Who The Appraiser Works For
July 8, 2008
Two people found this blog today by searching for appraisal related terms. One person was searching for “neutral appraiser” and the other was “buyer request independent appraiser.”
I’m a little curious what that second situation might be.
But regardless, let’s talk about appraisers.
If you’re getting a home loan, and the lender orders an appraisal, then the lender is the client of the appraiser, not the borrower. Even though the borrower might be the one paying for the appraisal. It’s just a cost that the lender is passing on to you, the home buyer.
However, if you go out on your own, and hire an appraiser, outside of who the lender hires, then you’re the client of the appraisal, you pay for it, you have all rights to the appraisal report.
The whole idea behind getting an appraisal when you buy a home, at least how it usually happens, is that it mitigates risk on behalf of the lender. It has nothing to do with protecting you against over-paying for a home, although some see that as a side effect.
Any appraisers out there want to comment on whether they are neutral parties or not? I would say that appraisers have to justify, very thoroughly and carefully, their opinions of value, but I’m not sure if they have and to whom their duties lie, or if neutral is the right descriptor. Comments?
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I had this discussion with a client who commented that his appraisal came in at exactly the purchase price. They were only suspicious because what are the odds, they asked. I told them that the odds are pretty good, since the appraisal requested by the bank seems to be there only to justify the sales price- not to determine it. If you want a real determination of value from an independent party - hire your own appraiser.
Kelly and Jessica,
There was a “spirited debate” about the role an appraiser plays in the real estate transaction surrounding a post I wrote here: http://www.realestateradiousa.com/blog/2008/07/01/an-appraiser-bites-back/
Some very interesting comments went back and forth between agents and appraisers. As I am both, I enjoyed hearing both sides and learned a little from each.
All My Best,
Mike