Answers to Homeowners’ Questions About Appraisals Used in Lending

Most of the time the public comes into contact with an appraisal, it is because they are seeking financing, either for a purchase or a refinance.  Appraiser Guy

What most Homeowners do not know, is that the Appraiser’s client is the lending institution and not the Homeowner.  Further, Appraisers are bound by confidentiality laws, see the Gramm- Leach-Bliley Act, that prevent Appraisers from disclosing ANY details of the appraisal to anyone other than the named “client”.

The easiest way to illustrate this is by explaining that the relationship between Lender, Homeowner and Appraiser is not triangular, but linear.  The Appraiser’s client is the Lender, the Lender’s client is the Homeowner.

“But I paid for the appraisal!” cries the homeowner.  In doing so, the Homeowner is merely paying a fee associated with the cost of procuring a loan, and most of the time, the fee paid for the appraisal is significantly higher than what the appraiser is actually being paid because it includes the underwriting and management expenses incurred by the lender.

Other important notes:

a:     It is not the Appraiser’s job to justify any particular value, be it a contract price or value estimate.

b:    Appraiser’s are bound to comply with both state law and Uniform Standards of Professional Appraisal (USPAP) when performing appraisals for use in a federally regulated transaction.

c:     It is a violation of Federal Law to attempt to influence an Appraiser as Sec 1472 of Dodd-Frank Act establishes independence for Appraisers.

d:     Should you need to complain about an appraisal, or see errors in an appraisal, the Homeowners’ best recourse is to write the grievance and send it to the Lender so that the Lender may pursue it with the Appraiser.  The Appraiser is not legally permitted to discuss the details of the appraisal with the Homeowner.

e:     A Real Estate Agent is not required to take any appraisal courses.

f:     Even a verbal disclosure of value from an Appraiser is an “appraisal”.  This may explain why Appraisers are hesitant to discuss value or market trends during the inspection.

g:     An appraisal is a legal document.  It should support the estimate of Fair Market Value with PROOF.  Should a Homeowner have a problem with an appraisal, the Homeowner should be prepared to provide conflicting PROOF to support their position.

h:    According to USPAP, it is the Appraiser’s first concern to protect the public’s trust.

i:     If the loan is being insured by Fannie Mae, Freddie Mac, or HUD, comparable selection and often times, comparable adjustments, are subject to certain guidelines and criteria.  This likely explains why some comparables were used in the report, while others were avoided.

j:     An appraisal’s Intended Use in a Federally Regulated Transaction is not only to estimate what a property may or may not sell for in an open market. It is to determine the “lendable” value which includes the fair market value as well as the risk associated with a particular property should the loan go into default.

 As always, if you have any questions, shoot us a message.  We are happy to clarify, expound upon, or passionately discourse about our profession!









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Megan Johnson Judd


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Adam Judd

(407) 282-1600 *1

Cert Res RD 4142

Megan Judd

(407) 282-1600 *2

Cert Res RD 3035