Category: The Appraisal Business

The Appraiser-Client Relationship and Confidentiality

Posted on by Dave Maloney

The Appraiser-Client Relationship and Confidentiality

(by David Maloney) There exists a special relationship  between the  appraiser and the client, and the appraiser is obligated to protect the confidential nature of that relationship. Specifically, the appraiser must  reveal neither the 1) results of an assignment nor 2) any confidential information other  than as permitted by the ETHICS RULE.

According to the  ETHICS RULE, confidential factual data obtained from the client and the results of an appraisal may be disclosed only to:

  • The client and anyone specifically authorized by the client, e.g., an insurance company, or, in the case of a divorce, to the client’s attorney,
  • Third parties authorized by due process of law, e.g., pretrial discovery, depositions, court testimony by the appraiser, or
  • A duly authorized appraisal society’s peer review committee

As noted, an appraiser must  respect the confidential nature of information obtained during the appraisal  process. USPAP defines confidential information as:

information that is either: identified by the client as confidential when  providing it to an appraiser and that is not available from any other source;  or classified as confidential or private by applicable law or regulation. (USPAP)

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Appraisal Procurement Fees vs. Finder’s Fees

Posted on by Dave Maloney

Appraisal Procurement Fees vs. Finder’s Fees

(by David Maloney) Appraisers often wonder if they are allowed to request a finder’s fee when referring an appraisal client to another appraiser, or a would-be consignor to an auction house. Or if appraisers can pay a fee to others in order to entice them to send appraisal business their way.

It is a confusing issue and the waters quickly become even more muddied when one takes into consideration that many appraisers perform in other roles, such as as dealers and auctioneers—roles which are not governed by USPAP and roles for which the awarding of finder’ fees is a common practice. USPAP sets forth requirements regarding fees or things of value being pro-actively paid by one performing as an appraiser in order to procure an appraisal assignment, but USPAP does not address accepting finder’s fees. (By the way, this is to be expected, since USPAP applies only to appraisers and not to individuals performing in non-appraiser roles such as dealers, estate liquidators, auctioneers, etc.)

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Using Retainers

Posted on by Dave Maloney

Using Retainers

(by David Maloney) It is not an uncommon practice for appraisers to request a retainer in some assignments. If you do not know the client well or if the client does not have a good payment history, you should require a retainer. In addition, it is common to request a retainer when the assignment involves legal matters—particularly in cases involving battling parties.

An appraisal assignment retainer is a sum of money a client gives the appraiser as an advance for appraisal services that the appraiser has agreed to perform for the client. The retainer might also include advance payment for anticipated expenses associated with the appraisal assignment such as for the appraiser arranging for an authentication service or for retaining the services of expert appraisers to assist with the assignment.

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Courtesy Discounts

Posted on by Dave Maloney

Courtesy Discounts

(by David Maloney) A courtesy discount is a reduction in one’s fee for services provided. I suppose those who offer courtesy discounts feel that by discounting their fees, their chances of obtaining future business from the client are enhanced. I’ve often wondered if the client, like Pavlov’s dog, will come to expect additional courtesy discounts in the future, and what his or her reaction would be if not offered a courtesy discount for future assignments. But I digress.

I, personally, do not recall ever having received a courtesy discount from any type of service provider, be it my attorney, accountant, financial advisor, appliance repairman, plumber, electrician, etc. Never.

And as a professional appraiser, I have never offered courtesy discounts nor will I ever offer them. While others might willingly give away their appraisal services, I choose not to do so.

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