Sep 28, 2020 - 07:26 AM
153. REVISION TO THE CONTRACT PRICE
Question: I recently completed an appraisal for mortgage financing purposes in a purchase transaction and delivered the report to my client. My opinion of value was less than the pending sale price. One week later, the buyer and seller renegotiated the contract agreeing to a price equal to my appraised value. My client asked if I can provide a revised report wherein I replace the prior sale price with the newly agreed-upon sale price. How can I do this and comply with the requirements of USPAP?
Response: The appraiser may not simply replace the pending sale price information in the appraisal report and resubmit the report to the client, as this would be misleading.
Under Standards Rule 1-5(a) the appraiser is required (when the value opinion to be developed is market value, and if such information is available to the appraiser in the normal course of business) to “analyze all agreements of sale, options, and listings of the subject property current as of the effective date of the appraisal.”
If the new contract information is stated in a revised report, the appraiser should note that the second contract was provided after the effective date, and the information regarding the contract that was in place as of the effective date must remain in the report. Further, the revised report must have a new report date, as of the date the revised report is transmitted to the client.
If the client does require a more current effective date, the request must be treated as a new assignment.
Additional related guidance may be found in Advisory Opinion 1, Sales History, and Advisory Opinion 3, Update of a Prior Appraisal.