A valuer who charges a fee calculated as a percentage of the assessed value fundamentally compromises the independence required of professional valuation practice. It’s a practice that serves neither the item’s holder nor the valuation sector well and borders on outright professional misconduct.
A small number of disreputable people and businesses offer valuation services and charge a percentage fee, with the valuation fee determined in whole or in part by the final valuation. The arrangement creates a direct financial incentive to produce a higher valuation outcome because the valuer personally benefits from increasing the figure. That conduct is entirely inconsistent with the ethical obligations expected of a professional adviser and constitutes professional misconduct under the professional standards of the Auctioneers and Valuers Association of Australia (AVAA).
The core purpose of a valuation is to provide an independent, evidence-based opinion. Clients, courts, insurers, financiers and government agencies rely upon valuers to exercise objective judgment free from personal financial influence, and none can nor should rely upon a valuation when the fee charged for that valuation is based on the outcome of that valuation.
A percentage-based fee structure destroys the integrity of the valuation because the valuer’s remuneration becomes tied to the outcome of the assignment itself. The higher the value assessed, the higher the fee earned. Few arrangements more clearly undermine professional objectivity.
The issue extends beyond actual misconduct to the equally damaging perception of misconduct. Professional ethics require not only genuine independence, but also the appearance of independence. Even if a valuer believes they remain impartial, the existence of a contingent fee arrangement would cause any reasonable observer to question whether the valuation conclusion had been influenced by financial self-interest. In professional practice, credibility matters. Once confidence in independence is lost, confidence in the valuation itself is severely weakened.
Any valuer who charges valuation fees based on the determined value of an asset demonstrates conduct that falls well below accepted professional standards in Australia. The arrangement reflects poor ethical judgement, disregard for professional obligations and a willingness to place personal financial gain ahead of objective analysis, and the client’s interests. It’s not a common practice, one only used by a small number of dodgy valuers.
This is particularly serious in taxation disputes, probate matters, family law proceedings, insolvency administrations, insurance assessments and litigation contexts where valuations may influence substantial financial outcomes.
A valuer operating under a percentage fee arrangement cannot credibly present themselves as a fully independent expert witness or adviser while simultaneously profiting from determining a higher assessed value.
Professional standards across the valuation sector have long recognised the dangers of contingent fee arrangements. Professional valuers, AVAA, and key stakeholders discourage the practice because the conflict of interest is so obvious and so serious. Ethical valuers charge fixed fees, hourly rates or complexity-based fees that remain entirely unrelated to the final valuation figure.
Clients and professional advisers should treat percentage-based valuation fee arrangements as a warning sign. Valuers engaging in such conduct are demonstrating behaviour inconsistent with professional independence and ethical practice. They are professionals best avoided.
When looking for a professional able to value assets ranging from sporting memorabilia, trading cards, paintings and other fine art through to motor vehicles, the safe decision is to choose a professional valuer with the respected AVAA Certified Valuer (CVAu) credential
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Interested In Finding Out More?
If you’re interested in the professional standards associated with valuation, send an email to standards@avaa.com.au or telephone 1300 928 165. You can also stay up to date by following AVAA on LinkedIn, X/Twitter and Facebook.
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