A recent experience with a client reminded me why it is exceptionally important for a home owner to clearly provide the purpose for the appraisal when they order. The purpose included on an appraisal report is the use for which it can be relied upon by the intended user of the report.
A home owner called recently and requested an appraisal for first mortgage financing purposes. I asked the home owner who the lender was, and secondly if the lender would accept the appraisal report from the appraiser of the owner's choice. The home owner provided the name of the lender and mentioned he was unsure if they would accept the report but would ask.
He then said that he had recently had an appraisal completed through the same lender for the property in question. Following completion of that report, the owner had requested a copy of the appraisal from the lender. The lender denied the request to release the appraisal to the home owner but provided a verbal estimate. I asked the home owner why he required a copy of the report and he mentioned the report was also going to be used for division of assets. His intentions were the same for the report he was ordering from me (i.e. mortgage financing AND division of assets).
I informed the home owner that appraisal reports are provided for the purpose included on the report only. Further, the client that ordered the report would be included as the intended user. So in the case of the report prepared for Mortgage Financing purposes by Lender X; this lender would be included as the intended user on the appraisal and the purpose that would be included on the report would be first mortgage financing. As a result, the home owner would not be authorized as an intended user nor would the division of assets purpose be included on the report.
Following this discussion, the home owner contacted the lender he was using for financing. The lender stated that they would not accept a report unless it was assigned directly through the Appraisal Management Company (AMC) that provided the first report. Additionally, the lender was unwilling to provide a dual purpose report as requested by the home owner.
Had I not asked additional questions to clarify the purpose of the report with the client before proceeding, the client would have been left with a report that would not meet their needs. In this case, he proceeded to order a report specifically for the purpose of division of assets for his own use.