Tag: maloney

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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Can Museum Appraiser/Volunteers do Appraisals for their Museum?

Posted on by Dave Maloney

Can Museum Appraiser/Volunteers do Appraisals for their Museum?

(by David Maloney) Donees, staff and their relations are prohibited by the IRS from doing appraisals of items being donated to their respective institutions. But what about volunteers such as committee members or members of the BOD? Are they, too, prohibited?

For the most part, IRS Pub 561 is clear as to who may and may not do appraisals for Federal income tax purposes, including non-cash charitable contributions. Those who may are termed “qualified appraisers.” Those who are not are termed “excluded individuals.” 

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When Assistance is Provided by Others

Posted on by Dave Maloney

When Assistance is Provided by Others

(by David Maloney) Recently, The Appraisal Foundation’s Appraisal Standards Board (ASB) responded to a query submitted by my Appraisal Course Associates partner, AQB-certified USPAP instructor, Bill Novotny. The original issue in question focused on USPAP record keeping requirements pertaining to appraisers who provide assistance with an assignment. There clearly are such requirements for the primary appraiser who signs the report’s USPAP certification, but what obligations apply to the assisting appraiser?

The initial query led to even more questions regarding USPAP obligations pertaining to the primary appraiser as well as to the individual providing the assistance. What if the individual providing assistance is not an “appraiser?” If an appraiser, what if the assistance provided was not “appraisal” assistance? What if the assistance provided was not deemed “significant”? This paper addresses these several questions and clarifies USPAP obligations pertaining to personal property assignments in which assistance is provided by others.

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ASB Q&As Clarify ETHICS RULE Changes that Begain with 2010-2011 USPAP

Posted on by Dave Maloney

ASB Q&As Clarify ETHICS RULE Changes that Begain with 2010-2011 USPAP

(by David Maloney) In late 2009 The Appraisal Standards Board (ASB) approved modifications to the Uniform Standards of Professional Appraisal Practice (USPAP). Those changes were incorporated into the 2010-2011 edition of USPAP and associated guidance material.

One of the several changes of interest to the personal property was made to the ETHICS RULE which, by the way, was largely rewritten. The change of interest occurs in the Conduct section of the ETHICS RULE and regards two new disclosure requirements.

  1. The appraiser must now disclose (prior to accepting the assignment or whenever discovered) any current or prospective interest in the subject property or parties.
  2. The appraiser must also now disclose any services performed (in the capacity of an appraiser or otherwise) regarding the subject property over the preceding three years.

The rationale behind this particular change is to allow the client to determine potential conflicts, if any, with past services undertaken by the personal property appraiser regarding the subject property such as having owned, sold, auctioned, appraised, authenticated, restored, brokered, etc. the subject property. For the real property appraiser, such services might include having provided management, leasing, brokerage, auction or investment advisory services.

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Bankruptcy Appraisals: FMV? OLV? FLV?

Posted on by Dave Maloney

Bankruptcy Appraisals: FMV? OLV? FLV?

(by David Maloney) The topic of bankruptcy and bankruptcy appraisals is a complicated one. Be that as it may, a rudimentary understanding of the bankruptcy processes, the type of debtor (individual or business), and the options available to the debtor depending on the type of bankruptcy filing sought (Chapter 7? 11? 13?) is helpful to the appraiser intent on completely identifying the “appraisal problem” including the type and definition of value to be developed when undertaking a bankruptcy appraisal.

Bankruptcy is a legal procedure designed to protect both an individual or business that can’t meet its financial obligations and to protect the creditors involved. The process of bankruptcy requires the debtor to create a report illustrating the “value” of their assets. In order to get a true reading of the value of the individual or business personal property involved, an appraisal is at times, but not always, necessary.

All bankruptcies are governed by Title 11 of the U.S. Code (Bankruptcy Code) and are processed through Bankruptcy Courts — part of the system of Federal courts. The Bankruptcy Courts of the 94 Federal judicial districts were created by Congress just to hear bankruptcy cases and make decisions about disputes between debtors and creditors.

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Bankruptcy Appraisals

Posted on by Dave Maloney

Bankruptcy Appraisals

(by David Maloney) Bankruptcy is a legal procedure designed both to protect an individual or business that can’t meet its financial obligations and to protect the creditors involved. The process of bankruptcy requires the debtor to create an expense report illustrating the “value” of their assets. In order to get a true reading of the value of the individual or business personal property involved, an appraisal is at times, but not always, necessary.

All bankruptcies are governed by Title 11 of the U.S. Code (Bankruptcy Code) and are processed through Bankruptcy Courts — part of the system of Federal courts. The Bankruptcy Courts of the 94 Federal judicial districts were created by Congress just to hear bankruptcy cases and make decisions about disputes between debtors and creditors.

The debtor begins the process by filing a bankruptcy petition with the Clerk of the Bankruptcy Court in the Federal District where the debtor has lived or has had a principal place of business. The various types of bankruptcy are referred to by their respective Bankruptcy Code chapter numbers.

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Appraisal Report Structure: Not Dictated by USPAP

Posted on by Dave Maloney

Appraisal Report Structure: Not Dictated by USPAP

(by David Maloney) There is no single approved format for all personal property appraisal reports, nor is there a required method of presenting information within the appraisal document. USPAP’s STANDARD 8 states that USPAP does not:

 “dictate the form, format or style of personal property appraisal reports, which are functions of the needs of the intended users and appraisers. The substantive content of a report determines its compliance [with USPAP].”

Appraisal reports typically contain a logical presentation of the required elements of information. Appraisers usually choose to prepare either a narrative letter-style appraisal report or a form-style appraisal report.

In a narrative letter-style report the appraisal has the look and feel of a formal letter on company letterhead complete with salutation, content, the USPAP certification statement, signature and enclosures.

In a form-style report the report is prepared in sections according to a pre-designed format, with each section appropriately titled and addressing the relevant elements of information it is designed to contain.

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Cover Letter vs. Transmittal Letter vs. Cover Document: What’s the Difference?

Posted on by Dave Maloney

Cover Letter vs. Transmittal Letter vs. Cover Document: What’s the Difference? 

(by David Maloney) There has long been a misunderstanding related to definitions associated with and use of the terms cover letter, transmittal letter and cover document. Do they differ? Are they one-in-the-same? Must one or the other be used? 

The term “cover document” was first used in association with appraisals in 1994 when a standardized core course in personal property appraisal theory and principles was written by this author for a major appraisal society. Suffice it to say that the term “cover document” is synonymous with the term “transmittal letter” which has been and currently is in even wider use within other appraisal disciplines. Indeed, even USPAP makes mention of the term “transmittal letter” in its Ethics Rule and in the below quoted Q&A. USPAP does not make any mention of the term “cover document.” For the purposes of this discussion, we will equate “cover document” with “transmittal letter” and will henceforth make use of the latter term while discontinuing use of the former. 

Of the two remaining letters, there is no consensus on the use or nomenclature of the cover letter and transmittal letter among the various appraisal disciplines, but the following discussion will assist you to properly make use of them regardless of what they are called. Note, too, that there is no USPAP requirement for either a cover letter or a transmittal letter, USPAP’s Q&A and Ethics Rule mentions of the transmittal letter notwithstanding. Though not required, both often have their place in the preparation of a professionally designed and coherent report. 

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