The second step of the appraisal process that a qualified appraiser will use is to _______.

Looking for answers or clarification regarding the residential appraisal process? Following are frequently asked questions of the National Association of REALTORS® that will help you provide guidance to your clients about the appraisal process.

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Yes. The Equal Credit Opportunity Act (ECOA) requires creditors to automatically send a free copy of home appraisals and all other written valuations on the property after they are completed, regardless of whether credit is extended, denied, incomplete, or withdrawn.

Prepare an “Appraiser’s Package” in advance and have it available for the appraiser at the property. The package could include plats, surveys, deeds, covenants, HOA documents, floor plans, specifications, inspection reports, neighborhood details, recent similar-quality comparables, detailed list and dates of upgrades, remodels and costs, and energy-efficient green features. Meet the appraiser at the property and answer any questions an appraiser might have about the property or neighborhood. Allow the appraiser the necessary space and time to complete the inspection.

Yes! Regulations allow real estate agents, or other persons with an interest in the real estate transaction, to communicate with the appraiser and provide additional property information, including a copy of the sales contract. An agent, or other persons with an interest in the real estate transaction, may not intimidate or bribe an appraiser and an appraiser may not disclose confidential information at any time. More information on communicating with an appraiser may be found at www.nar.realtor/appraisal/appraiser-independence.

Once an appraisal assignment is completed and sent to the appraiser’s client, typically the lender, an appraiser may not discuss the results of the report to anyone but the client who ordered the appraisal, or parties designated by the client. In order to ask an appraiser to correct errors in the appraisal report or consider additional information, you must contact the appraiser’s client in writing.

The Government Sponsored Enterprises (GSEs) require that an appraiser analyze the sales contract and the appraiser must confirm analysis of the contract on the appraisal report. The appraiser looks at the terms of the sales contract and compares them with what is typical in the market. The sales contract has information such as the interest rate, the down payment amount, seller contributions or other personal property items that might be included in the sale. The appraiser must also verify if the property seller is the owner of public record.

Appraisers are required to be competent in the geographic area where they are working. Some appraisers work in cities and counties beyond their residence, but are knowledgeable about those specific areas. If you suspect that an appraiser is not competent to appraise in your area, you may contact the lender who is the appraiser’s client.

Yes. The appraiser must comply with the Uniform Standards of Professional Appraisal Practice (USPAP) and appraisal regulations, but also follow any additional requirements from the mortgage lender, Freddie Mac, Fannie Mae, FHA, USDA and VFor instance, some loans will require the property to meet certain minimum property requirements.

The turnaround time for a full residential appraisal report varies depending on the complexity of the assignment.

At the beginning of the sales process, discuss the appraisal process with your client. If your buyer or seller is unfamiliar with the appraisal process, provide a link to The Appraisal Foundation’s “Guide to Understanding a Residential Appraisal” that can be found at www.nar.realtor/appraisal-valuation. The appraiser develops an independent, impartial and objective opinion of the value of the property. The appraised value may not always support the sales price of the home.

The mortgage lender orders the appraisal and is the appraiser’s client. Sometimes a lender will use an appraisal management company (AMC) to manage the appraisal process. An AMC will order an appraisal on behalf of the lender. Some lenders order the appraisal directly from an appraiser.

Most appraisals are reported in writing, although in certain circumstances, an appraiser may provide an oral appraisal. An appraisal is a two-step process 1) the development of the value conclusion and 2) report of the appraiser’s findings. In step one, the developing of a value conclusion, the appraiser must complete the same level of work no matter how that conclusion is reported in the second step. Depending on the client's need, there is an opportunity for some savings depending on the report format used.

A written appraisal report generally consists of:

• Scope of work, which defines the problem to be solved and the work necessary to complete;
• a description of regional and neighborhood factors that may influence the property;
• a description of the property and its locale;
• an analysis of the highest and best use of the property;
• an analysis of cost, sales and/or leases of comparable properties; and
• information regarding current real estate activity and/or market area trends.

New Report Options Effective 2014

Prior to changes in the Uniform Standards of Professional Appraisal Practice (USPAP) that became effective January 1, 2014, there were three options in reporting appraisals: self-contained, summary and restricted use. As of 2014, the Self-Contained Appraisal Report is no longer a reporting option, essentially leaving only an Appraisal Report (formerly Summary Appraisal) and the Restricted Appraisal Report (formerly Restricted Use).

Duncan & Brown will continue to tailor its reports to meet or exceed our clients' requirements as to level of detail and discussion about facts and analyses. As a result, we have developed internal standards for varying appraisal report formats that differ in depth and detail and still continue to be USPAP compliant. Below is a list of the different report formats offered by Duncan & Brown, along with a  comparison to the previously offered report formats prior to the 2014 USPAP changes.

Please contact Duncan & Brown if you have any questions concerning the appraisal process, the new appraisal report options or to obtain a fee quote for a specific property.

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