An appraiser has been asked to complete an appraisal assignment with a fee to be paid only if the loan closes. According to USPAP, may the appraiser accept the assignment under these conditions?

• A. Yes, it's permissible
• B. No, the fee arrangement is an unethical contingency arrangement and violates the ETHICS RULE
• C. Only if disclosed
• D. Only for certain loan types

Answer: (B)

The key idea here is that compensation cannot be contingent on the outcome of the assignment. A fee paid only if the loan closes creates pressure for the appraiser to produce a value that supports the loan, which undermines independence and objectivity. Under USPAP, the Ethics Rule prohibits compensation that is contingent upon the occurrence of a transaction or on the appraiser’s reported value. So this arrangement is not permissible regardless of disclosure or loan type. Disclosure alone does not cure the conflict, because the payment structure itself biases the appraisal process. The appraiser should be compensated for the work done, not for whether the loan funds.