Who is Our Client Anyway?

This post is not intended to suggest any form of legal advice. To define the client within a particular assignment the appraiser should understand the guidance as provided in USPAP.

This post is written to suggest that our client is not necessarily the intended user of the report. They are not the party that ordered the appraisal service, or the party that will “promise to pay” and sometimes even pay for the service.

My suggestion is that our client is someone who we all too often forget. Our client is someone who never actually reads the report, uses the report, or even realizes they are affected by our report. The client does benefit from an accurate report and suffers great losses from the indirect effects of an erroneous report.

The client that I am suggesting that all professional appraiser’s work for is the general public. This is  not a new concept. But this foundational precept is worthy of repetition.  It is the general public that is currently suffering that fact that appraisers failed to understand the products that they were led into producing. And, for the record, I am not suggesting that all appraisers are inept or crooked – but I am suggesting that we all share responsibility of allowing the common practice of misleading appraisals to be used to shape the destiny of the lending industry.

Appraisers are like rating agencies, or judges. We are supposed to maintain a level of expertise that allows us to understand the service that we are providing. We are supposed to cause no harm with our service. The service should be accurate and meaningful. Unfortunately, the reality is that many appraisals are none of these things. They are reports that are generated by a group of people that who either do not know, care or understand what their function in the marketplace is supposed to be.

The appraisers of earlier generations were required to be people of good reputation, who had a level of expertise to render a reliable opinion of value for the property that was being appraised. For example, my mentor was a man who had an international banking/finance degree, an engineering degree and a law degree and was a real estate broker and property manager for five years before he became a real estate appraiser. When this man stated a property was worth X it was not because he ran the MLS and grabbed three comparable sales that supported the client’s opinion of value or the sale price, it was because all the data (Cost, Income and Competing Sales and Listings) was considered, analyzed and an opinion was formed to demonstrate the findings of the analysis.

What am I suggesting? I am suggesting that those of us who do know our role in this society should take an active role in mentoring our peers, taking part in appraisal organizations, encouraging all appraisers to join an organization that will help to foster growth and professional understanding. We cannot mandate associations, but we can encourage as many appraisers as we can personally influence to take part in building a better product and providing a reliable product that our client will benefit from and can rely upon.

For those appraisers who are reading this blog entry, that are “fighting the good fight” and have always taken the necessary steps to provide professional appraisals then I personally applaud your efforts and want to encourage you that you are not alone.  For those of you who may be new, or simply never had the proper training or education from your “mentor” then I want to encourage you that if you are sincere in your desire to provide a professional service that can be used to correct the errors of previous appraisal decisions, then you can join our ranks by finding a mentor and not being embarrassed to ask. We are all in this together and we are all able to affect positive changes that can improve our industry.

But, for those who are in this industry 1) to only make money 2) without concern of how they affect others and 3) with the “moral flexibility” of a professional assassin – I hope that you will consider changing professions because there are easier ways to take advantage of people and you can make so much more money without leaving a devastating wake of destruction.