April 25, 2013

The Appraisal Qualifications Board of the Appraisal Foundation will hold a meeting in Charlotte, NC on May 3, 2013 from 9:00AM to 12:00PM. This is a unique opportunity for NC appraisers to attend a Foundation meeting held in our area.

The agenda includes:

• Exposure Draft of a Proposed Interpretation and Revision to the Real Property Appraiser Qualification Criteria
• Implementation of Adopted Revisions to the 2015 Real Property Appraiser Qualification Criteria
• National Uniform Licensing and Certification Examination Update
• Course Approval Program Activity
• Undergraduate / Graduate Degree in Real Estate Review Program

The location of the meeting is the Charlotte Marriott City Center located at 100 W. Trade Street Charlotte, NC 29202. If you would like to attend the meeting, The Foundation requests that you register online at http://www.appraisalfoundation.org/ and click the Events/Meeting Registration button.

On Tuesday March 19, the NC Appraisal Board suspended one appraiser and revoked another in separate hearings.   This post contains some general information gained from attending these hearings as an observer.   While the Chairman announced the Board’s decisions after the close of each hearing, the reporting of particular details on the cases should be reserved until the Board has issued the formal “Findings of Fact and Conclusions of Law” for each case.   Also, each appraiser has a statuary right to appeal the Board’s decision.

FIRST CASE

The appraiser received a 2-year suspension of their certification and is required to take the 15-hour National USPAP course and pass the examination.  Also, there are some restrictions on the appraiser’s ability to have trainees in the future.  Some of the hearing topics included:

• Signing a truthful certification.
• Sending a trainee to inspect the subject property alone and then the supervisor certifying in the report that the supervisor inspected the subject property when the supervisor is alleged to have not inspected the subject property.
• Following a client’s assignment condition of not allowing trainees to work on the assignment.
• Comparing the version of the report that the supervisor sent to the Board in response to the complaint with the version that the Board obtained from the lender.
• Completely describing and analyzing the characteristics of the subject property.
• Maintaining an accurate appraisal log.
• A trainee attempting to upgrade to certified residential when the supervisor is under investigation.

This case included testimony from two Board staff members, the trainee who did the inspection, and a notarized affidavit from the homeowner that provided details on who conducted the inspection.

SECOND CASE

The appraiser’s certification was revoked. Some of the hearing topics included:

• Communications with the client.
• Communications with the Appraisal Board.
• Laws and rules related to the investigation process and the need to respond to the Board, including the application of NCGS §93E-1-12 and 21 NCAC 57C.0100.
• Accepting and retaining appraisal fees without delivering the appraisal report to the client.
• License renewal and late renewal.
• Appropriately wrapping up appraisal practice when leaving the profession.
• Intended Use.
• Contents of the engagement letter.

This case included testimony from one Board staff member and a notarized affidavit from the appraiser’s client.

An unfortunate observation is that the topics included these hearings were very basic appraisal-related concepts involving non-complex appraisal issues that require only an introductory understanding of the URAR, USPAP, and the Appraisal Board Laws and Rules.  This is knowledge that some might consider fundamental to operating as an appraiser.

As an appraiser, please insure that you have a solid foundation of professional knowledge on which to build your practice and consider taking quality appraisal qualifying and continuing education that contains accurate and timely appraisal topics in an educational setting where you get your money’s worth.

As an appraisal educator and school owner, I urge you to please consider the following classes that provide solid information on some of the topics addressed at these hearings:

• Limiting Liability: Appraisal Case Law Update
• Appraisal Board Rules and Laws
• The URAR Revealed
• Square Footage and Other Essential Topics
• Developing, Using, and Defending Adjustments
• And more

Today, language was added to Senate Bill 521 (“S521”) that would change North Carolina’s position on when and by whom a Broker Price Opinion (“BPO”) a Comparative Market Analysis (“CMA”) may be performed.  Sponsored by Sen. Daniel Clodfelter of Charlotte, the bill was originally drafted to repeal the Rule in Dumpor’s Case.  The BPO/CMA language was added to an existing bill in a procedural move that will allow the language to be considered in this year’s “short session.”

