Ethical Considerations for Appraisers and USPAP

Appraisers are professionals, and like other professionals such as lawyers and bankers, appraisers are held to ethical standards above the general public. They are expected to remain objective and provide an unbiased opinion of value for the property they have agreed to appraise.

An appraiser's primary responsibility is to their client; in nearly all cases, the appraiser's client is the lender that engaged the appraiser for services. The appraiser is obligated to keep their client informed throughout the appraisal process and to complete and deliver the appraisal report in a timely manner and free from significant errors. Procedural rules and laws dictate to whom the appraiser may disclose information concerning their reports; for this reason appraisers are prevented from disclosing value opinions, selected comparables, and other material information to homeowners.

Appraisers are also required to disclose to their clients if they have a financial interest in the property being appraised or if they have a relationship with the borrower or property owner. While these factors do not necessarily prevent an appraiser from providing an appraisal for a particular property (assuming the said relationship or interest is disclosed to the client), they present a distinct conflict of interest and potential for bias. Most lenders will not accept an appraisal from an appraiser that has a vested interest in the subject property or a relationship with a borrower or seller.

Appraisers are also prevented from accepting assignments based on a pre-determined value or on the promise of future business. An appraiser may not accept an assignment with conditions such as: "If you can get this to $250,000, then the order is yours." or "I'd like to place an order, do you think this property will be worth $250,000?" and "If you can make this happen, I've got ten more orders lined up and I'll send them to you." Accepting such an order introduces an extreme conflict of interest and potential for bias.

When considering factors that may impact the market value of a property, appraisers are not permitted to consider immaterial information, including race or racial composition of the subject neighborhood or property occupants, religious affiliations, or other factors forbidden by USPAP (see below).


USPAP

USPAP stands for the Uniform Standards of Professional Appraisal Practice. This is the name for the rules promulgated by the Appraisal Foundation, the national oversight agency designated by Congress to set forth rules for appraisers.

For complete details on USPAP and the Florida Real Estate Appraisal Board rules for appraisers, visit The Appraisal Foundation and the Florida Real Estate Appraisal Board.