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As defined by the Uniform Standards of Professional Appraisal Practice 2003, an appraisal is: (noun) the act
or process of developing an opinion of value; an opinion of value. To learn more about how the appraiser
determines the estimate of value please see the Appraisal Process article in the
Educational Materials section.
As defined by the Uniform Standards of Professional Appraisal Practice 2003, market value is: The most probable
price which a property should bring in a competitive and open market under all conditions requisite to a fair
sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected
by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the
passing of title from seller to buyer under conditions whereby:
- buyer and seller are typically motivated;
- both parties are well informed or well advised, and acting in what they consider their own best
interests;
- a reasonable time is allowed for exposure in the open market;
- payment is made in terms if cash in United States dollars or in terms if financial arrangements comparable
thereto; and
- the price represents the normal consideration for the property sold unaffected by special or creative
financing or sales concessions granted by anyone associated with the sale.
The appraiser needs to give an accurate description of the property. An interior inspection will allow the
appraiser to gather information for that description. Some of this data includes the room count, floor plan,
amenities, and condition of the property. The appraiser will also measure and sketch the property.
The average total interior and exterior inspection time varies from 30 minutes to an hour, depending on the
size of the property and difficulty of the assignment.
It is helpful to have a deed, or survey, and a copy of recent tax receipts. The cost of recent updates or
improvements may be helpful, and will also be reflected in the inspection of the home. If you are purchasing the
property a copy of the sales contract will be needed, as well as the plans & specs if the property is a new
construction.
An appraisal gives an accurate representation of the property, and provides an estimate of value. If you want
to buy, sell, or refinance your property your lender will probably require an appraisal. This ensures that
they have an unbiased estimate of value. An appraisal may also be needed for PMI removal, property tax appeals,
estate planning, and equitable distribution settlements
The appraiser is an advocate of the property, and not an advocate of the parties involved in the
transaction.
The appraisers client, as defined by the Uniform Standards of Professional Appraisal Practice 2003 is: the
party or parties who engage an appraiser (by employment or contract) in a specific assignment. Comment: The
client identified by the appraiser in an appraisal, appraisal review, or appraisal consulting assignment (or
in the assignment workfile) is the party or parties with whom the appraiser has an appraiser-client
relationship in the related assignment, and may be an individual, group, or entity.
If a lender orders the appraisal they are the appraiser's client. This is true even if the appraisal is paid
for by another party. The appraisal can only be discussed with or distributed to the client, unless permission
to do otherwise is given, in writing, by the client.
If you paid for an appraisal completed in connection with an application for lending purposes then you are
entitled to a copy of the report. This report must be supplied by the lender. The following section of the
Equal Credit Opportunity Act clearly defines the details:
a. Providing appraisals. A creditor shall provide a copy of the appraisal report used in connection with an
application for credit that is to be secured by a lien on a dwelling. A creditor shall comply with either
paragraph (a)(1) or (a)(2) of this section.
- Routine delivery. A creditor may routinely provide a copy of the appraisal report to an applicant (whether
credit is granted or denied or the application is withdrawn).
- Upon request. A creditor that does not routinely provide appraisal reports shall provide a copy upon an
applicant's written request.
i. Notice. A creditor that provides appraisal reports only upon request shall notify an applicant in writing
of the right to receive a copy of an appraisal report. The notice may be given at any time during the application
process but no later than when the creditor provides notice of action taken under § 202.9 of this part. The
notice shall specify that the applicant's request must be in writing, give the creditor's mailing address, and
state the time for making the request as provided in paragraph (a)(2)(ii) of this section.
ii. Delivery. A creditor shall mail or deliver a copy of the appraisal report promptly (generally within 30
days) after the creditor receives an applicant's request, receives the report, or receives reimbursement from
the applicant for the report, whichever is last to occur. A creditor need not provide a copy when the applicant's
request is received more than 90 days after the creditor has provided notice of action taken on the application
under § 202.9 of this part or 90 days after the application is withdrawn.
2. Credit unions. A creditor that is subject to the regulations of the National Credit Union Administration
on making copies of appraisals available is not subject to this section.
3. Definitions. For purposes of paragraph (a) of this section, the term dwelling means a residential structure
that contains one to four units whether or not that structure is attached to real property. The term includes,
but is not limited to, an individual condominium or cooperative unit, and a mobile or other manufactured home.
The term appraisal report means the document(s) relied upon by a creditor in evaluating the value of the
dwelling.
[58 FR 65661, Dec. 16, 1993]
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