
Effective Date). After that period
the value estimate must either be updated (if the original appraiser can perform
it) or a new assignment must be completed. These time periods vary
according to the institution and the homeowner should check with the lender to
determine the appropriate action.
Question:
What does it cost for an
appraisal?
Response:
The cost for an appraisal report
is determined primarily by the scope of work required. Some assignments
require the appraiser only to drive-by the property and present a value
opinion. Mortgage appraisals where the buyer puts only a minimal amount down
usually require a greater amount of research and reporting and are thus more
expensive. They are even more expensive if the home requires a high
balance loan. If the value estimate is to be used for commercial purposes and
the report requires a narrative report of from 50 to several hundred pages, the
cost can be substantial. As of
spring 2006 the range of fees quoted by most professionals are as follows:
Drive-by residential appraisals: $75 to $250
Uniform Residential Appraisal Report forms: $250 to $500 (+)
Commercial Form Reports: $750 to $3,000
Commercial Narrative Reports (basic) $1,500 to $4,000
Commercial Narrative Reports (complex) $3,000 to $TBD.
Question:
What is the difference between a drive by appraisal and a full
appraisal?
Response:
A drive by appraisal
entails inspection of the subject property from the street. The appraiser does not inspect the interior and therefore
cannot take interior features and conditions into consideration. The drive
by appraisal is typically presented on a form specifically designed for this
purpose.
A full appraisal involves
complete inspection of the interior and exterior of the property and allows the
appraiser to consider all available information in order to provide a more
accurate opinion.
Question:
What is an update?
Response:
If you have had a relatively
recent appraisal on your property (say in the last 18 months or so) your lender
may allow the original appraiser to update his report to the current
market. This generally has the advantage of being less expensive than a new
report.
It is important to note that not
every appraiser is approved by every lender. Many lenders use only their
staff or only those appraisers on an approved list. Other lenders
may accept other appraisers but require an approval process prior to accepting a
previous report. It is best to check with your financial institution first.
Question:
I have received a notice of
valuation from the county Assessor. The value is considerably (less/more) than
the value I recently received for a mortgage appraisal. What's the difference?
Response:
Appraisals for assessment
purposes are primarily completed on a mass basis. The Assessor will
consider hundreds or thousands of sales and produce an Automated Valuation.
This process works well when applied to typical homes in market
areas where there has been a lot of market activity. It is not so accurate when
applied to less typical homes or even homes where the Assessor has incomplete
information (Assessors are sometimes unaware of recent physical changes to a
property like a finished basement or added porch/patio or pool).
Assessors also must base their values on sales that occurred in the
18-month period preceding the assessment and markets may have changed in that
period.
Question:
I recently had my
(home/building) appraised. The value estimate is substantially less than the
value the Assessor indicates. Can I use this appraisal to protest my taxes?
Response:
Maybe. For your 2011 taxes
(payable in 2012) the Assessor has based your value on the 18-month period from
January 1, 2010 to June 30, 2011. The new assessed values are
determined as of June 30, and applied to the known condition and features of
your home as of January 1 of the assessment year. If your appraisal uses sales
data from within the assessment period you can present that to the
Assessor as part of your appeal.
Question:
My home has a fully finished
basement and I have a total of 5 bedrooms. Why does my appraisal report only
count the three bedrooms on the main floor?
Response:
Appraisal report forms generally
require the appraiser to consider the property based on the gross living area
above grade and separately adjust for basement and basement finish. The
theory is based on the premise that basement living area has a different value
than the areas above grade.
Typically, in this market, the
appraiser will consider garden level areas (where the outside grade is no
more than halfway up the exterior wall) as above grade. This generally applies
to split level, bi-level, or raised ranch style homes.
Question:
I recently had my home
appraised. Why did the appraiser
fail to give me any value on the report for my new washer and dryer or the very
expensive ceramic cooktop range & oven?
Response:
Certain items within your home are considered to be personal property and
are not valued as real estate. The seller often removes items that are not
permanently attached (like your refrigerator). Lenders also do not want to rely
upon a value for a 30-year mortgage that includes items that typically do not
last that long.
Question:
I requested and paid for an appraisal performed for Lender A. The
transaction did not close and I then went to Lender B. The appraiser says
he cannot readdress an appraisal, and must treat a subsequent request as a new
assignment. Does that mean he must start from scratch to perform a new
assignment for a different client? Must the property be re-inspected?
Response:
No, a new assignment does not mean the appraiser must start from
scratch. What is needed is to decide the appropriate scope of work for the
new assignment. This would include a decision as to whether or not it was
necessary to perform another inspection. The scope of work for the new
assignment can be different from the scope of work completed in the earlier
assignment.
As with any assignment, the appraiser might be able to use information and
analyses developed for a previous assignment. Appraisers are often selected for
subsequent assignments specifically because of experience and demonstrated
competency in a prior assignment. The appraiser must be mindful of obligations
relating to the use of confidential information. The Confidentiality section of
the ETHICS RULE states:
An appraiser must not disclose
confidential information or assignment results prepared for a client to anyone
other than the client and persons specifically authorized by the client
READDRESSING WITH LENDER RELEASE
Question:
The appraiser says he cannot reappraise my property without obtaining a
release from the original client (Lender A).
Lender A has provided a release. Why can't the appraiser just readdress
the report to Lender B since I have obtained a release?
Response:
It is never permissible to readdress a report by simply changing the
client's name on a completed report, regardless of whether the first client
gave a release. The request from Lender B must be treated as a new assignment.
The client and results of the assignment are specific to Lender A. Lender B must
establish a client relationship and identify the scope of work required. To do
otherwise would be considered misleading. |
