fee schedule
240) Payment in Advance
02/11/08
Dear Henry,
Can getting paid for your appraisal services be included as a condition in the appraisal, just like any other condition that is used in an appraisal?
An example would be that you would include a condition in the appraisal report that the appraisal would have to be paid for before the intended user could actually use the appraisal for its intended use.
I have had situations over the years where I have not been paid for appraisals, but the appraisal was used anyway and the client just never paid for it. Actually, in some of these instances, I have demanded that the appraisal not be used because it was not paid for; but that did not work very well. It seems that if the appraisal and the right to use the appraisal were conditional upon the appraisal being paid for, this type of thing could be avoided. I understand there are legal issues involved here. I would like your advise, mainly in regard to USPAP and accepted business practices.
W. Michael Watts wattsappraisals@cox.net
P.S. Your Q & A Program is a much needed service for appraisers.
Dear W.
There is nothing that requires you to extend credit to a client. You can always ask for your money up front. However, once you have delivered the appraisal I don't think you can stop the client from using it unless you get a court order.
H2
Can getting paid for your appraisal services be included as a condition in the appraisal, just like any other condition that is used in an appraisal?
An example would be that you would include a condition in the appraisal report that the appraisal would have to be paid for before the intended user could actually use the appraisal for its intended use.
I have had situations over the years where I have not been paid for appraisals, but the appraisal was used anyway and the client just never paid for it. Actually, in some of these instances, I have demanded that the appraisal not be used because it was not paid for; but that did not work very well. It seems that if the appraisal and the right to use the appraisal were conditional upon the appraisal being paid for, this type of thing could be avoided. I understand there are legal issues involved here. I would like your advise, mainly in regard to USPAP and accepted business practices.
W. Michael Watts wattsappraisals@cox.net
P.S. Your Q & A Program is a much needed service for appraisers.
Dear W.
There is nothing that requires you to extend credit to a client. You can always ask for your money up front. However, once you have delivered the appraisal I don't think you can stop the client from using it unless you get a court order.
H2
154) More Contingent Fees
11/15/07
Dear Henry,
I was reading your question about quoting fees based on "a range of values". It is a violation of USPAP to quote fees based on value. As stated in Question #27, FAQs: "It is unethical for an appraiser to accept an assignment, or to have a compensation arrangement for an assignment, that is contingent on any of the following: #3. The amount of a value opinion."
Why isn't a fee schedule in violation of this guideline?
Darrell K. Hignite Appraiserman49@yahoo.com
Dear Darrell,
It is quite common for appraisers to use a range of value as a method of setting fees. "Contingent" in this case means that if they don't come in with a value in the range used for setting the fee, they won't get paid. That is specifically prohibited by USPAP.
Appraisers who use the "value range" method of quoting fees usually add words to explain that it is not a contingent fee and if the scope of work is greater than that of a typical appraisal, a different fee will have to be negotiated. Furthermore, they make it clear that they expect to be paid no matter what they estimate the value of the property to be.
H2
I was reading your question about quoting fees based on "a range of values". It is a violation of USPAP to quote fees based on value. As stated in Question #27, FAQs: "It is unethical for an appraiser to accept an assignment, or to have a compensation arrangement for an assignment, that is contingent on any of the following: #3. The amount of a value opinion."
Why isn't a fee schedule in violation of this guideline?
Darrell K. Hignite Appraiserman49@yahoo.com
Dear Darrell,
It is quite common for appraisers to use a range of value as a method of setting fees. "Contingent" in this case means that if they don't come in with a value in the range used for setting the fee, they won't get paid. That is specifically prohibited by USPAP.
Appraisers who use the "value range" method of quoting fees usually add words to explain that it is not a contingent fee and if the scope of work is greater than that of a typical appraisal, a different fee will have to be negotiated. Furthermore, they make it clear that they expect to be paid no matter what they estimate the value of the property to be.
H2