The Appraisal Institute reported April 17 that 37 bills affecting the valuation profession are pending in 23 states. According to the Appraisal Institute, the proposed legislation includes:

Arizona SB 1197 which makes various changes to the state’s appraiser licensing law and appraisal management company oversight and registration law.

California SB 70 which allows a state-licensed or state-certified appraiser to deviate from the Uniform Standards of Professional Appraisal Practice in certain circumstances.

Connecticut SB 780 which allows real estate brokers and salespersons to estimate for a fee or other valuable consideration a probable property sale price or lease price.

Florida SB 716/HB 927 which makes changes to the state’s AMC law and would allow appraisers to perform evaluations in compliance with the Interagency Appraisal and Evaluation Guidelines and allow the Florida Real Estate Appraiser Board to consider the adoption of standards of valuation practice other than USPAP for use in non-federally related transactions.

Hawaii HB 50/SB 390 which enacts a comprehensive AMC oversight and registration law.

Illinois HB 722 which prohibits AMCs from passing along to appraisers any costs, fees or other expenses.

Illinois HB 723 which requires the fee paid to an appraiser be shown separately from the fee paid to an AMC in any residential real estate closing document that lists real estate appraisal fees.

Indiana SB 76 which requires AMCs to compensate appraisers within 30 days of their submitting an appraisal to an AMC.

Kansas SB 2414 which allows appraisers to utilize the Appraisal Institute’s Standards of Valuation Practice and Valuers’ Code of Professional Ethics when performing an appraisal for any purpose other than a real estate-related financial transaction, and would allow appraisers to perform evaluations.

Kentucky HB 443 which reorganizes the state’s appraiser licensing and certification agency.

Massachusetts SB 104 which enacts mandatory appraiser licensing.

Minnesota HF 593/SF 366 which clarifies that allegations that do not result in disciplinary action against an appraiser are not made public, and that a background check is only required for an initial appraiser application. It also provides for the sequestering of information related to disciplinary actions more than five years old and imposes a six-year statute of limitation on civil actions against real estate appraisers.

North Carolina HB 431/SB 576 which clarifies that state-licensed and state-certified appraisers may perform evaluations.

Nebraska LB 17 updates the state’s AMC law to bring it into compliance with federal minimum requirements and the state’s supervisor and trainee requirements so they’re consistent with the Appraiser Qualifications Board.

New Hampshire SB 53 updates the state’s existing AMC law to bring it into compliance with federal minimum requirements.

New Jersey AB 1973 enacts a comprehensive AMC oversight and registration program.

Oklahoma SB 533/HB 1505 requires appraisers to include an invoice in the appraisal report.

Oregon HB 2189 establishes an appraiser-specific statute of limitations.

Pennsylvania HB 863 establishes the parameters around which a real estate broker or salesperson may perform a broker price opinion or comparative market analysis.

Rhode Island SB 543/HB 5620 establishes a comprehensive AMC oversight and registration program in accordance with federal minimum requirements.

South Carolina S279 enacts a comprehensive AMC oversight and registration program in compliance with federal requirements.

Tennessee SB 279/HB 376 enacts a statute of limitations applicable to civil claims against real estate appraisers.

Texas SB 1516/HB 3261 makes various changes to the state’s existing AMC oversight and registration law.

Vermont HB 506 repeals both the requirement for criminal background checks for appraisers and the state’s existing AMC oversight and registration program, vesting that authority instead to the Vermont Real Estate Appraiser Board.

 

The PA State House is considering a bill that would amend the state’s Real Estate Licensing Law. According the Bill’s sponsor, HB863 would define “a Broker Price Opinion (BPO) as ‘an estimate prepared by a broker, associate broker or salesperson that details the probable selling price of a particular parcel of real property and provides a varying level of detail about the property’s condition, market, and neighborhood, and information on comparable sales, but does not include an automated valuation model’ and provides standards.” The Bill is currently in the Professional Licensure Committee.

 

A Texas appellate court recently affirmed the dismissal of the city of Austin’s lawsuit claiming commercial and vacant property are being undervalued during property tax appraisals.  Austin sued the Travis Central Appraisal District after an appraisal review board in Travis County denied the city’s formal challenge to what it said was the systematic undervaluation of two classes of vacant and commercial properties. The city alleged the state’s property tax appraisal system is unconstitutional and creates two different standards of assessment, resulting in arbitrary and unequal taxation.

In Austin v. Travis Central Appraisal District et al., case number 03-16-00038-CV, the Third Court of Appeals said, though the city does have statutory standing to challenge the level of appraisals of any category of property in the district, Austin had effectively foregone the administrative determination of its challenge, depriving the district court of jurisdiction. The court said the city could bring its concerns over tax policy to the attention of the Legislature, but that Austin “has no standing to pursue such a debate in this court.”  “The city’s constitutional challenge is a transparent attempt by a taxing unit to debate an issue of tax policy that is within the prerogative of the Legislature, rather than the judiciary,” the court said.

Austin filed the suit in August 2015, two months after the appraisal review board’s ruling, also naming as defendants several individual property owners it claimed held undervalued properties. It argued commercial and vacant properties weren’t being appraised at market value because property owners aren’t required to disclose real estate sales data, which the city said created an imbalance in information available for different properties.

The Subcommittee on Housing and Insurance will hold a hearing entitled “Modernizing Appraisals: A Regulatory Review and the Future of the Industry” at 10:00 a.m. on Wednesday, November 16, 2016. This hearing will examine the appraisal industry since the creation of the Appraisal Subcommittee in 1989, review the Dodd-Frank Act’s impact on appraisers, consumers and stakeholders, and explore the future of appraisals, including alternative home valuation methods.

