In person viewings
What to expect:
A full home appraisal will likely require an in person viewing by one of our appraisers. We will attempt to book an in person viewing giving as much notice as possible, a minimum of 24 hours is the usual standard, in particular where the property is tenant occupied. Exceptions may be made depending on circumstances. Most standard home viewings will take less than one hour and some larger residences or with multiple outbuildings may take longer.
We will typically photograph every room or may request to video our walk-through as it provides a more thorough data collection and verification. This may speed up the viewing which can be beneficial to the process however, it is not mandatory. For most single-family and semi-detached, duplexes or townhomes, we will fully measure the exterior and may need to take certain interior measurements to verify the Gross Living Area (GLA), basement, garages, and other significant structures. If you have printed or digital house plans these may be helpful but we will typically need to take sufficient measurements to verify the plans are reasonably accurate.
We are not home inspectors and will not go into as much detail as a typical home inspector however, we need to have a clear understanding of the condition and any significant issues. We strive to gather as much pertinent data as possible and as we see fit based on the purpose and intent of the report. We understand that having strangers looking into our homes can be stressful. We take our jobs seriously and your privacy is one of our professional obligations. We do not share any of the information we collect with anyone other than the intended users of the report or as legally obligated. Appraisers are required to comply with the PIPEDA and/ or the PIPA Canadian privacy acts as applicable. The only time we will ever share any confidential or private information with anyone other than the intended user of our report would be at the request of a judge or judiciary authority which would be extraordinary circumstances.
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Can I get a copy of the report ordered for XYZ Lender?
What to expect:
We get this question all the time and we understand the answer can be frustrating as often the applicant/ borrower is paying for the report. Unfortunately, we are not allowed to share the report or any conclusions or opinions we may have formed as a result of the assignment with anyone other than the client (the party that orders the report and sets out the terms of the assignment)/ or the intended user identified at the time of the order, usually the Lender, without their written consent. This is both an ethics standard of our professional association we must follow and in almost all cases with major lenders it is a contractual obligation. We are able to discuss and explain the appraisal process and why we may need certain information but we cannot share a copy of the report, any data obtained during the assignment that is not publicly available or discuss any conclusions from our assignment.
The appraiser may not be able to receive this approval from the lender (particularly one of the major lenders) directly and if the applicant borrower would like to attempt to attain a copy they should make a request through their contact in the borrowing process, typically their mortgage broker, lenders staff or agents. Likewise, they are not allowed to share the report without the appraiser’s consent. Lenders have varied policies in this respect and some may provide a copy while others will not. Some will provide a redacted report which has much of the report information redacted including the appraisal firm, the (AMC) Appraisal Management Company, addresses and information on all Comparable Sale Properties, and comments on Comparable Sale Properties. Please reach out to us if we can provide further clarification or assistance.
Restricted Appraisal/ Scope of Work?
What to expect:
A restricted appraisal report is most commonly requested as a Drive-by or Desktop. Although a lender may request a Restricted Appraisal Report, it is the appraiser’s obligation to determine if a reasonably probable value can be provided based on the information available. With the exception of the actual physical site visit the research and analysis required does not change with a Restricted Appraisal Report. For lending purposes your lender may have determined that they have sufficient security, possibly due to a low ratio mortgage where they are only lending on a small percentage of the estimated value however, the appraiser must determine the actual value which is not based on the loan amount
In some cases the lender may be able to rely on a less detailed report and in many cases the value provided by this form of report is a range of value. This range is based on the appraiser’s analysis of the probable variation due to the limited Scope of Work and the lack of verification of the actual physical condition plus a variety of other factors including determination of the actual size, percentage of finished floor area, basement finish and any other extras not visible from the street or available from reliable third party data.
What is “Scope of Work”? In short the scope of work is the level of analysis and reporting the appraiser deems essential to produce a credible opinion of value and report sufficient for its intended purpose. Although clients or lenders may set minimum or maximum levels of analysis and reporting, it is the appraiser’s final judgment to determine what is required and sufficient to produce credible and reliable results. For an average borrower/ applicant this may not mean much except in cases where it is possible that the agent or mortgage broker etc. indicates that they have ordered a certain type of appraisal only to find out the appraisers they approached could not complete the assignment based on the restricted report type. Example: You may have been told they have ordered a drive-by or desktop appraisal. Often times this is perfectly acceptable provided that the appraiser is able to gather sufficient data on the subject however, there are many cases where there is simply not enough information or that the range of possible outcomes resulting from the limitation on the data is too great to provide a conclusion sufficient for the intended use of the report. In these cases the appraiser must either request to modify the scope ie. upgrade the appraisal type or decline the assignment. This may often be the case with Market Rent reports.
