_Commercial Grade is a weekly post by John Cicero, MAI who provides commentary on issues affecting real estate appraisers, with specific focus on commercial valuation. Today John talks about the dilemma facing appraisers when unintended users are wearing our tires out ’til they’re bald._
_Disclosure: John is a partner of mine in our commercial real estate valuation concern [Miller Cicero, LLC](http://www.millercicero.com) and he is, on Thursdays, one of the smartest guys I know._ …Jonathan Miller
In appraisal parlance, every appraisal report must state who the _intended user_ is. [USPAP](http://www.appraisalfoundation.org/s_appraisal/sec.asp?CID=3&DID=3) mandates that the intended user be specified in the report to establish the appraiser-client relationship.
I frequently receive phone calls from review appraisers or underwriters at financial institutions who are looking at an appraisal that I prepared for another client. (This week I received two such calls.) These institutions are participating in the loan and, therefore, feel justified in calling me to “ask just a couple of questions.” They were never “intended users.”
What is my responsibility to these callers this case? Per USPAP we are not permitted to discuss the report without prior permission from the client. _Surprising that the review appraiser is not aware of this._
If I do get permission to discuss the report, my appraisal has already been thoroughly reviewed (questions asked and answered) by my client; should I have to go through another full review? If there are a number of participants, should I answer to a dozen different reviewers, each asking different questions?
The reality is, though, that even though answering to different reviewers was not within the original scope of services, not co-operating with the participant is simply bad business. _After all, the participants are also potential clients._
_[This is the harsh reality of the commercial appraisal world. Contrarian viewpoint: Its up to them to get the original client allow the conversation with you. Of course, this would never happen so I say charge them for your additional time – calling for permission, speaking to several parties, etc. It all adds up. If the new client doesn’t value your time as a professional, then I am not so sure they are going to send that much business your way in the future. -JM]_
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John,
I used to hold the same contrarian viewpoint you stated above. I have come around on this and try to get my fellow appraisers to hold this as the conventional wisdom. The way I look at it, if a client is not willing to compensate me for my time as a professional that is client I do not want on the “approved client list”.
Often the client engages you for a complete summary appraisal and the parties calling down the chain are asking questions more in-step with a complete self-contained report. We certainly try to accommodate the additional parties – to a degree. But if things start to get out of balance, I see nothing wrong with charging for your time. The good clients understand this. They wouldn’t call their attorney’s or accountants without expecting a bill for additional consultation. And that is it in a nutshell. We are consulting with the other “unintended users” and a fair fee should be received. What is fair is up to you.
Great post!