Clients in Real Estate Appraisals:
- Lender or Financial Institution:
- In most mortgage transactions, the client is the lender (bank, credit union, or other financial institution).
- Buyer or Seller:
- In a private transaction, the buyer or seller may be the client if they order an appraisal to determine the market value before negotiating a deal. However, this is less common than appraisals ordered by lenders.
- Attorneys or Courts:
- For legal matters such as divorce, estate settlements, or litigation, an attorney or court may order an appraisal, making them the client.
Client vs. Other Parties:
While the client is the entity that orders the appraisal, other parties (such as the borrower, buyer, or seller) may benefit from the appraisal report. However, the appraiser’s responsibility is to the client, meaning the appraiser must act in the client’s interest and follow the client’s specific instructions (within the boundaries of ethical guidelines and regulations). The appraiser is also bound by confidentiality, meaning they cannot disclose details about the appraisal to anyone except the client unless the client gives explicit permission.
Important Clarification:
Even though the borrower often pays for the appraisal in a mortgage situation, it’s important to remember that the lender remains the client, as they are the party that orders the appraisal and uses it for underwriting purposes.