Valuation Engagement Letter Template for the United States

A valuation engagement letter, often searched for as an appraisal engagement letter, is a contract that sets the terms for business appraisal and valuation services. It is the foundation of the engagement, defining the scope of work, each party's responsibilities, and the deliverables, while confirming compliance with United States standards and regulations. Signing it is how the client and the appraiser accept the assignment on the same understanding.

What is an appraisal engagement letter?

It is the written agreement an appraiser sends before starting an appraisal assignment. The letter records what the appraiser has been asked to appraise, the intended use of the report, the fee, and the completion date. Once the client accepts and signs, both sides have a shared record of what will be prepared and delivered. You can build one from our engagement letter templates and adjust it to the assignment in front of you.

When do you need this document?

You need this letter whenever you engage an appraiser or valuation expert for a business matter. Common triggers include mergers and acquisitions, estate and gift tax planning, financial reporting, litigation support, buy-sell agreement events, divorce proceedings, and employee stock ownership plan (ESOP) transactions. It also applies to appraisals prepared for tax purposes, regulatory filings, or a fair value opinion on property, securities, or a whole business. Without a signed letter, both parties carry more risk and are more likely to disagree over scope, deliverables, and price.

What should an appraisal engagement letter include?

A complete letter usually covers the following:

• The appraisal assignment: a clear description of what is being appraised and the intended purpose and users of the report.
• The names and contact details of the client and the appraiser, their business address, and the effective date of the appraisal.
• Standards to be followed, typically USPAP for certified appraisers and AICPA SSVS for CPAs.
• The standard of value (fair market value, fair value, investment value) and the premise of value (going concern or liquidation).
• Any special assumptions or limiting conditions that shape the analysis.
• Deliverables, including the format of the appraisal report and its delivery date.
• The fee, payment terms, and what resources or records the client agrees to provide.
• The terms and conditions governing the services, including liability limitations, indemnification, confidentiality, and the appraiser's independence.

How is the letter structured?

Most appraisal engagement letters are organized into clear sections so each term is easy to locate. A typical structure opens with the parties, their contact and address details, and the effective date, then moves to a description of the appraisal services, the applicable standards, the fee, and the delivery timeline. A closing set of terms and conditions sets out confidentiality, data handling, and the firm's engagement policy, followed by the signature block. Keeping each section self-contained means the client can accept the terms without ambiguity over scope or responsibility.

Terms of service and rights reserved

The terms and conditions section is where the appraiser sets out the terms of service for the engagement. It typically states which rights the appraiser reserves, such as the right to decline the assignment if agreed records are not provided, the right to withdraw the report if it is used outside its intended purpose, and ownership of the working papers and analysis. If the firm shares interim findings online, through a secure portal, or over social media or other online channels, the letter should restrict how the report may be presented or republished so a draft figure is not presented out of context. Spelling out these reserved rights at the start keeps the final report under the appraiser's control.

Real estate appraisals and property interests

When the engagement covers real property, a real estate appraiser will typically be named and the letter should describe the property interest being appraised, such as fee simple or a leased fee interest. The effective date matters here because a property's worth changes over time, so record it clearly. Federal rules under FIRREA add specific requirements for real estate appraisals tied to federally related transactions, which the engagement letter should acknowledge alongside the applicable state licensing rules.

Who prepares and signs it?

The appraiser drafts and sends the letter; the client reviews and accepts it by signing. Both parties keep a copy. If the client requests extra work later, the appraiser issues an updated or supplemental letter rather than expanding the assignment informally. Keeping the scope in writing protects the fee and the report from scope creep and gives everyone a clear reference for what was agreed.

Legal requirements in the United States

Appraisers must follow the standards that match their credentials and the engagement type. USPAP compliance is mandatory for certified and licensed appraisers, covering ethics, competency, scope of work, and reporting. For tax-related appraisals, the Internal Revenue Code adds documentation requirements for gift and estate tax matters. If the engagement involves public companies or securities, SEC rules may apply, with additional disclosure and independence obligations. The letter must also satisfy state contract law, so the agreement is properly formed and enforceable, and it should reflect any state-specific licensing rules for valuation services.

Using the sample and editing it to your assignment

Start from the sample above, then design each section around the assignment in front of you. Change the standard of value, the deliverable format, and the delivery date so they match the engagement, and keep the terms and conditions aligned with how you actually work. The more you learn about the client's intended use of the report, the sharper the scope description becomes, and a tightly drafted letter is what keeps the experience smooth for both sides from the first email to the signed report.

Common questions

If you have questions about the standard of value, the property interest, or the fee before you engage, raise them and discuss the scope with the appraiser first, then confirm the outcome in the letter. Settling these points in writing at the start keeps the assignment and the final report aligned with what both sides expect.