The House Judiciary Subcommittee A took up S521 again today and considered whether to allow a proposed committee substitute (“PCS”) that included language that liberalizes the purposes for which a real estate broker may perform a BPO or CMA.   The Subcommittee, Chaired by Rep. John M. Blust, first considered this issue last Wednesday.  After comments from appraisers and real estate brokers, the Chair displaced the matter until this week to allow interested parties to work on the bill and address a number of questions and issues.

The Subcommittee heard from Rep. William Brawley, who explained the content and meaning of the PCS.  The Chair also recognized interested parties to speak.  One appraiser spoke in opposition of the PCS and described how this PCS would “blur the lines” between objective appraisal practice and brokerage activities.  One appraisal group, that strongly and articulately opposed the PCS last week, voiced its continued concerns with the bill, but added that the group would not oppose the PCS if certain language were added via an amendment.  Rep. Ric Killian offered an amendment that provided that “no appraiser shall be disciplined for completing an appraisal that includes a reduced scope of work or reporting level as long as it is appropriate for the intended use and is performed in accordance with the Uniform Standards of Professional Appraisal Practice.”  The amendment also changed the proposed effective date from July 1, 2012 to October 1, 2012.

The Committee approved the PCS with the Killian amendment after some discussion from Rep. Deborah K. Ross on why the bill was moving so fast and with some thought to waiting to the January 2013 session to have it run as a standalone bill rather than being tacked on to a current bill that may not be considered or evaluated by another House or Senate committee.

The bill currently proposes many changes to the North Carolina Real Estate Commission’s statute and the North Carolina Appraisal Board’s statute.  Some of these proposals would:

• Define “broker price opinion” and “comparative market analysis” as “an estimate prepared by a licensed real estate broker that details the probable selling price or leasing price of a particular parcel of property of or interest in property and provides a varying level of detail about the property’s condition, market and neighborhood and information on comparable properties, but does not include an automated valuation model.”
• Clarify that the new language will not apply to any BPO or CMA performed by a broker licensee for no fee or consideration.
• Expand the purposes for which a broker may perform a BPO or CMA to include for an existing or potential seller, buyer, lessor, or lessee of a parcel of or interest in real property, for a third party making decisions or performing due diligence related to certain activates, and for an existing or potential lienholder for any purpose other than mortgage loan origination.
• Establish required content for all BPOs or CMAs that would include, but not be limited to, 11 requirements listed in the bill.
• Give the North Carolina Real Estate Commission the power to promulgate rules not inconsistent with the proposed provisions
• Restrict brokers from performing BPOs and CMAs when an appraisal is required by federal and state law.
• Prohibit a BPO or CMA from including the reporting of a predetermined result.

The next step is for the S521 to be considered on the House floor.  If approved, it will be sent to the Senate for concurrence.  If passed by the House and Senate and then ratified by the Governor, the bill would become law October 1, 2012.  Both the House and Senate calendars may be found here.  The bill is expected to go to the House floor tomorrow.

The contents of this blog may only be republished with the  permission of the author. To request permission, please contact Mel Black by email or by phone at 800-268-6180 or 919-865-2577.

by Alyssa Marcus

One of the responsibilities of the Appraisal Practices Board (APB) is to identify issues where appraisers and appraisal users need some extra guidance. In March, the APB released a Valuation Advisory on adjusting comparable sales for seller concessions.

The purpose of the document is to provide guidance on generally accepted methods and techniques of seller concession. The document defines sales concessions and financing concessions, talks about verifying concessions, explains when an appraiser adjusts for concessions and more. A list of suggested further reading is listed at the end of the 17-page document.

You can download the document at the Appraisal Foundation’s website here.

At today’s meeting, the NC Appraisal Board voted unanimously to deny a request for a declaratory ruling that would impact how Broker Price Opinions (BPOs) could be performed in North Carolina.  Click here for details on a recent action against a real estate broker  who performed unlawful BPOs taken by the Real Estate Commission.

