In property transactions, the role of Freddie Mac-approved Sellers in providing accurate and comprehensive information to appraisers is paramount.As the market evolves, clarity and transparency in the communication of property details have become increasingly crucial.

So, what are the responsibilities of Sellers to disclose adverse property information, with an emphasis on maintaining consistency and reducing risk across appraisal processes? Let’s take a closer look and see how adhering to these guidelines can help to deliver smoother transactions and uphold the standards set forth in the property condition requirements in the Single-Family Seller/Servicer Guide (Guide).

Key Documentation for Credible Property Valuation

Sellers are required to provide appraisers with comprehensive information about the property. This includes, but is not limited to, the sales contract and legal description. Importantly, if a Seller becomes aware of any adverse information during the review of the property disclosure statement (e.g., Residential Seller Disclosure Statement, Transfer Disclosure Statement, Property Condition Disclosure Form, Seller’s Residential Real Estate Disclosure), this must also be communicated to the appraiser. Doing so iscrucial because it can affect the eligibility or market value of the property.

United Efforts for Consistent Appraisal Standards

By reinforcing existing Seller responsibilities to disclose all relevant property information to appraisers, we can improve the consistency of appraisal processes and reduce the risk of post-purchase defects.

Use of Information by Appraisers

As part of the appraisal process, appraisers collect, evaluate and analyze pertinent information needed to help develop credible and supportable estimates of value. As with other information that appraisers routinely examine (e.g., home inspection reports, engineering reports, etc.) a best practice would include review and evaluation of any Seller disclosed adverse property information and its potential impact on subject property valuation.

Review and consideration of this pertinent information could help reduce revision requests, by evaluating and analyzing the information during the original development of the appraisal.

Freddie Mac Mission

At Freddie Mac, our mission is to provide liquidity,stability and affordability to the U.S. housing market in all economic environments. An important part of executing that mission is to ensure that the company effectively oversees and manages market risks. We appreciate the collaboration with industry stakeholders to help ensure compliance with our Guide requirements and remain transparent with our valuation requirements.