DEFINING AND

ESTABLISHING THE
CONSULTANT-CLIENT
RELATIONSHIP
The consultant’s responsibility to the
client includes the following:
The consultant’s responsibility to the
client includes the following:
1. Know and understand the client’s business in relation to the
subject of consultation.

2. Open the mind of the client as to the general nature of the

client’s problem and the relevant and related real estate aspects
that may require third-party specialists, such as appraiser, broker,
builder, environmentalist, mortgage banker or lawyer.
3. Guide the client in defining the issues involved in the problem,
suggest alternatives, and recommend solutions after adequate
analysis and study, including necessary consultations with other
specialists.
► 4. Implement the engagement and render the report in
accordance with generally accepted standards of consulting
practice and ethics and with the contract of consulting
engagement.

► 5. Assist the client implement the decision or alternative action

recommended as may be required by the contract on the
matter.
Client’s Responsibility

1. Interview and qualify client

- to determine if the client is willing, ready, and qualified to seek and accept
professional advice. Any indication that the client has ulterior motive to use his
function subjectively must discourage the consultant and avoid the
consulting engagement, which may result in unethical relationship.
2. Necessary data and information,
- in order for the consultant to develop the right questions and outline the
nature of the problem and appropriate tools and techniques to be used to
approach the alternative courses of action and solutions.
► 3. Confidentiality of the report,
- in whole or in part, must be observed by both the client and the consultant.
Any dissemination of the same must be mutually cleared beforehand so that both
parties can evaluate the merit or disadvantage of maintaining strict
confidentiality of the report.
► Necessary degree of trust and honesty,
- to avoid guesswork in obtaining information.
The client must furnish needed materials in a straightforward and sincere manner
since the quality of the worked of the consultant is in direct relation to the
quality and quantity of data and information obtained from the client.
► 5. Compliance to the terms and conditions of the consulting engagement

- Particularly the provision on cost and expenses, and payment of progress and
final billings. Client default on this provision of the contract may affect
materially the consultant’s quality
Defining the Client Problem, Objective
and Needs
► 1. Immediate problem

► 2. Long-range goal problem

► 3. Cash flow and accounts receivable level are very sensitive assets that
affect both
current and long-term prospects.
1. Immediate problem

► involve a distressed property, a proposed project, land-use conversion,

highest-and-best use analysis of an existing property, or expanding an existing
residential subdivision. Such current or immediate problems must be hurdled
first before a focusing the effort to the long-term goals.
2. Long-range goal problem

► require more complex analysis than would short-term problems. The

long-time horizon involves necessarily more imponderables and
assumptions, and constant revisions in many aspects of the feasibility studies
made.
 3. Cash flow and accounts receivable
level are very sensitive assets that
affect both current and long-term
prospects.
► Close watch is required, and consulting may be in order if
something grossly unexpected has developed or is developing.
PROFESSIONAL FEE ARRANGEMENTS:

► Fixed Fee

► Modified Fee

► Performance Fees
The straight or fixed fee

► usually applies whenever the scope of an engagement is clearly quantifiable,

and the fee tends to be a lump-sum amount. The estimation of the fee usually
certain firm assumptions on the data available, the expertise required and
the time needed to complete the engagement.
The modified fixed fee

► is a modification of the straight or lump-sum fee to provide for changes

during the course of the engagement of for factors that must be considered
for the proper execution of the consultant’s responsibility. Although the
modified fee has man y variations, it generally provides for a minimum and
maximum range. Acceptable to both parties.
The performance fee

► considers a type of bonus or incentive payment, which bears no

relation to a commission payment, especially in a sale or
financing transaction as the main subject of the consulting
engagement.
In summary, the consultant may base
his fee on the following
considerations:
1. Intricacy of the problem
2. Urgency of the engagement
3. Professional skills required
4. Savings effected
5. Time expended
6. Personnel employed
7. Results obtained
8. Responsibility fee or profit
Specific Consulting Cases

1. Acquired asset
2. Liquidation
3. Development planning
4. Management planning
5. Development assistance
6. Investment advice
7. Conversion services
► 8. Impact analysis
► 9. Management assistance
► 10. Sales consulting
► 11. Use study
► 12. Assessing space needs
► 13. Conflict resolution
► 14. Needs assessments
► 15. Location analysis
► 16. Property taxes
► 17. Neighborhood analysis
► 18. Evaluation
► 19. Facilities planning
► 20. Use study
► 21. Redevelopment planning
► 22. Portfolio review
► 23. Cost-benefit studies
 Consulting Abilities to Provide Advice and
Assistance to Clients

