Intended User

[BRCJR]

When a contract has a contingency for the appraised value to meet or exceed the contract price does that infer there is a use other than a mortgage lending decision?

Does that mean the Appraiser acknowledges a buyer could use the Appraisal Report creating an additional Intended Use thus an additional Intended User?

I understand this is fairly common in contracts. I am just curious about others thoughts on this.

 

[ramrcdk]

Great Question!

My Opine, per the specific order assignment, the IU is the named client-lender & otherwise mandated IUs. That's it, our service is to the IU and not the contract.

Side Point: Around here, agency is using a "Sale Contract Appraisal Addendum" where by example: the buyer agrees to pay up to $______ above the appraisal reported value to void that section of the contract. This is due to and used for multi-offers on a given property.

 

[George Hatch]

Your relationship and your agreement is with your client. They're the ones who are going to convey to you who your intended users and and (more importantly) what their expectations are or where you can find those expectations.

Inasmuch as any 3rd party might want to use an appraisal for an off-label use, you would have no way of identifying exactly what their needs are or what they would find meaningful for this use without contacting them and playing 20-questions with them. It's possible to do that, but if that extra work isn't part of your agreement and not part of your assignment from the outset then it becomes an unreasonable expectation to impose after the fact.

 

[Terrel L. Shields]

does that infer there is a use other than a mortgage lending decision?

Perhaps I am off base here. However, it was my thought process that bank rules forbid the bank to use a report that was not specifically for them and engaged by them. Therefore the bank would not be a party to such terms in a Realtor created contract. In that case I would think that the appraiser should not be party to those contingencies. However I still put explicit language in the appraisal that the sole intended user is the bank and that no one else should be using this report for any other reason period.

I would love to see banks make borrowers sign a disclosure that the bank hires the appraiser and is the sole intended user of the appraisal and that they ( the borrowers) are not intended users nor does the appraiser have any responsibility towards them. Any obligations imposed upon the appraiser by a sales agreement are null and void. The borrower should hire their own appraiser to establish any benchmarks in a contract.

 

[TMG]

When a contract has a contingency for the appraised value to meet or exceed the contract price

That sounds like undue influence to me?

 

[Russ Kitzberger]

When a contract has a contingency for the appraised value to meet or exceed the contract price does that infer there is a use other than a mortgage lending decision?

Does that mean the Appraiser acknowledges a buyer could use the Appraisal Report creating an additional Intended Use thus an additional Intended User?

I understand this is fairly common in contracts. I am just curious about others thoughts on this.

Yes, the boards of realtors put those in there as another way to favor contracts toward buyers. Parties (Sellers who have multiple offers) are lining them out as well as adding in language about not requiring it to value for the bank and if they are bright will include a wide loan to value to not lose the deal over an appraisal.

There is a variety of cases that held differing views about who the intended users are. It seems most benefit appraisers. But it is better to state who they are and who they are not than leave it up to the courts.

Yesterday OCAP did a webinar with Peter Christensen and he had some very good information and disclaimers to include in reports.

Side Point: Around here, agency is using a "Sale Contract Appraisal Addendum" where by example: the buyer agrees to pay up to $______ above the appraisal reported value to void that section of the contract. This is due to and used for multi-offers on a given property.

I can say on the agent side appraisal gaps are a huge issue nowadays and also seeing the removal of these or the addition of terms like ramrcdk states.

 

[Carnivore]

Great Question!

My Opine, per the specific order assignment, the IU is the named client-lender & otherwise mandated IUs. That's it, our service is to the IU and not the contract.

Side Point: Around here, agency is using a "Sale Contract Appraisal Addendum" where by example: the buyer agrees to pay up to $______ above the appraisal reported value to void that section of the contract. This is due to and used for multi-offers on a given property.

Hey Bro, Is that Addendum something a few Realtors came up with, or is it some official addendum Sanctioned/approved by the Realtor association.

Where I am going with this is simple; If they made it up themselves, well congrats to them for getting law degree and passing the Bar! LOL

 

[Tom4value]

The intended use is for mortgage financing. The appraised amount is a tool the lender uses to determine financing not an issue regarding a different use.

Remember, that stipulation is in all contracts with government loans so it is nothing new.

 

[Dublin ohio]

Contingencies seldom stand on their own. Every appraisal contingency I have seen also has the right to renegotiate or withdraw from contract. I guess you could loosely interpret that as an alternate use. But that would have nothing to do with your intended use/user stated within the report

 

[Fernando]

I never encountered such a clause and there are many multiple offers I'd seen.
A ratified offer needs a price and usually there would be an addendum to clarify price and buyers name.
Contingencies do not concern me.