Virginia Real Estate Appraisal Board Made History!
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On Tuesday February 23rd, The Virginia Real Estate Appraisal Board made history!
The legislative code of Virginia states Licensed Appraisal Management Companies must provide customary and reasonable compensation to fee appraisers. There are two presumptions of compliance. One based on objective third party information, including fee schedules, studies and surveys prepared by independent third parties, such as government agencies, academic institutions, and private research firms. The other presumption of compliance is based on recent rates paid to a representative sample of providers of appraisal services in the geographic market of the property being appraised or fee schedules of those providers. The legislative code is very clear that both presumptions must exclude compensation paid to fee appraisers ordered by AMCs at both the Federal and State Levels.
The Virginia Real Estate Appraisal Board adopted the VA appraisal fee schedule… The Board analyzed fee studies completed in other states and compared them to the Veterans Affairs’ Fee Schedule in those states. In all states analyzed, the results were similar and showed support for a minimum fee structure.
On Tuesday February 23, 2016 The Virginia Real Estate Appraisal Board adopted the United States Veterans Affairs’ Roanoke Regional Loan Center Appraisal and Inspection Fee Schedule as published and updated from time to time, as a government agency fee schedule which AMC’s may use as a presumption of compliance with the requirement to provide customary and reasonable compensation to Virginia fee appraisers.
Our Real Estate Appraiser Board in Virginia associates the fee to the scope of work for the assignment. What that means is the fee is based on the Veteran Affairs’ requirements for the scope of work. For example, on the URAR, the Veterans Affairs’ requires three comparable sales and the 1004MC. Any additional requirements by the AMC or lender, (cost approach, additional sales, active or pending listings, etc.) will result in a larger scope of work and the compensation to the appraiser will be higher. If the property being appraised is larger, rural or complex in any other way, the fee should be higher. The opposite also holds true where if the scope of work is less than the Veterans Affairs’ requirements, the compensation may also be lower.
The Virginia Real Estate Appraisal Board is expected to process complaints against Appraisal Management Companies for not paying customary and reasonable fees. The way VaCAP understands the process, an appraiser must accept the assignment for a fee below customary and reasonable, complete the assignment and then file a complaint. The VREAB will process and investigate the complaint. The responsibility of proving the fee was customary and reasonable is placed on AMC. The AMC must provide the documentation used to determine the fee was customary and reasonable. The VREAB then will decide if the fee is customary and reasonable based on all the investigative findings, utilizing the Veterans Affairs’ Fee Schedule as a base guideline.
Does the appraiser completing the assignment have to be the one filing the complaint? NO! Virginia Law requires the fee paid to the appraiser be disclosed within the report if an AMC is used by the lender. If an appraiser completes a review on an appraisal completed by another appraiser, the reviewing appraiser may file a complaint of non-customary and reasonable fee. If a homeowner hands an appraiser a report completed by another appraiser, they may file a non-customary and reasonable fee complaint. The VREAB will process complaints made anonymously as long enough information provided.
Should appraisers continue to accept fees below what is considered customary and reasonable? That is a business decision in which each appraiser must determine based on their expenses and profit desired. The only advice VaCAP can provide is know your cost of doing business, be competitive and work smart.
VaCAP thanks the Virginia Real Estate Board for their dedication and hard work in establishing the Guidance Document. You may find a copy on the Town Hall. Please read it, keep it and share it with appraisers, AMCs, and lenders.
Virginia Real Estate Appraiser Board Guidance Document Customary & Reasonable Compensation for Fee Appraisers