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Who Is the Real Appraiser?

by Administrator on Jul 25, 2013 General Appraisal 2067 Views

I don't know about what goes on in your state but here in Nevada we have real estate appraisal firms owned by residential appraisers who are competing for commercial assignments.  When they find a potential client they go shopping for a licensed commercial appraiser to do the work, or they "affiliate" with a certified general appraiser and have them do all of the commercial assignments they can find.

It's amazing to me that this goes on.  Why can an appraisal firm advertise that they can complete commercial appraisal work when the firm is owned by a residential appraiser?  I have been asked to sign engagement letters on behalf of the unlicensed firms, they can't contract to do it, but I'm not a co-owner of the unlicensed firm so I refuse.

In my opinion it is dangerous for commercial appraisers to accept these "third-party" assignments.  Who will be held responsible for problems or complaints?  I'm sure that regulators will look to the properly licensed party and the residential company will claim that they have absolutely no responsibility.  Ask yourself, will the residential appraisal firm's E & O insurance cover the commercial assignment that you completed if there is a problem?  I think the answer to that question is no.  As a commercial appraiser, will your E & O insurance company cover you doing business under the XYZ letterhead?

There seems to be a hole in the licensing statute for Nevada appraises that has allowed this activity.  I don't think that the public is being protected, which is the whole point to licensing, If unqualified or unlicensed parties are taking appraisal assignments from the public and then looking for someone to do the work. 

In a way improperly licensed or unlicensed parties are acting like appraisal management companies or AMC's, taking appraisal assignments from parties and then assigning them to appraisers.  The problem with using that argument to defend their actions is that they are not AMC's, just appraisers or unlicensed parties who think they are being entrepreneurs.  There are no AMC protections for a commercial appraiser who takes an assignment from an unlicensed or residentially licensed firm.  If you have a subcontractor agreement with a residential appraisal firm, does the firm you are contracting with really have the authority to manage you if it is owned by a residential appraiser?

A referral fee is appropriate or some situations, but not for assignments that have been actively solicited using Internet advertising.  It's my opinion that an appraisal firm (that is not an AMC) that solicits commercial appraisal assignments from the public should have a licensed commercial appraiser who is at least a co-owner. 

If you are a consumer of appraisal services, ask if the firm and the individual you are talking to is licensed to do commercial appraisal work.  Take a look at the appraiser's licensing information on their Internet site, on their business card or on the state's regulatory site.  If the law is not going to protect you from misrepresentation, you need to take steps to find out who you are talking to.  

For more appraisal information contact Glenn Rigdon, MA, MRICS, ASA a Las Vegas / Henderson Nevada appraiser via email or via his business website Horizon Village Appraisal (, or you can also click on “Contact Us” on the home page of this website.

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