Have you heard horror stories about out-of-area appraisers driving 200 miles to appraise properties in places they know nothing about? There is a new bill (AB 1796) to pay attention to as it relates to real estate appraisals and this very issue. You can read this very short one-page bill HERE. In essence, AB 1796 looks to require the Director of the Office of Real Estate Appraisers (OREA) to adopt regulations for Appraisal Management Companies (AMCs).
I understand the reasons behind this bill, but the part of the bill that actually really concerns me is the following:
I understand the need to limit those pesky out-of-town appraisers who are “killing deals” because they are appraising in locations they know nothing about. I get that, but there are several good reasons why “regulation” language concerns me as it pertains to this point:
1) There are certain properties in my own county and city that I wouldn’t even think of appraising. Not all appraisers are qualified for all types of properties – even in the city they live in. I don’t know of an appraiser who would say it differently. So the issue is not about distance from the property per se, but does the appraiser have the experience to get the job done (or can he gain the experience)?
2) I’d hate to see the government impose some sort of a “two county” rule where AMCs could only send appraisers to properties within two counties or 50 miles of their location. Again, some appraisers have vast experience in multiple counties. This would probably hurt appraisers located in more rural areas too.
3) I’m not a big fan of the government imposing more rules and regulations on the appraisal industry. Appraisers are required already to be “geographically competent” by USPAP (our uniform standards) and if an appraiser is not, then the hammer needs to come down from the appropriate authorities already (OREA) instead of inventing new rules. This is a bit like parenthood. If you have rules in place, you need to enforce them. Don’t just go make new rules if you are not enforcing the old ones.
Isadore Hall of Compton, CA authored this bill.
Sacramento, CA 94249-0052
Phone: (916) 319-2052
I know I sound a bit ranty, but trust me, I’m concerned – not hostile. How this bill is ultimately handled can have big implications for the real estate industry. I am optimistic that OREA will not make some hard and fast “2 county” rule as I mentioned above, but my internal sensors are dinging and I’m aware of the importance for our legislators to understand how the appraisal industry works as it pertains to appraising in multiple counties.
I’d like to hear what you think. What is the solution to the problem? What implications do you see for the appraisal or real estate industry if this was handled poorly? Feel free to comment below.