Question:

A client engages an appraiser (Appraiser A) to appraise a property.  Appraiser A is provided with a copy of an appraisal report prepared by another appraiser (Appraiser B) retained by the property’s owner. Appraiser A finds significant errors in Appraiser B’s appraisal report. What should Appraiser A do?

Response:

State laws vary concerning appraisers’ duties in reporting other appraisers’ potential violations of USPAP. Though USPAP does not specifically address appraisers’ responsibilities when confronted by other appraisers’ USPAP violations, it does address the ethical aspects of using misleading or fraudulent reports. While it is not unethical for Appraiser A to read Appraiser B’s appraisal report, it is unethical to use it. The Conduct section of the ETHICS RULE states:

An appraiser must not communicate assignment results in a misleading or fraudulent manner. An appraiser must not use or communicate a misleading or fraudulent report or knowingly permit an employee or other person to communicate a misleading or fraudulent report.

Appraiser A fulfills the first part of this requirement by not using Appraiser B’s appraisal in his own appraisal of the property. He fulfills the second part of the requirement by pointing out to his client the misleading or fraudulent aspects of Appraiser B’s appraisal and advising the client against relying on that appraisal. Appraiser A’s responsibilities beyond these actions are not a matter of USPAP.