Appraiser Confidentiality vs Common Courtesy
When reviewing complaints submitted to the Division, or when taking calls from people who are upset about an appraisal, I often observe that a good portion of the concern expressed is from a lack of response from the appraiser. Specifically, this occurs when the appraiser will not address “issues” the person has with the appraisal and/or appraiser.
Having a third party call to discuss an appraisal report creates a difficult dilemma for an appraiser. Under USPAP’s Ethics Rule – Confidentiality, the part relevant to this discussion states “[a]n appraiser must not disclose: (1) Confidential information; or (2) assignment results to anyone other than…the client… (or) persons specifically authorized by the client”.
The obligation to maintain client confidentiality is often unknown to the caller/complainant, and quite often the caller/complainant paid the appraisal fee so they view themselves as the client.
The question I would ask is this: What is the best appraisal practice to appropriately handle an inquiry concerning an appraisal you performed from someone who is not your client?
An option, which some appraisers seem to take, is to just ignore the third party. Some arguments to support this response: (1) If I do not respond to the third party, I will not cross the confidentiality line; or, (2) the third party is not my client and I am not required to speak with them about the appraisal report, therefore I choose not to.
While ignoring third party complaints may solve a potential problem of violating the confidentiality required by the Ethics Rule-which is a valid concern by the appraiser, it does not resolve the questions or perceived problems being expressed by the complainant. Based on experience acquired as an appraiser and as an investigator for the Division, I find it just makes the third party more upset, and may often be the tipping point in whether a complaint or civil suit is filed.
I recently read a book entitled Blink, written by Malcolm Gladwell. In the book, Gladwell refers to some interesting case studies regarding malpractice suits against physicians, but the studies could be related to appraisers or to any regulated profession.
For example, at one point in the book, Gladwell states “believe it or not, the risk of being sued for malpractice has very little to do with how many mistakes a doctor makes.” Gladwell states analyses of civil suits against physicians show there are highly skilled doctors who were sued a number of times, while some doctors who made numerous mistakes were never sued.
Gladwell argues that a large number of people who are harmed by doctors do not sue the doctors. Gladwell claims the law suits are not initiated by injury alone, but because patients are harmed and something else occurs. Gladwell argues that something else is how the patients were treated by their doctor. Gladwell states “what comes up again and again in malpractice cases is that patients say they were rushed or ignored or treated poorly.”
To further make his point, Gladwell quotes a medical malpractice lawyer, Alice Burkin, in the book. Burkin states “I’ve never had a potential client walk in and say, ‘I really like this doctor, and I feel terrible about doing it, but I want to sue him.” Burkin goes on to state there are even cases where she determines another doctor is to blame, but the patient refuses to file suit because they liked the doctor.
Gladwell also points to another researcher, Wendy Levinson, who looked at a group of physicians, half who had been sued and half who had not. Levinson reviewed conversations between the doctors and their patients. The outcome: doctors who took less time and were less personable with their clients tended to get sued, while doctors who spent a little more time with patients, explained the process, and offered the patients an opportunity to ask questions generally were not sued. Levinson’s research did not show a difference in the quality of information provided by the two groups of doctors, but the difference generally was in how one group of doctors spoke with patients.
I found these studies illuminating and relevant in a number of ways. Appraisers, like doctors, are judged by a very high standard. USPAP establishes a high standard for appraisers to achieve. Appraisers, like doctors, work with people on a subject that can be very emotional (health/property). In residential appraising, the appraiser is dealing with a very emotional part of a person’s life, which is the person’s home or future home. Appraisers also work with loan officers and real estate agents, who have a vested interest in the outcome of the appraisal. The appraisal results can directly affect their paycheck.
As I read this portion of Gladwell’s book, I thought there could be some helpful answers to appraisers in how to deal with this often faced dilemma. As Gladwell points out, it is not the quality of information discussed as much as it is the way information is discussed. Confidential information does not need to be discussed with third parties, but it appears that a little bit of common courtesy in explaining some basic information could go a long way to diffusing interested parties’ anxieties, frustrations, and complaints.
After reading these brief comments from Gladwell’s book about doctors who get sued verses doctors who have never been sued, should it not give an appraiser pause, and cause us to think about how to interact with third-party users of a report?
Maybe a better way to explain these studies is to ask a simple question. Who is most likely to have a complaint submitted to the Division: (1) An appraiser who spends a little bit of extra time answering people’s questions, asking questions about the property, and responding appropriately to queries after the appraisal is submitted (by referring them back to the client, and explaining your limitations in discussing the appraisal); or, (2) an appraiser who “rushed” (complainant’s words) through the property, did not see all of the updating the home owner had done and (thanks now to the UAD changes on the 1004 form) even states in the report “no updates in the prior 15 years”, and then refuses to respond to a call or email for further explanation? (I recognize that the statement of “no updates” refers to the home’s kitchen and bath, but the owner does not know that is what the statement is referencing.)
On many occasions I have told homeowners and real estate agents who call the Division about the confidentiality standard under which appraisers work. Often times, I assume this is the reason an appraiser is refusing to respond to the person’s questions. Most people seem to understand my explanation, but often they are already put off by a perceived lack of professionalism and a complaint is submitted to the Division. This same explanation could be given by the appraiser.
~ By Theron Case / Utah Division of Real Estate
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Wow. Well written article and something we all should be thinking about in our own practices. Here is how we handle this problem at my office; Gate Keepers. I hire well-trained, smart, and very nice receptionists to answer my phones. When a borrower or party other than the client calls to talk to the appraiser, my wonderful staff explains to them in a very nice and professional manner that “Dustin would LOVE to talk to you,” but he must have permission from the client to do so per the law.” This way, they are still treated like human beings, they do not think I am blowing them off, and they are given a path to follow next. If the client does not give that permission (which they often do not), it was the client’s bad, not the appraiser’s. Again, the appraiser WANTED to talk to them. So far (knock on wood) it has kept me from any lawsuits or other painful problems.