Appraisal Standards, Ethics, and Professional Practice
Appraisal Standards, Ethics, and Professional Practice
This domain tests professional standards, independence, scope-of-work decisions, confidentiality, and recordkeeping. Expect scenario questions where a client or supervisor pressures the appraiser toward a predetermined result.
Core rules
- Independence and objectivity are non-negotiable. An appraiser may not accept an assignment contingent on a predetermined value, a loan approval, or a tax outcome.
- Scope of work must be appropriate for the intended use and must be disclosed. More complex property or litigation use generally requires more verification.
- Competency means knowing the property type and market, or disclosing the lack of competency and taking steps to gain it.
- Confidentiality protects client information, but appraisal records must be retained and produced when required by law or review.
- Recordkeeping generally requires retaining work files for at least five years after the report date, or two years after final disposition of a judicial proceeding, whichever is later.
- Contingent fees based on the amount of value, a percentage of value, or a finding favorable to the client are prohibited.
- Reports must distinguish facts, assumptions, and hypothetical conditions.
Worked example
A taxing authority asks an appraiser to value a parcel and says, “We need at least $2 million to support the budget.” The appraiser should decline the contingent engagement, document the request, and accept only an unbiased assignment. If the appraiser later finds a value of $1.7 million, the result must be reported with supporting market evidence, not adjusted to meet the budget target. The same rule applies if a taxpayer offers a bonus for a lower value.
Traps
Accepting a value target disguised as “guidance”; omitting a limiting condition from the report; failing to disclose a lack of competency; signing a report prepared by an unlicensed assistant without review; and treating client confidentiality as a shield against lawful review.