Engagement Letter
A written agreement between the appraiser and client that outlines the terms of the appraisal assignment, including the property, intended use, scope of work, fee, timeline, and any special conditions.
While not explicitly required by USPAP, engagement letters are considered best practice and may be required by state law or professional organizations. They protect both the appraiser and client by clearly defining expectations, preventing scope creep, and establishing the fee arrangement. A good engagement letter specifies the property address, intended use and users, definition of value, effective date, report format, fee, estimated completion date, and any limiting conditions. Many AMC orders serve as a form of engagement letter, though they may lack some of the detail a direct client engagement would include.
Related Terms
Scope of Work
The type and extent of research and analysis performed in an appraisal assignment.
Intended Use
The use or uses of an appraiser's reported appraisal or appraisal review as identified by the appraiser based on communication with the client at the time of the assignment.
Appraisal Management Company (AMC)
AMCA third-party company that manages the appraisal process on behalf of lenders, handling appraiser selection, order assignment, quality review, and delivery.
Work File
The documentation an appraiser must maintain to support the analyses, opinions, and conclusions in the appraisal report.
More in Appraisal Process
View allEffective Date (Date of Value)
The date on which the appraiser's opinion of value applies.
Extraordinary Assumption
An assumption that is directly related to a specific assignment and, if found to be false, could alter the appraiser's opinions or conclusions.
Hypothetical Condition
A condition that is contrary to known fact but is assumed for the purpose of analysis.
As-Is Value
The value of a property in its current physical condition, as of the effective date of the appraisal, without any hypothetical conditions or extraordinary assumptions about future improvements or changes..