Can a Lender Share the Appraisal With the Seller?
Understand the established protocols for sharing home appraisal reports in real estate. Clarify who has access and control over these crucial documents.
A home appraisal provides an objective estimate of a property’s market value, performed by a licensed appraiser. Lenders require appraisals to ensure the property serves as sufficient collateral for a mortgage loan. This valuation is a standard part of most real estate transactions that involve a mortgage.
Borrower’s Entitlement to the Appraisal Report
Borrowers typically bear the cost of the appraisal as part of their loan application expenses. Federal regulations, specifically the Equal Credit Opportunity Act (ECOA), grant borrowers a legal right to receive a copy of their home appraisal report. Lenders are mandated to provide this report promptly upon completion, or at least three business days before the loan closing, whichever is earlier. This requirement ensures transparency, allowing borrowers to review the valuation before finalizing their mortgage. The report provides detailed information regarding the property’s characteristics, comparable sales used in the valuation, and any conditions that might affect its value.
Lender’s Specific Role in Sharing
While lenders must provide the appraisal to the borrower, they are typically not permitted or obligated to share it directly with the seller. The primary reason for this restriction is the confidential relationship between the lender and the borrower.
The appraisal is ordered by the lender for their internal risk assessment to ensure the property adequately secures the loan. Sharing the appraisal with the seller could inadvertently disclose sensitive information related to the borrower’s loan application or financial situation.
Lenders act with a responsibility to protect their client’s private information. This confidentiality extends to documents generated as part of the loan application process, including the appraisal report. The lender’s duty is to the borrower, not to the seller, regarding direct access to the appraisal. The lender facilitates the appraisal but does not disseminate it to parties other than the borrower.
Seller’s Options for Viewing the Appraisal
Given the lender’s inability to directly share the appraisal with the seller, the seller’s access primarily depends on the borrower. Once the borrower receives their copy of the appraisal report, they have the discretion to share it with the seller. This often occurs when the appraisal comes in lower than the agreed-upon purchase price, prompting renegotiation of the sale terms.
Sellers can formally request a copy of the appraisal from the buyer or their real estate agent. The buyer is not legally obligated to share the report with the seller, but often does so to facilitate the transaction, especially if the appraisal impacts the financing. Receiving the report allows sellers to understand the valuation used for the loan and make informed decisions regarding the sale.