The lender hires the appraiser to perform and appraisal on the property. This creates a fiduciary relationship between the lender and the appraiser. As a result, the appraiser can only report any value conclusion directly to the lender and must get permission from the lender to let any other person or party know the results or value conclusion of the appraisal. This means the appraiser cannot disclose any opinion of value (an appraisal) to the homeowner without first giving the client (lender) the appraisal first and getting permission from the client to tell the homeowner the results of the appraisal.
When the appraiser inspects the home or property, he or she inspects the home, lot, floor plan, and measures the house for the amount of living area, basement, garage, etc. This is primarily a data gathering process. There are many factors that comprise the properties market value such as lot size, location, house condition, room count (number of bedrooms and bathrooms, etc.), finished basement, etc. All these factors need to be adjusted for comparison to other similar sales in the neighborhood or similar neighbor hoods. The appraiser does not have all of the sales data available to him or her at the time of the inspection and cannot make all of the necessary adjustments needed to arrive at an opinion of value at the time of the inspection. Therefore, any number given by the appraiser would probably not be accurate and should not be given.
An appraiser might think that a house is should be worth around $100,000 at the time of the inspection, but later finds two sales that just closed in the neighborhood for $94,000 and $95,000 and a very similar house that is listed for $97,000. Though the appraiser was fairly close in thinking the house could be worth around $100,000 at the time of the inspection, current market data shows a value of $95,000 to be more supported by the market and concludes at that number.
Taking the above example a step further, if the appraiser would have told the homeowner that their house was worth $100,000 at the time of the inspection and later concluded the value to be $95,000, the homeowner would be confused as to why there were two values given by the appraiser. The result was that the appraiser legally gave two appraisals ($100,000 and $95,000) since an appraisal is an opinion of value. One is probably more accurate than the other, but two appraisals were performed. In addition, the appraiser may be held liable for the $100,000 value even though it was a guess and the homeowner almost always says (“we won’t hold you to any number, we just want a rough idea”). Any potential value provided by an appraiser is considered an appraisal as the appraiser is considered an expert.