What is the primary purpose of an appraisal engagement letter?

The primary purpose of an appraisal engagement letter is to outline the scope and responsibilities of the appraisal. This document serves as a formal agreement between the appraiser and the client, clarifying what is expected from both parties throughout the appraisal process. It defines the specific parameters of the assignment, including the purpose of the appraisal, the property being appraised, the method of valuation to be used, and any relevant deadlines.

By ensuring that all parties have a clear understanding of their roles and the processes involved, the engagement letter minimizes potential misunderstandings and establishes a foundation for accountability. This is crucial as it helps guide the appraiser in conducting the appraisal according to professional standards and the client's needs. The engagement letter therefore plays a key role in ensuring that the appraisal is thorough and meets any legal or regulatory requirements associated with the property valuation.