Acreage Appraisals for residential lending
What to expect:
Various lenders handle the appraisal of acreages differently so be sure to understand how your chosen lender determines what they will lend on. Even the major lenders ie. the big 5 have widely varied instructions to appraisers about limitations on what they may consider to provide value, and some may offer different products that have varied levels of acreage and outbuildings they may allow to be included. Some lenders will allow the full acreage and include all outbuildings considered as residential use, excluding commercial use buildings or structures, and most often the maximum acreage is 160 acres. Some will limit to a set number of acres ranging from 5 to 15 the appraiser is to limit the value to and exclude all outbuildings other than an attached garage or if none attached, a detached garage. Unfortunately, in some cases this can be a very large difference in value and if the borrower is not aware or does not fully understand these limitations it can come as an unpleasant surprise and in the case of a purchase may cause a sale to collapse.
We will almost always view and collect the data on outbuildings etc. unless we are performing for a lender and the lender is excluding them and does not require this information. In that case then gathering this data may not be necessary and is handled on a case by case basis but most often they will be viewed and the data will be collected. That is generally a rare case as some lenders require we gather this information even though they do not intend on including those components in the value. In the case of a sale, or where the property was recently purchased within the prior 3 years typically, we must almost always gather this data and determine the value those components may contribute to the full market value or sale price and the appraiser must be able to reconcile any significant disparities. In general, these limitations are a way for the lender to limit their risk and be more certain that in the event of a foreclosure, they will be more likely to recoup their investment allowing them to lend at a lower interest rate.
The appraiser wants a copy of the purchase and sale agreement. Is this allowed?
What to expect:
Not only is this allowed, in fact, it is a requirement. There appears to be a myth that appraisers are somehow to be kept in the dark and not be provided a copy of the current offer or conditionally agreed purchase price. There may be circumstances where the client may request that the appraiser not have access to this information however, ordinarily the appraiser is required to not only request this information but they must also document the steps they took to obtain it through commercially accepted and legal methods. It is common practise for participants in a sales transaction to “inform” the appraiser as to the sale price therefore, it is already a rare occurrence that the appraiser may not be influenced. It is the appraiser’s obligation to support their conclusion of value based on credible research, analysis and calculations and to be impartial to any party or undue influence.
While the knowledge of the sale price is almost always present the appraiser’s full knowledge and understanding of all of the known conditions prerequisite the sale should outweigh the aversion to any bias the sale price alone may influence. From USPAP 2021-22 FAQ Standards “Rule 1-5(a) requires an appraiser developing a market value real property appraisal, if such information is available to the appraiser in the normal course of business, to: analyze all agreements of sale, options, or listings of the subject property current as of the effective date of the appraisal. The normal course of business for an appraiser when the property is known to be the subject of a pending transaction is to ask the client for the terms of the agreement, if this request is denied, then the appraiser should make reasonable attempts to obtain this information from other sources through legal means commonly available to and practiced by the appraiser’s peers. The Comment to Standards Rules 2-2(a)(x)(3) and (b)(xii)(3) also includes the requirement that:
If such information is unobtainable, a statement on the efforts undertaken by the appraiser to obtain the information is required. If such information is irrelevant, a statement acknowledging the existence of the information and citing its lack of relevance is required.”
Modified or Alternate Viewings / Covid-19 protocols.
What to expect:
Covid-19 has disrupted many industries and we are all working to adapt. We remain committed to our profession and clients while adapting to new requirements. In the event of increased public health orders, we are well adapted to accommodate. During prior restrictions we remained successful at completing hundreds of assignments using alternative viewing techniques while maintaining the integrity of our reports. The most successful method we utilized was to have the occupants use our video recording device to tour the interior of their home. This method provides us with high quality video allowing us to determine the quality, condition and floor plan of the home far better than any other method we tested and only second best to an in person viewing. Wherever possible we prefer to attend the property and perform a full viewing of at least the exterior and any portions of the property we are able to access.
The client, lender or intended user of the report must request or agree in advance to this type of modified appraisal which will require us to include an Extraordinary Assumption as we are not able to fully verify the actual condition and there are limitations. Please feel free to contact us for further details on alternative viewing methods and procedures.
If there are any health concerns, we request that if any occupants of the home are experiencing flu like symptoms or those commonly described by local health authorities, that you advise us prior to our visit so we can determine the most appropriate course of action. We are committed to completing the appraisal assignment in a smooth and seamless process and will work hard for all parties to limit any disruptions. A part of this overall process is for us to avoid unnecessary exposure and potential resulting disruptions.
We also respect others’ health concerns, opinions, and beliefs therefore, in addition to our professional obligations, we will not disclose to any other party including the client, lender or any other party to the transaction, the vaccination or health conditions of the occupants. If we are unable to enter a home or complete the assignment or need to request our client to modify the appraisal type to suit the conditions in the home, we will only advise that we are requesting the modification and not the specific reason.