Bidding on Appraisal Assignments

Having bid on hundreds of appraisal assignments over the years I have a few facts and opinions about submitting them that I would like to share.  Since I’m sure this process varies all over some of my suggestions may not be useful to all, but if you can get something out of it then I have done my job. 

There are some simple bids that I have sent to private owners and others by email that have stated terms like this; “I will appraiser the current fee simple interest in your property located at XXX Main Street, Any Town, NV 89000, being a 40,000 SF GBA industrial warehouse and land, for $ X,XXX.  The appraisal shall be completed on or before May 1, 2015.  The fee shall be paid ½ in advance and the balance upon delivery.”   If the potential client wants to proceed I usually send a standard written engagement letter that restates the email terms and adds some more detail.

Developing an engagement letter with standard terms that you can quickly modify is important.  If someone wants an engagement letter that they want to pass along to their boss, their board or some other third party you don’t want to get bogged down writing it and lose hours of your productive time working on it.  Fill in the pertinent data and save it, convert it to a .pdf and send it by email, if you can’t get the entire process down to 15 minutes its taking too long.

Attorneys and corporate clients usually want the full engagement letter sent to them for review and the day that I get the signed engagement letter and a check back from them is the day that I begin the assignment.  If there are special appraisal requirements they are usually discussed prior to drafting the engagement letter and the requirements are included in it.  Do I start an assignment without an engagement letter?  Yes, I often do, but my preference is to have a written agreement.

It’s important to note that I pay attention to details, the worst case scenario is to have a client think you are doing one thing but you did something else.  A few time in my 35 years as an appraiser I thought that a client wanted something, like an appraisal as of the current date, when in fact they wanted something else like a retrospective report.  Even when you are trying to communicate with someone there can be confusion and having the terms written down in an engagement letter doesn’t always guarantee that there is a total understanding.  The engagement letter does however lead to fewer problems.

Some parties, most often government entities and banks, have their own engagement agreements or appraisal services contracts.  For appraisers dealing with the terms written into one of these agreements can become painful indeed, especially when the terms impose specific appraisal requirements.  Banks often want current sales, even when none or only a couple exist.  They also want copies of purchase agreements, when they are difficult to secure, and they often impose deadlines that are sometimes difficult to meet. 

For the most formal bids the party requesting the bid, again usually the government, a large trust or an accountant managing a large trust will want evidence of all of your vital business information.  In my state (Nevada) that usually means; a resume / CV, proof of errors and omissions insurance, court history (if it’s an attorney), proof of liability insurance, proof of auto insurance, fictitious name or dba filing, a copy of your business license and a copy of your State business license.

It’s easy to understand why errors and omissions insurance companies want appraisers to have written engagement letters, when relationships with clients become contentious it’s better to have a written document to reference.  The reality is however that trying to have an engagement letter in place for every service that an appraiser provides is difficult and time consuming.  Some clients resist signing a contract, you can write it up and send it to them but you may not get it back with a signature on it, and it may just evaporate.

For more appraisal information contact Glenn J. Rigdon MA, MRICS, ASA is a Las Vegas / Henderson Nevada based appraiser who can be contacted via email or via his business website known as Appraiser Las Vegas  (http://www.appraiserlasvegas.com), or you can also click on “Contact Us” on the home page of this website or visit my public profile at LinkedIn at http://www.linkedin.com/pub/glenn-rigdon-ma-mrics-asa/1a/30b/879/

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