States Want Appraisers to Play Ball
“[The builder] filed a grievance against me… and threatened to file a grievance every time I or others appraised below purchase price.”
California and Nebraska couldn’t be more different, but both clearly want their states to be more like the fictional town of Lake Wobegon – a place where all the men are good-looking, all the children are above average and all properties appraise at or above their sale price.
Parts of California Assembly Bill 948, which was signed into law in September, read like something from the satirical news site The Onion. The statute requires the state’s appraiser enforcement bureau to assign a scarlet letter to complaints of “low” appraisals (fraudulently high appraisals aren’t given the special status). These “low appraisal” complaints are assured to be from sellers and brokers who’ve had their deals torpedoed by an appraisal that failed to support a sale price.
As for the state’s buyers? Well, for their troubles, they get an informational flyer and an appraiser with a newfound fear of the seller.
In Nebraska, that state’s Real Property Appraiser Board recently refused to automatically dismiss a complaint against an appraiser by a salesman working for one of the nation’s largest home builders. The aggrieved salesman accused the appraiser of colluding with unnamed co-conspirators to undervalue new homes the builder was selling. It also contains threats of future complaints if certain specific values aren’t met.
Said the accused appraiser: “[The builder] filed a grievance against me… and threatened to file a grievance every time I or others appraised below purchase price.” This appraiser may have also committed the sin of not having been hired by one of the builder’s affiliated lenders.
Back in California, the new statute, which bears the fingerprints of the state’s powerful Realtors lobby, coddles sellers for what appear to be practical reasons.
In the Golden State, sales commissions on both sides of the transaction are typically paid from the seller’s proceeds at closing; hence, both the buyer’s broker and the seller’s broker need the sale to close to get paid. They don’t want heretical value opinions blowing up their commissions, even if the buyer benefits as a result.
The new fraud-enabling statute clearly places a sword of Democles over appraisers’ heads. The only acceptable outcome, should the appraiser not wish to draw special attention from the state’s licensing bureau, is one in which all properties appraise at or above their contract price. “Low” property opinions have somehow become the bête noir of self-styled appraisal reformers, but appraisal fraud historically occurs with inflated “high” appraisals. The new law also fast-tracks real estate brokers to become licensed appraisers.
The California law also hides behind a specious social-justice argument. It names protected classes, but the umbrella of protected classes is so broad that it includes literally everyone in the state.
The seller must merely possess a gender (including, but not limited to, pregnancy, childbirth, breastfeeding, and related conditions, and gender identity and gender expression), sexual orientation, marital status, medical condition, military or veteran status, source of income, ancestry, disability (mental and physical, including, but not limited to, HIV/AIDS status, cancer diagnosis, and genetic characteristics), genetic information, age, race, color, religion (including religious dress, grooming practices, or both), national origin (including language use and possession of a driver’s license issued to persons unable to provide their presence in the United States is authorized under federal law).
Meanwhile, back in the Cornhusker State, the appraiser – he asked that his name be withheld – has had to hire an attorney and mount a legal defense against vague charges made by the home builder’s sales agent.
“The grievance raises no issue with the appraisal itself,” wrote the appraiser’s attorney, Richard P. Jeffries of the Omaha law firm of Cline Williams Wright Johnson & Oldfather, in a letter addressing the complaint.
“Ominously, the complainant explicitly reserves the right to lodge a future grievance against [my client] if he should ever submit an appraisal the complainant finds, without apparent regard to the facts, to be $5,000 to $10,000 ‘low.’ This should concern the Board.”
The human comedy never fails to disappoint.
By Jeremy Bagott, a licensed appraiser and former newspaperman, sends up a warning flare in his 2019 book “Dispatches from the Cosmic Cobra Breeding Farm.” He takes the reader deep inside a tiny Washington, D.C., foundation that has managed to have its copyrighted code of conduct enshrined in federal and state law. All 50 states, even the U.S. territories of Guam and the Northern Mariana Islands, now enforce it. The nonprofit, known as the Appraisal Foundation, has parlayed the arrangement into a lucrative publishing cartel. In his journey, the author uncovers a troubling trend deep in the plumbing of government.
The bullies with the loudest voices and the biggest bank account winning again. What a shock? God help our profession!
Kathy Morton Bunting Hoey reading these articles makes me wonder how I have survived for 30 years doing this Mort.
I know!!! Big AVM companies doing everything in their power to discredit us and chase away traditional appraisers. Scary time for us all Scott Taylor
Reading this article actually leaves more questions than answers.
If it’s goal is simply to make appraisers mad, it succeeds.
If it’s goal is to provide useful information, it falis.
This is a direct result of our peers not knowing how to do their job. We have responsibilities that are tossed to the side by way too many, leaving the rest of us vulnerable. It really has nothing to do with social justice, and everything to do with bad appraisers.
Considering we have amongst our ranks those who coach others to churn and burn 4 to 9 appraisals a day, I fully agree Joe.
I wish other appraisers would seek the truth and stop putting profits before principles.
Seek the truth.
It’s the only business that the consumer can’t pick who provides the service and the service provider is chastised for their “opinion” for being to high or to low…
I think it’s time for appraiser organizations across the lands to join together and to file a separate grievance against home builders, and selling agents alike for over pricing homes, taking advantage of the unsuspecting buyers who don’t know any better. And then another that binds all states from taking any discipline actions against an appraiser who over-values. Wait; there’s more! Yet another law should be written that states, if a borrower defaults the home builders and the selling agent has to pay the bank!!! YES, YES S & L all over again….
The cosmic cobra strikes again! Your logic is undeniable.