How Important is a Confidential Appraisal?
In the world of real estate appraisal, confidentiality is paramount. A confidential appraisal is of primary importance to homeowners who often express concern about the privacy of their appraisal report and who might have access to this sensitive information.
As a residential real estate appraiser with decades of experience in the Birmingham, Alabama area, I understand these concerns and adhere to strict confidentiality standards to protect my clients.
I thought I would take time today to explain the confidentiality aspects of real estate appraisal reports, referencing the Uniform Standards of Professional Appraisal Practice (USPAP), and clarify misconceptions about who can access your appraisal information, particularly regarding the county tax assessor.
Understanding Confidentiality in Real Estate Appraisal
The confidentiality of an appraisal report is a cornerstone of professional appraisal practice. According to the USPAP, appraisers are required to uphold confidentiality to protect the interests of their clients and maintain the integrity of the appraisal process.
This commitment is outlined in the ETHICS RULE of USPAP, which mandates appraisers to act in a manner that is independent, impartial, and objective, while also safeguarding confidential client information.
The ETHICS RULE of USPAP
The ETHICS RULE in USPAP consists of several components, including Conduct, Management, and Confidentiality. The Confidentiality section specifically addresses the appraiser’s duty to protect client information.
According to USPAP, appraisers must not disclose confidential information or assignment results to anyone other than:
The client and persons specifically authorized by the client;
State enforcement agencies and such third parties as may be authorized by due process of law;
A duly authorized professional peer review committee, except when such disclosure to a committee would violate applicable law or regulation.
This means that, as an appraiser, I am bound to keep your appraisal report and its findings confidential, sharing them only with those whom you have authorized or as required by law.
What Constitutes Confidential Information?
USPAP defines confidential information as information that is either identified by the client as confidential when providing it to the appraiser and that is not available from any other source or classified as confidential or private by applicable law or regulation. This includes the details within your appraisal report, such as the appraised value of your property, and any analyses or conclusions drawn by the appraiser.
Dispelling Myths: The County Tax Assessor and Your Appraisal Report
A common concern among homeowners is whether the county tax assessor has access to their home appraisal report. The simple answer is no, the county tax assessor does not have access to your private appraisal report unless you or another authorized party provide it to them.
How the County Tax Assessor Determines Property Value
The county tax assessor’s role is to determine the assessed value of properties within their jurisdiction for the purpose of property taxation. This process is separate from the private appraisal conducted for mortgage, sale, or other purposes.
Tax assessors use a mass appraisal process to evaluate property values, which involves statistical analyses of property data and recent sales in the area. This method allows them to assess property values for a large number of properties efficiently and uniformly.
Confidentiality and the Tax Assessor
Since the tax assessor uses a different method to determine property values, they do not need access to individual private appraisal reports. Furthermore, the confidentiality requirements set forth by USPAP prohibit appraisers from sharing your appraisal report with the tax assessor unless you, as the client, explicitly authorize it. This ensures that your private appraisal information remains secure and confidential.
Real-Life Applications of Confidentiality in Appraisal
Let’s consider a few scenarios where confidentiality plays a critical role in the appraisal process:
- Mortgage Refinancing- When refinancing your mortgage, the lender will require an appraisal to determine the current market value of your property. The appraisal report is shared with the lender, who is the client in this scenario. As the homeowner, you will also receive a copy of the report. However, this information is not shared with the county tax assessor or any other parties unless you give explicit permission.
- Property Sale- If you are selling your property and an appraisal is conducted to establish a listing price (commonly referred to as a pre-listing appraisal), the appraisal report is confidential and shared only with you (the client) and any other parties you authorize, such as your real estate agent. Prospective buyers will not have access to this information unless you choose to share it with them.
- Estate Planning- When an appraisal is conducted for estate planning purposes, the report is confidential and shared only with the parties you designate, such as your attorney or financial advisor. This ensures that sensitive information about the value of your property is not disclosed to unauthorized individuals.
The Importance of Trust in the Appraisal Process
Confidentiality is not just a requirement; it is a fundamental aspect of building trust between the appraiser and the client. Knowing that your information is protected allows you to engage openly and honestly with the appraiser, ensuring an accurate and reliable appraisal process. This trust is particularly important in situations involving significant financial decisions, such as buying, selling, or refinancing a home.
Upholding Confidentiality in Practice
As an appraiser, I take several steps to ensure confidentiality is maintained throughout the appraisal process:
- Secure Data Storage- All appraisal reports and related documents are stored securely, either electronically with encryption or in physical files in a locked, secure location. This prevents unauthorized access to confidential information.
- Clear Communication- I clearly communicate confidentiality policies to clients at the outset of the appraisal engagement, ensuring they understand who will have access to the report and under what circumstances information may be disclosed.
- Ethical Practice- I adhere to the highest ethical standards as outlined in USPAP, ensuring that all actions taken during the appraisal process align with the principles of confidentiality, independence, impartiality, and objectivity.
Conclusion
Confidentiality is a critical aspect of the real estate appraisal process, protecting the interests of homeowners and ensuring the integrity of the appraisal profession. According to USPAP standards, appraisers are required to keep client information and appraisal results confidential, sharing them only with authorized parties. It is important for homeowners to understand that the county tax assessor does not have access to their private appraisal reports, as the tax assessor uses a different method to determine property values for taxation purposes.
By upholding strict confidentiality standards, appraisers build trust with their clients, ensuring that sensitive information remains secure. Whether you are refinancing your mortgage, selling your property, or engaging in estate planning, you can trust that your appraisal report will be handled with the utmost confidentiality.
If you have any questions or concerns about the confidentiality of your appraisal report or any other aspect of the appraisal process, feel free to reach out. As a professional appraiser, I am here to provide you with the information and assurance you need to navigate your real estate decisions confidently. As always, thanks for reading.
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Good topic, Tom. It’s important to reinforce what won’t be shared. I find clients often ask where the appraisal will be shared. Appraiser can get into deep water when sharing confidential information.
Same here, Ryan. I do get asked this question quite a bit so I thought I would write a post to help spread the word about the confidential nature of the appraisal process.
Tom,
Good information. I’ve been told by local agents that sometimes they are required to disclose prelisting appraisals and have had one or two over the years not too happy about that if my value was below their expectations.
That’s interesting to hear, Joe. That does not seem right that it would be required to disclose this information since it can be a part of the seller or their agent’s marketing plan and pricing strategy.