The Real Estate Valuation Advocacy Association (REVAA) reached back through the cobwebs of administrative law and dusted off a rarely used rule (21 NCAC 57C.0401) to make a request that is even more rarely approved.  In my nearly 20 years of experience with the Board, dating back to when it was part of the Real Estate Commission while I was employed there, there may have been a successful request for a declaratory ruling, but I can’t remember it.

REVAA, a trade organization comprised of companies that produce and deliver BPOs, CMAs, AVMs, and other innovative approaches to valuation, asked the Appraisal Board to clarify the Board’s statute to allow a real estate broker employed by a lender to perform “discretionary BPO/CMA” when it is ordered for “discretionary business reasons” and federal regulations do not require an appraisal.  In its nine-page filing, REVAA addressed a number of areas, including the application and interpretation of the North Carolina Statutes, details of REVAA’s legal argument, and sample language for the Board’s use.

From the discussion at the Board meeting, it seemed to me that the vote to deny the request may have been based largely on procedural matters. Notably, the Board’s rule on declaratory rulings provides that the Board shall not issue a declaratory ruling when the subject is materially related to a matter under investigation by the Board.  It was announced today that the Board has a matter under investigation that relates to a real estate broker who is alleged to have performed an improper BPO.

It’s interesting to me that REVAA would ask the Appraisal Board to broaden the plain meaning of the statute when any effort to do so would be more appropriately addressed in the North Carolina General Assembly.

A Raleigh, NC real estate broker accused of performing unlawful broker price opinions (BPOs) recently agreed to a revocation of their broker license via a formal Consent Order accepted by the North Carolina Real Estate Commission.  In addition, the broker’s Broker-in-Charge agreed to a suspension with certain conditions.

The Commission has made its position on BPOs patently clear, publishing articles in the Real Estate Bulletin in May 2009 (see page 7) and in March 2011 (see page 4) and including the subject in this year’s Update Course which is required of all brokers..

Here are some of the issues related to the case as obtained from the Commission staff:

• A real estate broker filed the complaint with the Commission after this broker performed an unlawful BPO for a lender on a property involved in a short sale.  Allegedly, the lender had evaluated an offer on the property and was moving toward closing when the lender engaged this broker for an unlawful BPO to confirm the value of the property.
• As a result of the complaint, the Commission began an investigation that showed that the broker had performed over 400 BPOs but had received zero listings from the client.
• The BPOs were produced on a form that had many characteristics of a typical Sales Comparison grid used by appraisers.

It should also be noted that the Commission has published that a BPO is an opinion of value of real property and consequently an appraisal under the law, unless it meets a narrow exemption.  NCGS § 93E-1-12 (a) provides that the Appraisal Board may take disciplinary action against any person who performs appraisals without an appropriate registration, license, or certificate or against any person who has acted or held himself or herself out as a registered trainee or a licensed or certified real estate appraiser when not so registered, licensed, or certified.  NCGS § 93E-1-13 provides that any person who willfully violates G.S. 93E-1-12(a) “shall be guilty of a Class 1 misdemeanor.”  I have no information on whether this sanction will be pursued.

This case may send shock waves through the real estate brokerage and financial communities. We’ll see what shakes loose.

For a detailed treatment of the law related to Broker Price Opinions in North Carolina see our October 11, 2010 post.
 
 
 
 
 
The contents of this blog may only be republished with the permission of the author. To request permission, please contact Mel Black by email or by phone at 800-268-6180.

Today I spoke at the 2nd Annual Energy Efficiency Summit in Raleigh, presented by The North Carolina Energy Efficiency Alliance. I was part of a panel that included an energy rater, a lender, and a real estate broker.  The audience consisted of builders, energy raters, lenders, brokers, policy makers, academia, government representatives, and yes, one other appraiser.

