What is the consequence of failing to properly disclose the fee arrangement to clients?

Failing to properly disclose the fee arrangement to clients can compromise the appraisal's credibility for several reasons. Transparency in fee arrangements is crucial for maintaining trust and integrity within the appraisal process. If clients perceive that they have not been fully informed about how the appraiser will be compensated, it can lead to doubts about the impartiality and objectivity of the appraisal.

The credibility of an appraisal hinges on the perception of fairness and objectivity, which can be undermined if clients feel that the appraiser may have a financial incentive that influences their judgment. Disclosures about fees help ensure that clients understand any potential conflicts of interest and can trust that the appraisal is conducted in a professional and ethical manner. This transparency is key to upholding the ethical standards expected in the field of real estate appraisal, which ultimately affects the overall reliability of the appraised values provided to clients and stakeholders.