NC Appraisal Board on HVCC

[NC Appraising]

Here is the North Carolina Appraisal Boards response on the HVCC.

 

[Couch Potato]

Looks like they forgot BPOs are also legal for relocation appraisals.

A real estate broker may perform a comparative market analysis for compensation or other valuable consideration only for prospective or actual brokerage clients or for real property involved in an employee relocation program.

 

[David Beasley]

Actually, they cover the BPO vs appraisal thing in there as well. They say (in the linked PDF) that an "appraiser must" do an appraisal for lending purposes in NC. By lending purposes, one of course assumes they mean mortgage lending purposes. Relocation appraisals and mortgage lending appraisals are 2 different things. A mortgage appraisal's purpose is to determine an opinion of (market) value. A relo appraisal's purpose is to determine an opinion of anticipated sales price - and also, the subject of the typical relo appraisal is not being purchased with lender-loaned (or tax payer secured) money.

Look at NCGS 93E-1-4 and notice there are 2 distinct different definitions for "appraisal" (#1) and "comparative market analysis" (#7c). So long as that verbiage is in there, what they stated in their letter as linked in above is correct. They rightly do not consider relos as "appraisals" for making decisions on lending security/collateral.

 

[Couch Potato]

Actually, they cover the BPO vs appraisal thing in there as well. They say (in the linked PDF) that an "appraiser must" do an appraisal for lending purposes in NC. By lending purposes, one of course assumes they mean mortgage lending purposes. Relocation appraisals and mortgage lending appraisals are 2 different things. A mortgage appraisal's purpose is to determine an opinion of (market) value. A relo appraisal's purpose is to determine an opinion of anticipated sales price - and also, the subject of the typical relo appraisal is not being purchased with lender-loaned (or tax payer secured) money.

Look at NCGS 93E-1-4 and notice there are 2 distinct different definitions for "appraisal" (#1) and "comparative market analysis" (#7c). So long as that verbiage is in there, what they stated in their letter as linked in above is correct. They rightly do not consider relos as "appraisals" for making decisions on lending security/collateral.

Yeah, right. Those definitions are very different. A CMA is "the analysis of sales of similar recently sold properties in order to derive an indication of the probable sales price of a particular property" and it differs from an appraisal how? Read a definition of Market Value lately? The only defining characteristic of a CMA is the part of the definition that says, "by a licensed real estate broker."

“Appraisal” or “real estate appraisal” means an analysis, opinion, or conclusion as to the value of identified real estate or specified interests therein performed for compensation or other valuable consideration.

A CMA done for compensation is a type of appraisal which is why it is mentioned in the law governing appraisals. If it was not an appraisal, there would be no need mention it.

If it were merely about lending, real estate brokers could do appraisals (CMAs if you prefer) for other purposes like establishing the date of death value for an estate. They cannot do that service because they are not authorized to do appraisals for anyone other than potential clients and relocation companies.

 

[NC Old Guy]

But as we all know, there is a difference between the law and what is actually occuring. I've had calls asking us to do BPOs for lending purposes. Explain the law. Have been argued with by the caller that NC is not a state that prohibits such activity. I guess the next time I need to ask for their name and phone # and ask if a rep of the NC Appraisal Board or NC Real Estate Commission could give them a call. (Anybody think that a call from either group would help, or that they would even make such a call?) I doubt they'd make the call and I don't think it would help.

 

[Pamela Crowley (Florida)]

Licensed appraisers should be the ONLY ones that can be paid, money or any other consideration, for their opinion of value on real estate. That would take care of this whole mess.

 

[Couch Potato]

Pam, that was the intent of the NC law when it was originally written. Brokers were not intended to be allowed to be paid for their opinion of value, but they could use their opinion of value as part of an effort to sell a property.

It seems clear enough until you start considering how brokers view their job. If you ask a typical broker if their is a property in their service area they are not wanting to list, unquestionably the answer is no. Brokers are always actively trying to list properties for sale. Good brokers can honestly say everything they do is oriented toward getting that next listing. So maybe it could be restricted to having a listing agreement to get compensation? What about the buyer's broker who helps a buyer and does not list property? Valuing property is part of the brokerage business.

If the goal is to protect appraisers, then yes it is a good idea to prevent anyone else from providing an opinion of value. If the goal is to protect the public, then it is a bad idea to prevent anyone else from providing an opinion of value. In fact I would go so far as to say eliminating licensing of appraisers would be a better way to go. I think the public would be better served if appraisers were merely brokers with specialized training and experience. The level of training and experience ought to be required in every appraisal report. Licensing gives the idea that all appraisals are equal. Take it away and all appraisals would be judged on their own merit. The idea that appraisal is somehow a separate business rather than a specialized area of brokerage provides for the expansion of government power and extends the power of federal government in particular, but it does not provide the best protection of the public.

 

[NC Old Guy]

Couch Potato(e) ROFL

I totally agree. Welcome to pre-licensing, when clients had to be worried about an appraiser's ethics & experience because it came back to bite them, if they chose wrong. (Were there skippies among us then. Of course. Not as many as now. Did some clients deliberately choose them. Of course. Just like now. The difference--it came back to the client as it was their responsibility. No laying it off on the state by saying, "How were we to know? After all, they had a state license?" Now, a person with 1 day old license has the same qualifications so far as the client is concerned as 1 working in the industry 50 years.

 

[Pamela Crowley (Florida)]

Misunderstood?

I'm saying it should be illegal for anybody other than a licensed appraiser to be PAID for their opinion of value.

 

[Couch Potato]

Misunderstood?

I'm saying it should be illegal for anybody other than a licensed appraiser to be PAID for their opinion of value.

An opinion of value is never provided by itself. If someone is paid for work which contained an opinion of value as a component they would violate the law if it were written that way. (Hence the need for the exception for a broker doing a CMA.)