► The solutions that real estate consultant presents and the methods by which
he reaches those solutions are just as diverse as the problems that confront
real estate owners and users.
► Each problem requires individualized treatment. To be really helpful, the
consultant needs special knowledge and skill in such fields as investment
analysis, operations research, statistics construction management, real estate
economics and finance, and income tax planning.
► The broad experience and good judgment of the consultant that focus such
special knowledge and skills on the client’s problem.
Clients can benefit from the
consultant’s ability to:
► Analyze property values and facilitate transactions Evaluate management
performance Conduct research and Forecast investment outcomes Formulate
plans to achieve objectives Identify and define threats and opportunities
Investigate markets and Plan developments Draw model of investment
scenarios Negotiate and arbitrate between parties Provide expert testimony
Train others to provide real estate services Understand and simplify complex
situations
ASSIGNMENT #2

► USPRCP (UNIFORM STANDARDS OF PROFESSIONAL REALTY AND

CONSULTING PRACTICE)
► USPRCP Preamble
► Code of Ethics of Realty Consultant
STANDARDS AND ETHICS
The Ethics In Consultancy

The hallmarks of consulting are:

► (1) independence of action

► (2) objectivity in analysis
► (3) respect for co-practitioners
► (4) concern for the public interest
► (5) and a fiduciary relationship with the client.
The consultant must not accept any
consulting engagement:

► 1. which gives rise to a conflict of interest, and must withdraw from any
engagement if an unavoidable conflict of interest arises after the engagement
has been agreed to, unless such conflict is fully disclosed in writing.

► 2. which involves a violation of the law or of his specific ethical

responsibilities, and must immediately withdraw from an engagement if such
violation is perceived.
3. which do not permit his freedom and objectivity in performing the engagement and
rendering his advice thereon. Specifically, the consultant must not accept any
engagement which:
► a. makes his fee contingent on the substance of the advice or recommendation
given.
► b. calls upon the consultant solely to lend his professional
► c. reputation or signature as a consultant to predetermined opinions or positions.
► d. precludes or limit his ability to develop factual and supportable opinions, findings
or conclusions.
► e. is beyond the scope of his competence, knowledge and expertise and when he is
prevented from obtaining the needed knowledge or expertise from other sources.
► 4. which involves no function other than the determination of the value of
real estate. However, the consultant may, in connection with other consulting
services, render value opinions provided they are covered by clear statements
that such opinions are preliminary and are not to be construed as appraisals.
5. which requires him as an individual to perform concurrently and for
compensation other real estate services relevant to the consulting engagement
for the same client, unless such other real estate services are agreed upon at the
time the consulting engagement is accepted, or are requested by the client on
his own initiative.
6. which may require him to testify under oath unless his client understands such
oath supersedes the consultant’s obligation to preserve the confidential
relationship between them.
► B. The consultant shall not testify in any proceedings regarding any
engagement except with the written consent of his client or in response to
legal process, and will cooperate in any efforts by his client to quash such
process.

► The value of consulting services depends on the personal integrity of the

consultant. No amount of knowledge and trade expertise, can replace the
consultant’s lack of honesty, fairness and objectivity.
STANDARDS OF
PROFESSIONAL
REALTY AND
CONSULTING
PRACTICE
(USPRCP)
Uniform Standards of Professional
Realty Consulting Practice

► In performing real estate or real property consulting services,

a consultant must be aware of, understand, and correctly
employ those recognized methods and techniques that are
necessary to produce a creditable result. (Standard 1,
USPRCP)
The USPRCP prescribes specific
standards in
► the development of consulting advice that the consultant must observe when
performing real estate or real property consulting services. The development
standards substantially consist of the following:
. The consultant must

► (a) be aware of, understand, and correctly employ those recognized

consulting methods and techniques that are necessary to produce creditable
results,
► (b) not commit a substantial error of omission or commission that significantly
affects the results of a consulting service,
► (c) not render consulting service in a careless or negligent manner, such as a
series of errors that, considered individually, may not significantly affect the
results, but which, when considered in the aggregate, would be misleading.
2. The consultant must observe the
following specific guidelines:
► (a) clearly identify the client’s objective,

► (b) define the problem to be considered, define the purpose and intended use
of the consulting service, consider the extent of the data collection process,
adequately identify the real estate and/or property under consideration, if
any, describe any limiting conditions, and identify the effective date of the
consulting service.
3. The consultant must observe the following
specific guidelines when a conclusion or
recommendation is required by the nature of the
engagement:
► (a) identify alternative courses of action to achieve the client’s
objective and analyze their implications,
► (b) identify both known and anticipated constraints to each
alternative and measure their probable impact,
► (c) identify the resources actually or expected to be available to each
alternative and measure their probable; impact,

► (d) identify the optimum course of action o achieve the client’s objective.
► 4. The consultant must observe specific guidelines in performing a market
analysis.

► 5. In developing cash flow analysis, the consultant must observe specific

guidelines.

