Appraiser independence and neutrality

In order to help preserve appraiser independence and neutrality on the purchase of a one-to-four unit residential property that is financed with a federally-related mortgage, a transaction participant is unable to contact or discuss the price with the third-party appraiser in an attempt to influence their opinion of value.

However, the buyer or interested party is permitted to receive a copy of the appraisal report.

Further, the results of the appraisal may be appealed if the appeal is based on factual information that is found to be in error, such as amenities not considered in the report.

It is unlawful to violate appraisal independence, including:

  • coercing an appraiser into appraising property at a value based on any factor separate from their independent judgment;
  • mischaracterizing the appraised value of a property to secure a mortgage;
  • influencing or encouraging an appraiser to meet a targeted value for a property; and
  • withholding or threatening to withhold payment for an appraisal report or service.

However, some context is needed. This doesn’t prohibit someone with an interest in a transaction from interacting with an appraiser in any capacity whatsoever. For instance, someone with an interest in the transaction may ask an appraiser to:

  • consider additional relevant property information, such as information regarding comparable properties;
  • provide further explanation for the valuation;
  • correct errors in the appraisal report; or
  • obtain multiple valuations in order to assure reliability in value assessment.

Also, an appraiser or appraisal company may not have an interest, financial or otherwise, in the property being appraised.

Further, if a lender is aware of a violation of appraisal independence, they are prohibited from using that appraisal report to make a mortgage, unless the lender has confirmed that the appraisal does not misrepresent the value of the property.

Finally, lenders and their agents need to compensate appraisers at a rate that is reasonable in the market area of the property being appraised. An appraiser may charge an increased fee for complex assignments that reflects the increased time, difficulty and scope of the work performed.