Sample Engagement Letter Date: Mr./Mrs. Company Address City, State, Zip Subject: Appraisal Report: Address Mr. ____________: In accordance with your request, we are pleased to submit this proposal to prepare a complete appraisal report on the subject properties identified above. Countersigning this letter below will authorize Steffens & Kling, LLC to provide the appraisal services requested. NATURE OF THE ASSIGNMENT Purpose of the Report: The purpose of the assignment is to estimate the market value of the fee simple interest in "as is" condition on the valuation date. Function of the Report: The report is to be used in making a decision about the potential to market the property. Appraisal Standards: The report will be prepared in accordance with he requirements of the Uniform Standards of Professional Appraisal Practice (USPAP), the Code of Ethics and Standards of the Appraisal Institute, and comply with the appraisal requirements of the Financial Institution Reform, Recovery and Enforcement Act (FIRREA). Limitations Conditions: The report will be made subject to certain assumptions limiting conditions attached. Attached is a copy of our standard assumptions and limiting conditions. If anything is found to require an additional assumption or limiting condition, you will be notified immediately. REPORT FORMAT AND CONTENTS The report will be developed as a complete report and written in a summary format according to USPAP requirements of Standard Rules 1 and 2. Fees / Payment: Our fees for professional service will be in the range of $________ - $________. Thank you for the opportunity to provide a proposal for appraisal services. We look forward to working with you on these assignments. If the above conditions are acceptable, please acknowledge this agreement by signing and returning a signed copy to our office. Yours truly, Steffens & Kling, LLC. Edward V. Kling, MAI Acknowledged and Agreed to this _____ day of __________, 2006. by: Signature: __________________________________________________ Attachments: Appraisal Standards Qualifications of Appraiser Appraisal Standards: The appraisal report will: 1. Conform to the Uniform Standards of Professional Appraisal Practice (USPAP) adopted by the Appraisal Standards Board of the Appraisal Foundation. 2. Be based on the following definition of market value: Market value means the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and passing of title from seller to buyer under conditions whereby: 1. buyer and seller are typically motivated; 2. both parties are well informed or well advised, and acting in what they consider their own best interest; 3. a reasonable time is allowed for exposure in the open market; 4. payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 5. the price represents the normal consideration for the property sold unaffected by special or creative financing or sale concessions granted by anyone associated with the sale. (Source: Office of the Comptroller of the Currency under 12 CFR, Part 34, Subpart C-Appraisals, 34.42 Definitions [f].) 3. Be written in either a "self-contained" or "summary" format depending on the type of report requested. 4. Include a legal description of the property (when available) as well as a physical description of the property appraised. 5. Analyze and report any prior sales of the property appraised that has occurred for the property appraised within one year for 1-4 family residential or within three years for all other property types. 6. Contain sufficient supporting documentation (explanation or summary detail depending on the type of report requested) so that the appraiser's logic, reasoning, judgement and analysis in arriving at a conclusion can be followed by the reader. 7. Provide the detail and depth of analysis that reflects the complexity of the property being appraised.
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