 
Many folks are pushing to have the consumer understand energy efficiency better in the hopes of being able to “drive” the further acceptance of energy efficiency in the market place.  Appraisers, however, need to remember that our job is to stay independent, impartial, and objective and to be ready to analyze the market’s reaction, if any, to energy efficient characteristics.  We sit back, watch the market, gather data, analyze data, and give our opinion on how the market will view a particular set of circumstances.  It is not our job to “drive” anything.  Our job is to develop and report credible assignment results.

Some of the topics raised at the summit include:

Changes in NC building codes and builders building to new standards

Loan programs for energy efficient properties

Adding more data in MLS to describe property features in more detail

Real estate brokers assisting appraisers by providing accurate and complete data

Consumer response to energy savings and if it is changing

HERS ratings and when will we all know our property’s rating

The relationship of “cost,” “price,” and “value”

Contribution of property characteristics to value

Substitution and the typical buyer

The Sales Comparison Approach relies on past data to form a current opinion

 Are we on the verge of social change?   Will buyers begin to ask sellers for past utility bills, HERS ratings, energy efficiency certifications, walk scores, and other energy related characteristics of the house?  Will these matters impact value?  Time will tell.

 
What is certain is that appraisers must keep abreast of social changes to determine if they have an impact on appraisal theory and practice and we must also be ready to revise current appraisal methods and techniques and devise new methods and techniques to meet new circumstances.  The competent, professional appraiser will also continuously improve skills so as to remain proficient in their profession.

BrightPath Education is pleased to be chosen for a joint venture with Appalachian State University and the North Carolina Energy Efficiency Alliance to offer a series of classes across the state to help appraisers increase competency level in appraising energy efficient subjects.
 
 
 
 
 

The contents of this blog may only be republished with the permission of the author. To request permission, please contact Mel Black by email or by phone at 800-268-6180.

Yesterday, the North Carolina Appraisal Board (“Board”) took action to suspend AppraiserLoft’s registration as an appraisal management company (“AMC”) in North Carolina.

AppraiserLoft, a San Diego-based AMC, is the first AMC to have a registration suspended in North Carolina using the Board’s new power to summarily suspend an AMC’s registration under NCGS § 93E-2-8(b). Under the law, AppraiserLoft has the right to make a written request for a hearing before the Board.

After much speculation, AppraiserLoft closed October 10, 2011 and has left appraisers stuck with unpaid appraisal fees to the tune of approximately $3 million.

If you believe AppraiserLoft owes you fees and you would like to evaluate the situation to look into possible options for collection, you may want to seek legal assistance from an attorney.

Currently there are 136 Appraisal Mortgage Companies registered in North Carolina. Most of the 18 AMC complaints received by the Board in 2011 have involved issues related to the payment of appraisal fees. There are currently 8 matters pending with the Board.
 
 
 
 
 

The contents of this blog may only be republished with the permission of the author. To request permission, please contact Mel Black by email or by phone at 800-268-6180.

Today there was a meeting of the Joint Legislative Study Commission on the Modernization of North Carolina Banking Laws.  This Commission was formed by Senate Bill 555 back in June of this year and its purpose is to determine whether and to what extent the North Carolina Banking Laws need to be updated.

Rep. Harold Brubaker and Sen. Harry Brown co-chair the Commission.  Rep. Brubaker presided today and the Commission received remarks from Commissioner of Banks Joe Smith and reviewed a presentation on the proposed draft changes of Articles 1 to 10 of the banking laws.

Chairman Brubaker set a detailed agenda for the Commission to review each of the 10 Articles during monthly meetings through spring 2012.  The Commission is expected to make a report to the 2012 Regular Session of the 2011 General Assembly prior to May 1, 2012.

There was a similarly-titled Commission appointed in 2009 that made findings and recommendations in the spring of 2010.

The next meeting of the current Commission is December 19, 2010 at 10:00am in room LOB 544.
 
 
 
 
The contents of this blog may only be republished with the permission of the author. To request permission, please contact Mel Black by email or by phone at 800-268-6180.