Like riding on a seesaw, children must see if they have a counterbalance on the other end before they can teeter totter. A lack of balance will inhibit kids from enjoying the ride. A true equilibrium comes from a perfect balance. If one side is a profession and the other end is a trade, then there will be imbalance and the results are wobbly at best.

The ideal stability on the appraisal teeter totter would be to have a professional valuator on each side or having both ends worked by trade appraisers. Here one can expect consistency in valuation approach. Yet, having a trade appraiser and a professional appraiser on opposing sides may disrupt that continuity.

        Profession V. Trade

A profession is based on a compulsory standard of education, testing as to proficiency, and lastly adheres to a compulsory code of behavior geared for the public interest. A trade, in contrast, does not require the formal educational and testing aspect, and in contrast to a profession does not embrace a universal code of conduct. So, what is personal property appraising¹ - a profession or a trade?

Yes, we can list valuation and gemological associations, their respective educational opportunities, and a commonly embraced set of standards, and perhaps a long list of other suggestions aimed at categorizing appraising as a profession. But ask yourself if any of these options are mandatory? Must one have a valuation or even gemological education to render an appraisal on a diamond ring for obtaining insurance? Does one have to be a member of an association?

The truth is, to appraise jewelry one does not have to have a gemological or valuation education. Additionally, one does not have to be a member of a professional society or hold any professional designations. And the often-cited commonwealths of appraisal standards and procedures are not required.

        Shortcomings

Firstly, those who have availed themselves of a valuation education, joined a society, and adhere to a standard have a disadvantage - the expense and time.² Yes, it costs to become a professional. Trade appraisers can merely learn from reviewing appraisals they acquire, a fellow tradeperson working in a retail store, etc. And then there are the required fees to be a member of society. It takes a while for one to break even in time and expenses when they take the professional route. Trade appraisers who are not rendering valuations as a serious means of income, may not earn enough to offset the expenses of training.

On the other hand, the trade appraisers are at a higher risk of litigation for malpractice, to use the term broadly. There are, in fact, some laws that address appraisers directly. A court hearing a case against an appraiser will rely on their laws, regulations, and published precedent setting cases³ to decide the outcome of a case. Who will be retained as an expert witness on what the proper adherence procedures are for the appraisal assignment? A highly trained professional appraiser.

A second upside will be the type of assignments that a professional appraiser will be sought out for. They are the lucrative ones. What the trade of appraising sees as "angel fear to tread" assignments, the professional appraisers see as ordinary and money generating jobs. Confidence is the difference.

For example, to render appraisals for a trust, the professional appraiser understands that there are appraisal reports for (1) forming a trust, (2) exchanging property in and out of the trust, (3) determining tax liability, (4) annual inventories, (5) new trustee takeover inventories, (6) insuring property within a trust, (7) beneficiaries challenging a trustee, and (8) invading a trust. Each one of these appraisal assignment possibilities has its own effective date and value definition. And, yes, to make the task more complicated, the effective date and value definitions vary depending on jurisdiction. It takes a professional appraiser to properly provide reports for a trust. Not likely would a trade appraiser know what the mandatory requirements are for each facet of valuating property for trust.

        Being Separate is Dangerous

Some professions are well organized and even though they may have different associations, they work together. Unfortunately, the appraisal profession does not. Yes, we have commonwealths of ethics, procedures, methodologies, etc. but not a centralized effort to establish state laws that provide a clear understanding of what are the appraisers' basics. This leaves us vulnerable.

        Other Professional Efforts

We are considered providers of opinion information. Another profession that is also considered a provider of opinion information are accountants. Certified Public Accountants (CPAs) are organized as a profession. Thus, they have encouraged law makers to enact laws that provide clarity for their profession.

For example, who owns the appraisal working notes - the appraisal client or the appraiser? If the appraiser owns the notes, then there is no problem as to when they can be destroyed. But if the court deems the appraisal working notes as the property of the appraisal client, then they cannot be destroyed without proper notice to the client.

A non-precedent setting case⁴ involved the estate of an appraiser. The appraisal clientele sued to block the working files from being inherited. The court decided the working files were the property of the appraisal clients and could not be transferred to the appraiser's heirs.

Back to CPAs. Are their working notes the property of their clients or the CPAs? Several states have enacted laws that address this legal question. We can, for example, look at Florida law. It states:

"All statements, records, schedules, working papers, and memoranda made by a certified public accountant or firm or her or his employee incident to, or in the course of, professional services to a client, except the reports submitted by the certified public accountant or firm to the client and except for records which are part of the client's records, shall be and remain the property of the certified public accountant or firm in the absence of an express agreement between the certified public accountant or firm and the client to the contrary."⁵

Until we are a true profession, we can only envy such efforts. In essence, CPAs are not mere custodians but owners of the working notes!

Yes, you can, by contract, claim working notes as the property of the appraiser to avoid any disagreements as to ownership - especially if you plan to destroy the files someday. Otherwise, some angry client may appear after destruction and claim you destroyed their property without their permission and caused them to not be able to win their lawsuit. Run this by your attorney since we are not authorized to provide legal advice…

"All work papers, statements, appraisals, records incident to rendering services in the practice of appraising shall be and remain the property of the appraiser or the firm employing the appraiser unless there exists a written express agreement to the contrary. Destruction of all records will occur in no less than seven years after the date the appraisal is published. Please take this into consideration when calculating your update and other needs. Maintenance and storage beyond the date of destruction can be arranged for a reasonable storage fee."⁶

        Lupus Auribus Teneo⁷

What is needed? For personal property appraising to be a profession it would be necessary that (1) there be a common compulsory standard, (2) there be a centralized testing for certification, and lastly (3) that legislation exist to mandate the first two objectives. This cannot be achieved merely through membership associations. An independent overseeing group is crucial. As Terrance's quote indicates, we are in a perfect dilemma. There will be a professional level of personal property appraisers seeking to learn more, establish standards, and participate in professional organizations. And there will be, alongside the professionals, trade appraisers who view appraisals as a service akin to repairs. This weakness thwarts the likelihood of being a true profession.

Written by Bill Hoefer