The integrity of professional valuation practice depends upon the valuer maintaining complete independence from the outcome of the valuation assignment. Any remuneration structure that links the valuer’s fee to the assessed value of the asset introduces an inherent conflict between the valuer’s financial interests and the obligation to provide an objective and evidence-based opinion. Within professional valuation practice, percentage-based fee arrangements therefore present significant ethical and legal concerns.
A contingent fee arrangement in the valuation context commonly arises where the valuer’s remuneration is calculated wholly or partly as a percentage of the final assessed value. The practical effect of such an arrangement is that the valuer derives a direct financial benefit from arriving at a higher valuation conclusion. The larger the assessed figure, the greater the fee payable to the valuer. The conflict of interest created by this structure is embedded within the commercial arrangement itself, and is one to be avoided.
Professional valuation services occupy a position of reliance within commercial and legal systems. Courts, insurers, financiers, taxation authorities, insolvency practitioners and private clients routinely depend upon valuation opinions when making decisions involving substantial financial consequences. The legitimacy of those decisions rests upon confidence that the valuation has been prepared independently and without improper influence. Where the valuer’s remuneration is outcome-dependent, the reliability of the valuation process becomes materially compromised.
A valuation cannot credibly be regarded as independent when the valuer’s remuneration increases directly with the assessed value. Such arrangements fundamentally compromise professional objectivity, impartiality and confidence in the valuation process itself.
The issue is not confined solely to actual bias. Equally significant is the appearance of compromised independence. Established principles of professional ethics recognise that public confidence in expert opinion requires both genuine impartiality and the reasonable perception of impartiality. Even where a valuer asserts that professional judgment remains unaffected, a reasonable observer would inevitably question whether the valuation conclusion had been influenced, consciously or otherwise, by the valuer’s financial interest in achieving a higher assessed figure.
This concern becomes particularly acute in litigation, family law proceedings, deceased estate matters, taxation disputes, insolvency administrations and insurance assessments, where valuation evidence may substantially influence the financial rights and obligations of parties. A valuer operating under a percentage-based remuneration arrangement may encounter significant difficulty establishing credibility as an independent expert witness. In adversarial proceedings, the existence of such a fee structure would likely attract close scrutiny regarding impartiality, evidentiary weight and professional conduct.
Percentage-based valuation fees create more than the appearance of bias. They establish a direct financial conflict of interest that undermines professional ethics, evidentiary reliability and public confidence in valuation practice nationally.
Professional standards throughout the valuation sector have historically rejected contingent fee arrangements because they undermine the foundational principles of objectivity, independence and professional integrity. Ethical valuation practice instead requires fee structures that remain entirely disconnected from the valuation outcome itself. Fixed fees, hourly charging arrangements and complexity-based pricing models avoid the direct financial incentive associated with percentage-based remuneration and better preserve professional independence.
Under the professional standards framework of the Auctioneers and Valuers Association of Australia (AVAA), conduct involving valuation fees calculated by reference to assessed value may constitute professional misconduct due to the clear and obvious conflict of interest created. Such practices demonstrate deficient professional judgment and expose both clients and the broader sector to reputational and evidentiary risk.
The use of setting valuation fees based upon the determined value of the asset being valued isn’t widespread, used only by a number of unprofessional valuers that consumers should avoid. Clients seeking valuation services across sectors, including fine art, collectables such as sporting memorabilia and trading cards, motor vehicles and other specialised asset classes, should exercise caution where contingent fee arrangements are proposed. The prudent course is to engage a valuer whose professional obligations and remuneration structure support genuine independence, including appropriately credentialed professionals holding the respected AVAA Certified Valuer (CVAu) designation.
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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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