Donating Free Appraisals...Seems Like a Bad Idea

[Mark K]

Don't do it. No good deed goes unpunished.

Donate a $50 gift card to a local restaurant instead if you feel the charity is worthwhile. A gift card can't sue you a few years down the road.

 

[alebrewer]

I was recently asked by my local MLS if I'd donate a free appraisal for a raffle they hold to raise money for scholarships for local kids. I told them "no" and cited ethical reasons. They responded that it wouldn't be for an agent, just for a private party if they wanted to find out the value of their property. I told them "no" again and said I didn't want to take any chances with my license.
Personally, there's just so much work that goes into an appraisal, especially in the rural area I'm in, that I don't want to work for free. Aside from that, there's so much that we as appraisers are responsible for and have to put our signature to that I'm not comfortable doing that for free. I'm curious as to what your opinions are on this? Anyone else ever been asked to donate an appraisal for free? What did you say?

Is it not common for folks in any profession to donate of their time or service (or goods) for a laudable cause? I don't see how donating an appraisal would be any different than donating a painting? Or an attorney donating a 'free divorce filing'. It's what you do - and you're contributing what you do to some cause you think is worthy. That said, (1) if you don't think the cause is worthy - don't do it, BUT.... (2) don't base your justification on the fact that it's 'too much work' - that's what a donation is about - donating something of value, and (3) don't base your justification on exposure - you're no more (or less) exposed for doing an appraisal pro bono than for doing one for compensation - and the point of a donation is that you're NOT doing it for compensation.

That's just my opinion, though. It's fairly common for me to be in the minority.

 

[glenn walker]

Is it not common for folks in any profession to donate of their time or service (or goods) for a laudable cause? I don't see how donating an appraisal would be any different than donating a painting? Or an attorney donating a 'free divorce filing'. It's what you do - and you're contributing what you do to some cause you think is worthy. That said, (1) if you don't think the cause is worthy - don't do it, BUT.... (2) don't base your justification on the fact that it's 'too much work' - that's what a donation is about - donating something of value, and (3) don't base your justification on exposure - you're no more (or less) exposed for doing an appraisal pro bono than for doing one for compensation - and the point of a donation is that you're NOT doing it for compensation.

That's just my opinion, though. It's fairly common for me to be in the minority.

How about Biases or becoming a advocate -Seems to me if I was willing to do free for 501-C Corporations I would have a biases BUT just because its free doesnt prohibit a user from not liking your appraisal and worse if you took at as a charitable gift on your tax return, then its really no longer a 100% free appraisal.

 

[alebrewer]

How about Biases or becoming a advocate -Seems to me if I was willing to do free for 501-C Corporations I would have a biases BUT just because its free doesnt prohibit a user from not liking your appraisal and worse if you took at as a charitable gift on your tax return, then its really no longer a 100% free appraisal.

No doubt that I'd want to make sure whomever 'bought' the service agreed to terms of service that I thought would address those types of concerns. My only point was/is that - when we think of someone 'donating' their professional service, IMO there is no difference between donating an appraisal and donating a divorce service.

 

[Terrel L. Shields]

I was recently asked by my local MLS if I'd donate a free appraisal for a raffle they hold to raise money for scholarships for local kids. I told them "no" and cited ethical reasons. They responded that it wouldn't be for an agent, just for a private party if they wanted to find out the value of their property. I told them "no" again and said I didn't want to take any chances with my license.
Personally, there's just so much work that goes into an appraisal, especially in the rural area I'm in, that I don't want to work for free. Aside from that, there's so much that we as appraisers are responsible for and have to put our signature to that I'm not comfortable doing that for free. I'm curious as to what your opinions are on this? Anyone else ever been asked to donate an appraisal for free? What did you say?

"Go forth, be fruitful, and multiply."- loose translation.

