Appraiser Ethics


By definition, appraisal is a professional opinion, usually written of a market value of a property such as home, business or other assets. It is the job of the Professional Appraiser to identify these values by gathering, analyzing, and applying information related to a property. Like any other professions, an appraiser is also bounded by laws on their practice and ethics in carrying out their profession.

Appraisers are expected to perform to the highest ethical standards as possible. Apart from their main responsibility towards the client (the lender), their profession also calls them to be obligated to third parties as such a fiduciary obligation towards homeowners, buyers, sellers or other individuals playing important role in real estate transactions. These fiduciary obligations are spelled out on the appraisal assignment and these duties are limited to parties or persons based on the stated scope of work or parameters of the assignment.

There are also big “Don’ts” in their practice. Few examples are getting assignments on contingency fees, making an appraisal report and get paid only if the loan closes or doing appraisal on percentage fees. These are big NO-NO’s in the profession. These situations call for appraisers to inflate the value of the properties to increase their paycheck. The Uniform Standards of Professional Appraisal Practice (USDAP) also defines an unethical practice the acceptance of assignment that is reliant on “the reporting of a pre-determined result” (example: opinion of value) or “taking a direction on assignment results that favors the cause of the client”, the amount of a value opinion and a lot more. Appraisers should work objectively to determine the right values of the home or property.

Like any other profession, appraisers are expected to treat their clients with confidentiality and exercise due diligence. For instance, a homeowner wants a copy of the appraisal report; you typically have to request this report from the lender.

State laws or other organizational participation of the appraiser can clearly define their limitations and obligations as to its practice and ethical standards as to its performance and execution. They are also responsible to continuously acquire learning through continuous education and should maintain a level of competency and expertise in their profession. Appraisers therefore should take ethical responsibilities very seriously and should at all cost conduct in a professional manner.