Appraisers' Free Forum

Do you send appraisal report drafts to clients?

No. Why would I want to? If a draft is necessary, you haven't adequately addressed the SOW in the engagement letter.

Why? Do your want them to proof read the report for corrections, needed modification?

Strikes me like a verbal, you give a verbal and next thing you know you are backing into value.

I agree with you Jim.

This is a new "feature" to me, as I saw a report that was not signed, and when the author was contacted, and informed the report was unsigned, they indicated it was a "draft" for approval before they sent the "final" report.

Drafts are not specifically covered in USPAP, but are permitted, so long as they are labeled 'draft" and unsigned.

Being a residential appraiser I was curious as to if this is a common practice among commercial appraisal providers.

By the way, it was not "labeled" draft per the advice in the FAQ section of USPAP.

I voted "no" because I have never had the need. I believe the only circumstance where a draft would be appropriate is a situation more like consulting or where there is some agreement with the client as to their control of formatting... not of value opinion.

Steve Owen wrote:I voted "no" because I have never had the need. I believe the only circumstance where a draft would be appropriate is a situation more like consulting or where there is some agreement with the client as to their control of formatting... not of value opinion.

Of course not. Sounds to me like someone doing a "comp check" in anticipation of getting an order. Signed or not, it's an appraisal, an indication of value prepared by an appraiser acting as an appraiser.

Bill,
Just because USPAP allows it, that doesn't mean I have to accept it as a condition of the assignment. Any client who insists on having a draft presented is, IMO, hell bent on controlling the value opinion or limiting the research reported. I won't allow either one. If a client needs a better explanation of something after I've completed the report, I can provide that by supplemental addendum. Whether I charge for it or not will depend on the engagement terms and the amount of work required.

Steve Owen wrote:I voted "no" because I have never had the need. I believe the only circumstance where a draft would be appropriate is a situation more like consulting or where there is some agreement with the client as to their control of formatting... not of value opinion.

Steve,

How does your state board look at this matter? I ask because, some state boards say "do not do this", and this report, I saw, came from an appraiser in Missouri. I know for fact the client (I am employee of client) did not request this and it is not for consulting, as it is for a lending decision for a FRT.

To tell you the truth, Bill, I really don't know. Since I have never had occasion to do it I never bothered to find out.

Another thought, though... if USPAP does allow it (I never checked that either), then it might be a bit difficult for a state board to justify not allowing it.

I recently got into a similar incident. Our state board has advised against putting a copy of your license in a report. I have a large bank client that wants that because it makes it easier for their compliance. I decided to go ahead and do it, since USPAP does not disallow it.

[quote="Steve Owen"]Another thought, though... if USPAP does allow it (I never checked that either), then it might be a bit difficult for a state board to justify not allowing it..........................................quote]


FREQUENTLY ASKED QUESTIONS

196. Providing a draft of a report

Question:
My client has asked that I provide a draft of my appraisal report prior to issuing the report in final form. Is this permitted under USPAP?

Response:
USPAP does not explicitly define or address drafts of reports. When clients, other intended users, and appraisers use the term “draft,” they may mean many different things, from preliminary spreadsheets to a written document that contains all that will be in the “final” report except it is labeled as “draft” and does not contain signatures. Report drafts have traditionally been part of certain types of appraisal practice but have never been considered acceptable in other types of appraisal practice.

State-regulated appraisers should be aware of applicable state laws and regulations. Many laws define a “report” as any communication, written or oral, of an appraisal.

Whatever a “draft” may be in a particular context, it would always be part of “appraisal practice,” because it is a valuation service provided by an appraiser. When performing a service that is considered appraisal practice, but for which there are no applicable Standards Rules, an appraiser must still comply with the portions of USPAP that apply generally to appraisal practice. These include the DEFINITIONS, PREAMBLE, ETHICS RULE except for the Record Keeping section, COMPETENCY RULE, and JURISDICTIONAL EXCEPTION RULE.

The second sentence of the PREAMBLE states: It is essential that appraisers develop and communicate their analyses, opinions, and conclusions to intended users of their services in a manner that is meaningful and not misleading. Additionally, the ETHICS RULE states: An appraiser must not communicate assignment results in a misleading or fraudulent manner. Therefore, if an appraiser communicates with intended users prior to completion of an assignment, the communication must not be misleading.

The purpose of issuing a “draft” cannot be to allow the client to improperly influence the appraiser.

See Advisory Opinion 21, USPAP Compliance for further guidance.


Would this be something a state could say falls under the Jurisdictional Exceptional Rule, in your opinion?

Bill - welcome to posting on the forum

I don't and won't send a "draft"! To me, especially from the residential side, I see it as very similar to a "Predetermined" or "minimum" valuation assignment. I also would consider a "draft" in the same line as an appraisal, signature or not. It was produced by an appraiser and expressed an opinion of value - if there's a problem with the report - I'd send it to the state.

Edit to add: I believe our state here views it the same as I do. I think I remember a complaint on a "draft" filed once - years ago.

I'm not sure what you mean by a draft, but no we don't send a report until it's been proofread. But, we do have several clients who want a PDF emailed, and hard copies sent through the mail.

Any client who insists on having a draft presented is, IMO, hell bent on controlling the value opinion or limiting the research reported.

Is that the ESP method of accusing your colleagues of being unethical?

It comes up in litigation assignments, where the attorney has found errors, inconsistencies or ideas that look like a cross-examiner's picnic. While that has happened to me many times, I have yet to find an attorney-client try to weaken my scope or control my value. Then again, I suppose one could argue the attorney is a co-worker and not the client.