Why is Kate prohibited from referring an appraisal company to Art?

When an individual is involved in real estate transactions, they must adhere to various regulations designed to prevent conflicts of interest and ensure transparency. In this scenario, Kate is prohibited from referring an appraisal company to Art because her brother owns that company. This relationship creates a potential conflict of interest since Kate could benefit financially or otherwise from the business provided to the company due to their familial connection.

The prohibition exists to maintain the integrity of the appraisal process, which needs to be independent and impartial. If appraisers have a personal connection to the parties involved, it could compromise their objectivity and lead to biased appraisals. Therefore, even if Kate believes her brother’s company would provide a fair appraisal, the appearance of impropriety and the potential for bias are reasons why that referral is prohibited.