The Rate-Lock Appraisal: Independence, Effective Date, and a Desktop Scope
You are a licensed residential appraiser. An appraisal management company orders a purchase-money appraisal of a 1962 three-bedroom ranch on a 0.22-acre lot. The contract price is $412,000. The loan officer emails you directly: 'The borrower is a long-time customer and comps are thin. Please make sure it comes in at contract, and send me a preliminary number before you inspect so we can lock the rate.' The order form says interior inspection is not required and instructs you to complete a desktop appraisal. Your MLS research shows the subject sold 14 months ago for $355,000. The listing agent says the roof was replaced after a 2024 hailstorm, but no building permit was pulled; the seller's disclosure states 'roof replaced 2024 - permit unknown.' The loan officer also asks that the effective date be 30 days before the order date because 'that is when the rate was locked.' The property is 45 miles outside your usual market; you have completed two appraisals there in the past year.
1. Identify the USPAP and appraisal-practice issues raised by the loan officer's requests, and state how you would respond to each.
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Independence and predetermined value. The request to 'make sure it comes in at contract' is a request for a predetermined value. Under USPAP, I cannot accept an assignment conditioned on a predetermined value or a direction in value. I would tell the loan officer that I will develop and report an independent opinion and that I cannot guarantee a number.
Preliminary number. A value estimate before inspection may still be an appraisal or an appraisal practice. I would not provide a number unless the client engages me for a separate, compliant assignment with a defined scope, and I would document it. I would not let an early number become a commitment.
Effective date. A retrospective effective date is permitted if it is supported by market data and not misleading. But choosing a date solely to match a rate lock is questionable. I would need a legitimate reason, such as the date of contract or inspection, and would disclose the date and rationale. I would not backdate an opinion to a date I cannot support.
Prior sale and communications. The $355,000 sale 14 months ago is within the period that must be analyzed and reported. I would analyze it and explain the difference. I would keep communications with the loan officer professional and document them, and follow the client's engagement terms.
2. How should you treat the roof replacement for the appraisal - as a hypothetical condition, an extraordinary assumption, or a factual statement? Explain, including the effect of the missing permit.
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An extraordinary assumption is something I believe to be true but cannot verify; a hypothetical condition is something contrary to fact that I am asked to assume. The roof replacement is a fact if verified; the missing permit is an uncertainty. If I assume the roof was installed in a workmanlike manner and is functional, that is an extraordinary assumption. If the client asks me to value the property as though a permit had been issued and final inspection passed, that is a hypothetical condition. I would not silently assume either. I would describe the roof, report the permit uncertainty, consider an as-is condition rating, and state any extraordinary assumption clearly. If the roof appears to be leaking or the work is visibly deficient, I would not make the assumption; I would recommend inspection and possibly condition the value on repair. The missing permit can affect marketability and lender acceptance, so it belongs in the report.
3. What must you decide about the desktop-only scope and your competency, and what would you document?
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The Scope of Work Rule requires enough research and analysis to produce credible results. A desktop appraisal can be compliant, but for a 1962 house with a roof issue, thin comps, and a 45-mile distance, I must decide whether a desktop is credible. If not, I would ask the client to upgrade to an exterior or interior inspection, or decline. The Competency Rule requires me to disclose my limited experience in that market and take steps to become competent - research, consult local data, partner with a competent appraiser - or decline. I would document the scope decision, data sources, competency steps, and any client agreement. I would not accept the desktop solely because the order form says so if it prevents a credible result.