We have a commercial real estate loan for which we had an appropriate appraisal completed. The owners of the real estate have a copy. They are currently looking at selling the real estate and have shared the appraisal with the prospective buyers.

The prospective buyers have not applied for any loan transaction with us and, so, we have not ordered any new appraisal.

Since the appraisal was between the Bank and the appraiser, do we owe anyone any explanation that there is a fourth party out there using this report? They were never intended to be a "user" per USPAP. But they are also not asking to rely on the value. (But otherwise, why would they be reading a copy?!?!?!)

I wouldn't worry about this. The appraisal is merely being read, not being used. If the prospective buyers decide to go ahead, the financing lender will need its own valuation and any issues with use of this appraisal as an actual appraisal would be dealt with at that time.

I agree this is not a problem and is probably somewhat common as it may justify the price the seller is asking. The new lender can either request a transfer or obtain their own from their own apraiser list, if different.

Cornfed,

Has someone inquired why a fourth party is using the appraisal? Are they blaming you for allowing it?

Unless they signed some sort of agreement, you have no control over what the customer does with their copy of the appraisal. They could post it on the internet to brag about the perceived value of their property.

MJ

Good point, MJ!

I think our loan officer is concerned that this party may come into the bank for a loan (triggering our ordering a new apprisal) and find that the value may have changed. I think he is feeling some bad vibes coming at himself and the appraiser for what may or may not have happened to the property value.

But, if someone looks at a dated appraisal to determine a purchase price that should be their problem.

On the side note, it was a good refresher dig through the new USPAP.

Well, if they don't like the way the property value is headed, maybe they shouldn't buy it?

Gotta love a martyr!