Courtesy Discounts

(by David Maloney) A courtesy discount is a reduction in one’s fee for services provided. I suppose those who offer courtesy discounts feel that by discounting their fees, their chances of obtaining future business from the client are enhanced. I’ve often wondered if the client, like Pavlov’s dog, will come to expect additional courtesy discounts in the future, and what his or her reaction would be if not offered a courtesy discount for future assignments. But I digress.

I, personally, do not recall ever having received a courtesy discount from any type of service provider, be it my attorney, accountant, financial advisor, appliance repairman, plumber, electrician, etc. Never.

And as a professional appraiser, I have never offered courtesy discounts nor will I ever offer them. While others might willingly give away their appraisal services, I choose not to do so.

If the obvious downside (not making money!) of discounting fees or providing appraisal services for free is not a sufficient reason for abstaining from offering courtesy discounts, let me give you a one-acronym reason that should be sufficient: USPAP.

The Conduct section of USPAP states that an appraiser 1) “must not perform an assignment with bias”, and 2) “must not advocate the cause or interest of any party or issue.”

And I can think of nothing that would give an opposing attorney more reason to discredit an appraiser and the appraiser’s work product because of actual or perceived “bias” or “advocacy” like the appraiser reducing a fee in favor of the client!

This issue appeared to be a no-brainer, and, to be honest, I really gave it little thought until recently when a colleague asked me what I thought about giving courtesy discounts. At first blush, I supposed that if an appraiser wanted to knock off a few dollars to a little old lady having her sterling silver flatware service appraised for insurance purposes – what’s the harm?

But I was forced to rethink the bigger picture when my colleague told me that after recently offering a courtesy discount to a client involved with a litigation issue he (the appraiser) had been admonished by the client’s attorney regarding the danger inherent in offering courtesy discounts because of the resulting perception of bias/advocacy in favor of the client – a perception that the opposing side could most certainly take advantage of in attempting to discredit the appraiser – and a perception the appraiser’s client’s lawyer now has to overcome.

I posed the question to a LinkedIn Group of which I am a member and that is populated with expert witnesses. The unanimous consensus was that courtesy discounts should be avoided like the plaque for exactly the reason noted above – that such discounts might be perceived as showing bias/advocacy in favor of the client—a clear violation of the generally accepted appraisal standards of USPAP to which you are bound.