Restricted Appraisal - Intended User

[Ken B]

Who decides and upon what standard is such a decision made?

 

[CANative]

Interaction and communication between the appraiser and the client. If it was a long time tenant who wanted to buy out his landlord a restricted appraisal report would probably do. Someone from out of the area wanting to acquire this property... not so much.

 

[PS111222333444]

Does you client know enough about the property and the market to understand a restricted appraisal report?

Yes, I believe the client to be knowledgeable and has researched the immediate market.

 

[BRCJR]

We determine the intended use and intended users based on conversations with the client. The buyer has conveyed their intentions to provide the bank a copy of the appraisal, and while they have no issue with the bank not being named an intended user, I don't doubt that they will still provide them a copy. That is not to suggest that the bank should be named as an intended user. But while you can probably argue around using a restricted format, I would still opt for using an appraisal report format, as it is just a little gray.

Most banks know they cannot use the report per The Interagency Appraisal and Evaluation Guidelines..

 

[Gobears81]

Most banks know they cannot use the report per The Interagency Appraisal and Evaluation Guidelines..

Right. But that isn't going to stop the client from giving the report to the bank, and he has conveyed his intention to do so. He might tell the appraiser something else to save money on a restricted report, but my point is that the waters have been muddied. There is a reason why restricted reports only have one intended user.

 

[hastalavista]

In the original post, the stated intent of the client is to provide the appraisal for private funding.

I used to do a lot of review work for a bank in the mid-2000s. Pre-2005 form change, I reviewed a report done on the old Fannie form. At the very end, I read where the report stated that the intended use was for private asset valuation and not intended for a mortgage loan. Had I missed that, the bank may have used it for a loan (there was other issues with the report that would have stopped it from going forward, but had there not been, it may have been used for a loan... and that would have been my fault).

 

[CANative]

The buyer of a commercial condo wants me to perform a Restricted Appraisal for acquisition purposes. However, the buyer has stated that private funding will be based on the appraisal.

Maybe the loan rep just wants to fondle the restricted appraisal for feasibility and would then order an appraisal appropriate for lending uses.?

 

[BRCJR]

Right. But that isn't going to stop the client from giving the report to the bank, and he has conveyed his intention to do so. He might tell the appraiser something else to save money on a restricted report, but my point is that the waters have been muddied. There is a reason why restricted reports only have one intended user.

...and that is a perfect time for the Appraiser to inform the client that the bank cannot use the report for a lending decision.

 

[Gobears81]

...and that is a perfect time for the Appraiser to inform the client that the bank cannot use the report for a lending decision.

Right again. But what happens in practice is that the client provides a copy to the bank, they look over it for the loan evaluation, and then call the appraiser to request "re-assignment" of the original report, which is what Ken B mentioned also. My point is that the wrong person could get their hands on it and be misled, as a result of the restricted format. If something like this got sent to the state, do I think that the original appraiser could get around it? Yes, because of the reasons mentioned by you and other posters in this thread. But for good business practice and risk mitigation, I would just do a standard appraisal report.

 

[CANative]

How can someone claim the were mislead when there is clear narrative in the report stating intended use and the only intended user?