The appraisal process is a large and complex industry, differing from state to state based on the guidelines and regulations specific to each locality. Trimavin is based in California for example so it’s important for our clients to understand the regulatory environment through which our company works out of.
For trainees who are just starting out on their journey toward becoming appraisers, the National Uniform Appraiser License examination or its equivalent is no longer required to get a license according to the California Code of Regulations Section 3568, effective October 1, 2016. At the same time however, the Appraisal Qualifications Board (AQB) has increased requirements or licensed trainees and supervisors, who must now take a four-hour course on the responsibilities and requirements of each role. Supervisors must also be licensed with the Bureau of Real Estate Appraisers, be in good standing and not be subject to disciplinary action for a minimum of three years before becoming an eligible supervising appraiser.
For those who are already in the appraising field, they should be aware that most home buyers in the state have what’s known as an appraisal contingency, which allows the buyer to back out of a transaction if the appraisal value turns out to be lower than the sales price. This puts pressure on the appraiser to value a home which approximates the selling price if it isn’t higher. Fortunately, it doesn’t have to come to this, as the sales price can also be reduced to have it match with the value the appraiser determines for the property. The home buyer can also put more money down to cover the difference between the selling price and the home appraisal value.
There are laws on the books in California that appraisers have to work with which are distinct from those of other states. For example, after Former Governor Jerry Brown signed SB70 on September 29, 2018, appraisers are now allowed to name other intended users than just the client in restricted appraisal reports. The law is effective as of January 1st of this year and in order to produce a restricted appraisal report with multiple intended users, the appraiser must obtain consent from the client and the appraisal cannot be for a mortgage lending transaction engaged by a federally regulated bank, the purchase or refinance of a residence of one to four units or a broker investment transaction, where users may not be well versed enough to understand the information contained within a restricted appraisal report. Appraisers with the types of assignments where clients are informed enough to understand a restricted appraisal report but don’t need all of the information and analysis required for an appraisal report are most likely to benefit; these assignments include engaging with tax appeals and financial reporting.
According to the Appraisal Institute, SB70 can help appraisers meet client needs and compete with unlicensed service providers not subject to the same limitations as licensed appraisers. It could also encourage more real estate valuation professionals to become state certified as the scope of services will not be arbitrarily restricted by pre-existing regulations. However, the legislation does have a sunset provision that takes place on January 1st, 2020, unless the state legislature votes to extend it before then. California’s appraisal environment is unique from the other forty-nine states for both trainees and experienced professionals working in the field. These are just a few examples to keep in mind when choosing to work as an appraiser in the region.