In the 2007 era a group formed of mortgage brokers, banks and the BoR here in NW Arkansas to send out letters and ask we donate a fee to this group for the purpose of promoting the area housing, claiming that all this stuff about falling prices, dropping sales was all the result of "bad" publicity and this LLC was going to spend the money promoting the area and countering the idea that the market was tanking. Complete fantasy on their part. So I wrote back to the author of the letter, head of the group, and a local mortgage originator for a regional bank. I basically told him if he had half a brain he would know that the market was turning and he could either go with it or joust the windmills but I wasn't about to throw money down a rabbit hole. Within a year he was gone, within another year, his bank was under FDIC control, and within a couple more years what little remained of it was consolidated with another equal weak bank.

 

[Terrel L. Shields]

A gift card can't sue you a few years down the road.

Except in California. I think they can sue you for anything.

I'd donate the cash long before the service. That is not to say I don't do pro bono work. I get calls where an elderly person needs to go on medicaid as they basically have outlived their savings. It's easy at $15k per month a lot of rest homes get..even more if disabled. Often the hang up is a tiny mineral interest that makes so little money as to pay only a few dollars per year. And my normal fee (modest as it may be) is 10x the annual income. I do those pro bono.

So while on that subject, if you family has mineral rights, keep it intact, make a family partnership and divvy it up at the end of the year. But get it out of your name and into a general fund. Our family has a partnership, IRS number and file accordingly. We are not an LLC and don't pay franchise taxes, etc. But this adds partners for each generation, and as a member dies, the next senior member gets their designated share. In our case, it is enough to distribute monthly but otherwise a tiny share is best distributed annually.

Drilling units are usually from 80 to 1200 or more acres. If you own 40 acres of minerals in a 640 acre drilling unit, you are only getting 1/8th of the proceeds from that drilling unit. You signed a lease that might be 1/8th to maybe 1/5th royalty ... so your net acreage is 640 x 1/8th x 1/8th (or whatever) So you have a very small percent of the well(s) income to start with. And it may last 30 years or longer. So each time you divide that 40 acres among heirs - well, the interest gets mighty small and if it isn't producing you may find 2 generations down the road that an interest no one in the family remembers, and all 85 of you are getting letters from an oil company trying to lease your 0.025 portion of a 50% mineral interest estate left by great-grandpa back in the 1930s when he sold the farm...it happens.

I did a mineral and land estate near Tulsa and the heir of an aunt was pulling her (own gray) hair out. After we valued it she called again and had found a type-written mineral lease from Red River County, Texas dated in the 1960s and I hired her a landman to investigate it. Unbeknownst to her, auntie had inherited one-third of an estate of half the minerals under a 600 acre property. I begged her to probate it as they were drilling a wildcat well and speculators nearby were paying $200-300 an acre to lease. If was free money. She refused and said she was going to refuse it and pretend it wasn't real. That interest as well as the interest of some cousins she had lost contact with, is unclaimed to this day. The wildcat well was dry and no one wanted to lease any further.

 

[alebrewer]

I remember - back in the day - giving MB's 'free appraisal' gift cards in an effort to get their business. I guess to me it kind of seems like the same thing.

 

[glenn walker]

I remember - back in the day - giving MB's 'free appraisal' gift cards in an effort to get their business. I guess to me it kind of seems like the same thing.

But that was not charity it was to benefit you, even the IRS allows for wining and dining potential customers or even exiting ones

 

[alebrewer]

But that was not charity it was to benefit you, even the IRS allows for wining and dining potential customers or even exiting ones

It could potentially benefit me, but only if I captured the business... both would still be considered donations, no?

 

[Mark K]

Is it not common for folks in any profession to donate of their time or service (or goods) for a laudable cause? I don't see how donating an appraisal would be any different than donating a painting?

Paintings don't have intended users, intended uses, scopes of work, contingent liabilities, etc.

Or an attorney donating a 'free divorce filing'.

Have you EVER, EVER seen a raffle gift of attorney services? I've seen baskets of 'stuff' donated by attorneys at charity auctions/raffles. They know better.

That's just my opinion, though. It's fairly common for me to be in the minority.

The "minority" is where the cool kids hang out! I'm right there with you, except in this case.