► 6. In developing a project feasibility study/analysis, the consultant must

observe specific guidelines.
► 7. In reporting the results of a consulting service, the consultant must
communicate each analysis, opinion, and conclusion in manner that is not
misleading. (USPRCP has four Standard Rules in reporting and definitions of
terms applicable to the statements of standards)
Based on the definition of realty
consulting,
► the consultant must develop a work plan with appropriate tools and
techniques on how he can carry out his work in resolving problems and
investment objectives of the client. The following is a suggested consulting
process that serves as a broad framework and guide to assure the quality of
service in consulting engagements. Hopefully, a generally accepted Real
Estate Consulting Process will be adopted as a tool by the consulting
practitioners as part of the Uniform Standards of Professional Realty
Consulting Practice (USPRCP).
USPRCP Reporting Standards

► In reporting the results of a real estate or real property consulting service,

a consultant must communicate each analysis, opinion, and conclusion in a
manner that is not misleading.
Standard 2

► requires that in the consulting report a consultant must explain logically and
convincingly the reasoning that leads to his conclusions. The flow of
information should be orderly and progressive, leading from the broadest to
the most specific level of analysis possible. Those topics most critical to the
consulting conclusions should receive the most detailed emphasis.
Each written or oral consulting report
must:
► (a) clearly and accurately set forth the consulting service in a manner that
will not be misleading,

► (b) contain sufficient information to enable the person(s) who receive or

rely on the report to understand in properly,

► (c) clearly and accurately disclose any extraordinary assumption or limiting

condition that directly affects the consulting service and indicate its
impact on the final conclusion or recommendation
Each written consulting report must
comply with the following specific
reporting guidelines
► a) define the objective to be considered,

► (b) state the purpose of the consulting service,

► (c) identify and describe the real estate and/or property

under consideration (if any),

► (d) set forth the effective date of the consulting service and
the date of the report,
► (e) describe the overall range of work and the extent of the data
collection process,

► (f) set forth all assumptions and limiting conditions that affect the analyses
, opinions, and conclusions,

(g) set forth the information considered, the consulting procedures followed,
and the reasoning that supports the analyses, opinions, and conclusions,
► (g) set forth the information considered, the consulting procedures
followed, and the reasoning that supports the analyses, opinions, and
conclusions,

► (h) set forth the consultant’s final conclusions or recommendations (if

any),

► (i) set forth any additional information that may be appropriate to show
compliance with, or clearly identify and explain permitted departures
from, the requirements to Standard 1,
► j) include a signed certification in accordance with Standard Rule 2-3.
Each written report must include a

► certification that is similar in content to the following form:

► I certify that, to the best of my knowledge and belief:
► - the statements of fact contained in this report are true and correct.
► - the reported analyses, opinions, and conclusions are limited only by the
reported assumptions and limiting conditions, and is my personal,
unbiased professional analyses, opinions, and conclusions.
In summary,

► the USPRCP prescribes the standards that must be observed by the real
estate consultant to achieve competency and ethics in his practice. A
professional consultant must arrive at and communicate his competent,
disinterested and unbiased advice, professional guidance, and sound
judgment in a manner that will be meaningful to the client and will not be
misleading to the public.
►
The Ethics In Consultancy

► The hallmarks of consulting are:

► (1) independence of action,
► (2) objectivity in analysis,
► (3) respect for co-practitioners
► (4) concern for the public interest,
► (5) and a fiduciary relationship with the client.
The following is a partial codification of the
intents of the Code of Ethics referred to above:
CODE OF ETHICS FOR REALTY CONSULTANTS
A. The consultant must not accept any consulting engagement:

1. which gives rise to a conflict of interest, and must withdraw from any
engagement if an unavoidable conflict of interest arises after the
engagement has been agreed to, unless such conflict is fully disclosed in
writing.

2. which involves a violation of the law or of his specific ethical

responsibilities, and must immediately withdraw from an engagement if
such violation is perceived.
► 3. which do not permit his freedom and objectivity in performing the
engagement and rendering his advice thereon. Specifically, the consultant
must not accept any engagement which:
a. makes his fee contingent on the substance of the advice or
recommendation given.

b. calls upon the consultant solely to lend his professional

c. reputation or signature as a consultant to predetermined opinions or

positions.
d. precludes or limit his ability to develop factual and supportable opinions,
findings or conclusions.

e. is beyond the scope of his competence, knowledge and expertise and when he
is prevented from obtaining the needed knowledge or expertise from other
sources.
► 4. which involves no function other than the determination of
the value of real estate. However, the consultant may, in
connection with other consulting services, render value opinions
provided they are covered by clear statements that such
opinions are preliminary and are not to be construed as
appraisals.

► 5. which requires him as an individual to perform concurrently

and for compensation other real estate services relevant to the
consulting engagement for the same client, unless such other
real estate services are agreed upon at the time the consulting
engagement is accepted, or are requested by the client on his
own initiative.
► 6. which may require him to testify under oath unless his client understands
such oath supersedes the consultant’s obligation to preserve the confidential
relationship between them.
► B. The consultant shall not testify in any proceedings regarding
any engagement except with the written consent of his client or
in response to legal process, and will cooperate in any efforts by
his client to quash such process.

► The value of consulting services depends on the personal

integrity of the consultant. No amount of knowledge and trade
expertise, can replace the consultant’s lack of honesty, fairness
and objectivity.