The link to view the hearing ishttp://financialservices.house.gov/

This will be a one-panel hearing with the following witnesses:

  • Mr. James R. Park, Executive Director, Appraisal Subcommittee
  • Mr. David S. Bunton, President, The Appraisal Foundation
  • Ms. Joan N. Trice, Chief Executive Officer and Founder, Clearbox
  • Mr. Bill Garber, Director of Government and External Relations, Appraisal Institute
  • Mr. Ed Brady, Chairman of the Board, National Association of Home Builders
  • Ms. Jennifer S. Wagner, Managing Attorney, Mountain State Justice, Inc.

A Pennsylvania state appellate court recently held that a taxing authority could not present an appraisal prepared by a non-testifying expert for the taxpayer. In Millcreek County School District v. Erie County Board of Assessment Appeals v. Wegmans Food Markets Inc., 39 C.D. 2015, the Court of Common Pleas of Erie County allowed the Millcreek Township School District to present certified appraiser Barry Polayes’ appraisal submitted by the taxpayer during a 1998 valuation.  The Commonwealth Court of Pennsylvania reversed the decision.  It ruled that Polayes was not an agent of the taxpayer and his earlier opinions should not have been used against the taxpayer in court.  They held that the appraiser was not a representative of the taxpayer and, therefore, the appraisal violated the hearsay rule.

The Appraisal Institute has reported that it will lobby Congress for the modernization of the appraisal regulatory process. The issues the Appraisal Institute want to see addressed include the relationship of Federal and state regulations, the ability of appraisers to work in multiple states, more flexibility in the appraisal process and better processes for sharing information.

The Appraisal Institute has been advocating the use of alternatives to the Uniform Standards of Professional Appraisal Practice (“USPAP”). USPAP is provided by the Appraisal Foundation and is described as “the generally accepted standards for professional appraisal practice in North America. USPAP contains standards for all types of appraisal services.” The Institute’s Florida government relations leaders and staff met with the Florida Real Estate Appraisal Board in October and December to discuss the possibility of the FREAB allowing state-licensed and state-certified appraisers to utilize standards of valuation practice other than the Uniform Standards of Professional Appraisal Practice when performing non-mortgage lending, non-federally related appraisal assignments. A similar meeting was held with the Montana Board of Real Estate Appraisers on Dec. 9.

According to the Institute, a rulemaking proceeding will commence in Florida in early 2016, and all stakeholders will have input into the development of rules allowing for the use of alternate valuation standards. In Montana, the next steps have not yet been finalized.

The impact “green” aspects of a property has on its value continues to be a subject of study and debate. The Appraisal Institute recently reported that a study by a member specializing in the valuation of green homes found that homes with host-owned solar photovoltaic energy systems are sold at a premium compared to homes without PV systems.

Sandra K. Adomatis, SRA, of Punta Gorda, Florida, served as the lead author of the study, which engaged a team of seven appraisers, with the support of the U.S. Dept. of energy, across six states to determine the value added to homes with host-owned PV systems. The study – “Appraising Into The Sun: Six-State Solar Home Paired-Sales Analysis” – compared comparable sales of 43 homes in six states: California, Florida, Maryland, North Carolina, Oregon and Pennsylvania.  The study can be found at: https://emp.lbl.gov/sites/all/files/lbnl-1002778.pdf

There has been an ongoing feud between perhaps the 2 most important appraisal organizations – the Appraisal Institute and the Appraisal Foundation.  The Institute has been publicly critical of the Foundation and resigned from the Foundation about 5 years ago.  Now, the Foundation has responded very forcefully.

In an open letter to valuation professionals, the Foundation stated that “[r]ecent communications by the Appraisal Institute (the Institute) are calculated attempts to fracture the whole.  This month marks the fifth anniversary of the Appraisal Institute’s decision to resign from The Appraisal Foundation, rather than face a suspension for violating the Foundation’s Code of Conduct for Sponsoring Organizations.  Instead of coming together with their peers, working collaboratively, and respecting the opinions of others to further a common purpose, leaders of the Appraisal Institute aim to splinter the profession.  This divide and conquer approach is short-sighted, damages the profession, and must stop.”

The Foundation then told its side of the story regarding efforts “to repair the relationship and solidify what has been collaboratively built over the last 28 years.”  This included what it described as “Offering Olive Branches” including “three face-to-face meetings between the leadership of the Appraisal Institute and The Appraisal Foundation, none of which were initiated by the Institute.”  The Foundation also accused the Institute of creating “a false narrative” and was critical of the Institute’s new “Standards of Valuation Practice.”

In conclusion the Foundation stated, “[t]he rift between The Appraisal Foundation, the Congressionally-authorized source of valuation standards and qualifications, and the Appraisal Institute, one of the nation’s largest appraiser trade associations, is a detriment to the profession and needs to be resolved.”  Regardless of fault, that last statement is undeniably true and this “rift” needs to be resolved.

 

 

The Appraisal Institute Board of Directors at its July 30-31 meeting in Dallas adopted the proposed Valuers Code of Professional Ethics as a model code and approved making the VCPE available for use by non-AI professionals as a companion document to the Appraisal Institute Standards of Valuation Practice. The Institute describes the VCPE as containing “high quality, straightforward, principles-based and strict canons and rules of ethical conduct that valuers can follow when national or international ethical codes do not apply or are not required.”  AI explained, “To develop the proposed VCPE, the Professional Standards and Guidance Committee (PSGC) started with the Appraisal Institute Code of Professional Ethics (CPE), removed obligations and terminology unique to Appraisal Institute professionals (e.g., cooperating with an Appraisal Institute peer review committee) and adjusted remaining language to ensure universality.”