Contract Price

[J Grant]

If the lender ordered it, the lender is the client and thus the intended user. The intended use is analysis for a mortgage loan, the purpose is market value.

I fail to see why some think that two appraisals are necessary.

If a private party ordered it, then they are a client and intended user. If then a lender wants the appraisal for a purchase loan, it would be a new appraisal and new client. But as far as I understood it, the OP has a lender as the client.

 

[Surf Cat]

And therein lies the problem. That requires the borrower to pay for two appraisals, one for their purpose and one for the lender. That makes us all look like we're participating in a shakedown scheme to get as much money as we can from them.

That's correct..... it's not the Appraiser's fault that the buyer and seller do not have an agreed upon purchase price. And everyone here knows what's going to happen..... one of the parties is not going to be happy with the appraised value. They are going to want some sort of concession for this or for that.

First appraisal ordered by the buyer or the seller on a GP form, they hash it out. Second appraisal if it's a conventional like the op says, 1004, discount rate, everybody's happy everything's filled in properly, no confusion.

 

[Mike Ault]

That's correct..... it's not the Appraiser's fault that the buyer and seller do not have an agreed upon purchase price. And everyone here knows what's going to happen..... one of the parties is not going to be happy with the appraised value. They are going to want some sort of concession for this or for that.

First appraisal ordered by the buyer or the seller on a GP form, they hash it out. Second appraisal if it's a conventional like the op says, 1004, discount rate, everybody's happy everything's filled in properly, no confusion.

Yes, if a deal moves forward the appraiser is going to have to do some extra appraisal work anyway you look at it. Just not as much work if you don't have to switch forms, should be a bigger discount. And they can concession all they want, the value doesn't change. And nobody can accuse the appraiser of "hitting the number". I wish they were all ordered this way. Buyer should have this information available prior to making the offer, not afterwards.

 

[sputnam]

Sorry for partially duplicate post. I need to clarify. I have a 1004 conventional purchase. The contract states the buyer agrees to purchase based on appraised value and does not provide a contract price. Can I do this? Fannie Mae states I must enter a contract price?

Can you appraise a property that isn't a sale? Of course you can. Why would you think that you can't appraise a property when you aren't told the purchase price? Or when you don't get a copy of the purchase agreement at all?

 

[NC Appraising]

Can you appraise a property that isn't a sale? Of course you can. Why would you think that you can't appraise a property when you aren't told the purchase price? Or when you don't get a copy of the purchase agreement at all?

I agree, but if it's going to Fannie, i disagree.

Conventional loan fannie mae.

B4-1.3-02, Subject and Contract Sections of the Appraisal Report (06/04/2025)​

This topic contains information on reviewing the Subject and Contract sections of the appraisal report form, including:

selling-guide.fanniemae.com

The lender must provide the appraiser with a copy of the complete, ratified contract. The appraiser must indicate whether an analysis was or was not performed on the contract for sale. If an analysis was performed, the appraiser must provide the results of the analysis. If an analysis was not performed, the appraiser must provide an explanation why the analysis was not performed.

For appraisals required to be UAD compliant, the appraiser must also indicate the type of sale for the transaction. The appraiser may report any other relevant information in this field or elsewhere in the report regarding the sale type, including whether more than one sale type applies.

The appraiser must

• enter an amount in the Contract Price field if the Assignment Type is a purchase transaction. Contract price must be the same as the sales price for the subject property in the Sales Comparison Approach section;
• enter a contract date if the Assignment Type is a purchase transaction; and
• indicate if the property seller is the owner of record.

 

[Tom D]

My observations:
1. the parties know each other, maybe a tenant or family. There is no realtor involved, or they would have gotten a appraisal before the loan. So, they don't understand the process.
2. the bank/lender is trying to save them money by doing 1 appraisal to fill in a factual blank, no value change. Whereas, there should have been a sale price determined before hand to make sure everyone is acceptable of your appraisal value being the sale price.
3. the lender can order it anyway they like, because they can change it later. Fannie says must, but there is no reference to when they have to provide it. Only reference is how to comment on the present situation. The issue then is the revisions you will have to make, and you didn't charge for that future.
4. sale price is a fact in the appraisal, and at times it can change. That fact doesn't change any part of the value process. Of which you then change, explain and make a new signature date.

 

[jay trotta]

Sorry for partially duplicate post. I need to clarify. I have a 1004 conventional purchase. The contract states the buyer agrees to purchase based on appraised value and does not provide a contract price. Can I do this? Fannie Mae states I must enter a contract price?

Market value is the most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale with, 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 froum seller to buyer under conditions whereby:

• buyer and seller are typically motivated;
• both parties are well informed or well advised, and each acting in what they consider to be in their own best interest;
• a reasonable time is allowed for exposure in the open market;
• payment is made in terms of cash in U.S. dollars or in terms of 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.

Let's go outside the box.
Is the appraisal being used to "set a price"?

Is the Seller using an alternate appraisal for their interests?

 

[sputnam]

Maybe break this down a bit.

The Buyer and Seller have agreed to a transfer of the property at a price based on an appraisal. That's none of your business except as a reportng requirement. Despite Fannie saying the Lender MUST provide a copy of the contract and the appraiser MUST review, analyze, and report the results of the analysis (USPAP says that too), there is no requirement that the Buyer and Seller have to play along. From the OPs post, there is a contract... which the appraiser can review and analyze. The appraiser's job is not and has never been to make sure that the borrower (if there is one) can get the sort of loan they would like to get.

Neither the Buyer nor the Seller is an Intended User. The Intended Use of your Client and Intended User is to support a mortage lending decision. Despite the fact that you have not identified the Buyer or Seller as an Intended User... once they, or anyone, have a copy of your appraisal report... they can use it anyway they want to.

Just do the appraisal, write the report including explanations of what you actually know about the contract, and submit it to your Client.

 

[NC Appraising]

OK.

So what happens when the lender demands that the appraiser update the report to reflect the contract price?

What are the chances that the report will be accepted by the GSEs without a contract price?

Now the appraiser is in a catch 2020.

Who knows..maybe the computer will accepted it. Highly doubt it.

If I remember correctly, the nc board stated that the contract price should not be updated after the effective date and that only a statement can be added.

FHA is big on this one too. The contract section cannot updated after the effective date.

So what, leave it blank? Try uploading that to the GSEs....

Like it or not, this is their rules and game. If you don't agree, do private work or the borrowers and sellers can pay cash or go hard money route. You don't get to pick and choose which guidelines you are going to follow.

 

[alebrewer]

And therein lies the problem. That requires the borrower to pay for two appraisals, one for their purpose and one for the lender. That makes us all look like we're participating in a shakedown scheme to get as much money as we can from them

In my opinion, it doesn't. It's simply the cost of using someone else's money. Want the money? Follow the rules.