Purpose Of Appraisal And Intended Users

[Brenda Larson]

I received an appraisal order from a property owner today. He and his wife are getting a divorce. They are sharing an attorney. The husband will compensate the wife for half the value and retain the property. He then will obtain a loan to update the home. His bank will accept a report up to a year old, but their name must be on the report. Can the purpose of the appraisal report be written in such a way to allow the owner to do both. Can the bank name be included in the report as an intended user along with the husband, wife and their attorney.
I'd appreciate any input. <_<

 

[Don Clark]

B) First, who is your client?

Having answered that question, the next step would be to have them advise you as to who the intended users should be.

If the appraisal is for a divorce, then that is the intended use or "to form an opinion of value for purposes of division of the marital assets".

But, the bank must comply with FDIC as well as any secondary market purchasers requirements. generally speaking, the bank must select the appraiser. I strongly suggest that you not mix intended uses. Have the bank order an appraisal on the same property as a "new assignment" with their stated intended use for the banks purposes. I posted the new FDIC rules on this forum last week. Do a search under my name and it will come up.

Although both the property owners and the bank may want an opinion of "market value" their intended uses are not the same. And, with 2 assignments you get paid more, at leats I hope you will charge for both.

 

[Shawn Seewald]

And, with 2 assignments you get paid more, at leats I hope you will charge for both.

I would approach this by telling the first intended user, probably the lawyer, that your fee will cover both assignments. Perhaps, the reply will be to bill the bank separately. You should treat this as two separate and distinct assignments. That way you won't "muddy the waters" as to what your report is being used for.

Remember to charge accordingly for divorce work and to put necessary verbiage in the appraisal stating what your scope of work is regarding testimony.

 

[Brenda Larson]

Thanks for the advice. My client is actually the property owner. He personally ordered the appraisal report and stated that he plans to use the report in the division of marital property. His plans to pursue a loan for the property will then require a second report ordered by the bank.
I know that my next question will likely show my inexperience. Since the bank is willing to accept an appraisal up to a year old, would it be contrary to USPAP to reassign the report with the bank as the intended user for an additional fee. Please don't be too hard on me for asking this question. I know that this forum is the place to get honest information.

 

[Jeff Horton]

Originally posted by Brenda Larson@Mar 28 2005, 08:40 PM
Since the bank is willing to accept an appraisal up to a year old, would it be contrary to USPAP to reassign the report with the bank as the intended user for an additional fee.

Welcome, you wil learn more here than any class you ever sit in if you hang around and keep reading!

Now, reasigning appraisals is a no-no. Lot of posts on here about that. It's a new assignment and new appraisal. Turns out we could never reassign Appraisals it's just USPAP wording wasn't clear.

Also, as Don was saying the Bank has to order and pick the Appraiser. Not the home owner. So you need an (well want in my opinion) a written request from the bank. That means a new Appraisal and a new fee. Hey, get paid for the work you doing!!

 

[Terrel L. Shields]

His plans to pursue a loan for the property will then require a second report ordered by the bank.

I am concuring with the above. Legally, the bank should not accept a report prepared for the borrower as client. Sometimes they do, but if questioned, or challenged, I would sure hate to have to wear both hats. So whose yer daddy? The borrower? The bank? Purpose of report? Not the same. can of worms.

 

[xm39hnu]

The bank can dang well use anything it wishes as support for a mortgage loan--as long as it isn't a federally related transaction. If they're going to portfolio the loan, and not sell it on the secondary market, they certainly can use an appraisal of market value prepared for some other client to support their lending decision.

If they intend to sell on the secondary market (likely an FRT), then the bank must be the client; there's where you get two assignments.

Do keep in mind, though, that these "amicable" divorces sometimes (with the help of the right attorneys) turn nasty. You wind up in court when you didn't intend to. Charge more, and document the report well. There's no reason not to list the lender as an intended user, and an additional purpose of evaluating the subject prop as collateral for a possible home improvement mortgage loan. I would include a specific disclaimer that the report cannot be used in a federally-related mortgage lending transaction, though.

Oh, and get the fee before you deliver the report. Collection from attorneys and I'll-pay-half-and-she'll-pay-half clients can be difficult.

 

[Richard Carlsen]

I would absolutely treat these appraisals as two separate assignments.

When the bank as your client, your report must adhere to the secondary market guidelines. The appraisal for the husband and wife does not have any such guidelines so you have more latitude to be creative. If the husband and wife request you adhere to the secondary market guidelines for their appraisal, then you can do the new assignment simultaneously and charge the bank accordingly.

One thing to remember is, just because you are doing them at the same time, your liability does not diminish with either. Full liability on both regardless of the fee.

Your call.

 

[Mountain Man]

Two different purposes, two scopes, two assignments.
Now, what you want to charge the bank for the second job is you own business decision.