The Benefits of Credentialing by a Peer Association
It is one thing to hire a firm or individual to conduct an appraisal in a bankruptcy case, but another to later defend the dollar amount derived. Defending those values is second in importance only to a correct or reasonable value. At issue may be the methodology, testimony experience and general valuation education of the appraiser. Credibility is derived from the experience of the individual, the adherence to the standards and the testing organization by which one is accredited. This article will identify the benefits of active involvement within the discipline by membership in an appraisal association.
Professional association membership is a way of indicating to the world that one is, or is striving to be, a professional. But membership is only as good as the participant's personal involvement. A membership may not have testing requirements that
are stringent enough to show competency and may not have continuing education requirements to keep the individual current in the ever-changing areas of the profession.
Maintaining a professional license may require continuing education and fees. These can become burdensome in terms of time and money. It is tempting to eliminate the membership. The choice for an appraiser is either to be a part of the process or merely conduct business without the educational or networking participation. More "shingle hangers" are created every week. They compete on price alone and damage the ever-improving quality that has been stimulated by the implementation and continuing education requirements associated with the Uniform Standards of Professional Appraisal Practice (USPAP).
Beyond Mere Membership
More significant than mere professional society membership is the level of involvement. Active participation in the society's committees, publication of articles in professional journals, and teaching are all elements that add to the expert's credibility. These elements can be brought out during the expert's testimony. Also significant is having passed a certification exam. Finally, an entire appraisal firm can be judged by how many of its appraisers have achieved these standards. Appraisal users may themselves need to be educated about the benefit and desirability of such credentials.
Competitive and Cost Pressure
Most accreditation societies require continuing education in addition to having members meet USPAP standards. Appraisers or appraisal companies adjusting to competitive pressures may eliminate value-added options such as continuing education. This may not be obvious to the client, but could eventually sacrifice quality. Some other areas that can be sacrificed include a comprehensive library, research, in-house training and firm newsletters on the latest developments.
The credentialed appraiser has made a substantial investment in both time and money to meet the highest standards.
Many in the appraisal profession resisting the urge to trim these features lament the inability to pass through their expenditures. So what's new? This has been the case in many professions, and eventually it all evens out. There is always a lag in the ability to raise client fees to meet the higher expenses of an operation. Larger companies may be able to sustain this, whereas many good independent fee appraisers may not.
The need for an appraisal in a bankruptcy matter is typically to make a monetary decision for the estate. The use of accredited appraisers allows the estate to benefit from mandatory continuing education, experience requirements and resulting credibility. The credentialed appraiser has made a substantial investment in both time and money to meet the highest standards. While it may be possible to get an opinion while avoiding the expense associated with a credentialed expert, most workouts or chapter 11 plans will benefit from the involvement of an accredited appraiser.