Federal Oversight of Real Estate Appraisals. In 1989, Congress enacted the Financial Institutions Reform, Recovery, and Enforcement Act, which set a dollar threshold value to require an appraisal and create the Appraisal Subcommittee to coordinate appraisal regulation. This legislation also mandated that property appraisers meet qualifications established by the Appraisal Foundation's Appraisal Qualification Board. The Appraisal Foundation maintains the Uniform Standards of Professional Appraisal Practice (USPAP). USPAP is the generally recognized ethical and performance standard for the appraisal profession in the United States.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 established the Consumer Financial Protection Bureau (CFPB) and provided this new entity with rulemaking authority for residential mortgage appraisals by removing residential mortgage appraisals from the Appraisal Subcommittee. The Appraisal Subcommittee continues to have the authority to coordinate the regulation of commercial real estate appraisals.
Both the Appraisal Subcommittee and the CFPB rely on states to monitor and enforce compliance with federal standards.
State Oversight of Real Estate Appraisals. The Certified Real Estate Appraiser Act provides a regulatory framework to certify and license real estate appraisers in the state of Washington. A state-certified general real estate appraiser is certified to develop and communicate real estate appraisals of all types of property. A state certified residential real estate appraiser is certified to develop and communicate real estate appraisals of all types of residential property of one to four units. A state-licensed real estate appraiser is licensed to develop and communicate real estate appraisals of noncomplex one to four residential units, and complex one to four residential units and non residential property having transaction values specified in rules by the director.
The director of the Department of Licensing (DOL) has the authority to adopt rules, approve or deny application for certification or licensure. The Real Estate Appraiser Commission serves as a liaison between appraisal practitioners, the public, and DOL.
Prerequisite and Continuing Education Requirements for Licensure and Certification of Appraisers. As a prerequisite for licensure, an applicant is required to provide evidence to DOL they have completed the education requirements adopted by DOL by rule. Under existing rules, courses for pre-examination must be a minimum of 15 hours in length, directly related to real estate appraising, and include a proctored examination. Continuing education requirements for appraisers under existing DOL rules require 28 hours of instruction in courses or seminars. These courses must be completed within the term of certification, licensure, or registration. Courses or seminars that active or inactive appraisers can take include, but are not limited to:
Fair Housing Continuing Education Requirements for Real Estate Brokers. In 2021, the Legislature directed real estate brokers to take specific course instruction on fair housing and consumer protection issues within existing continuing education requirements related to obtaining and maintaining real estate brokers licenses. DOL was directed to provide more specific training concepts after receiving input from select stakeholder groups.
Disclaimer for Real Property Evaluations. An appraiser performing evaluations is not engaged in real estate appraisal activity when the appraiser includes a disclaimer and is therefore not subject to the jurisdiction of DOL or the Real Estate Appraiser Commission. The disclaimer must be located immediately above the appraiser's signature and include the following in at least 10-point boldface type: "I am a state-licensed appraiser or a state-certified appraiser. This evaluation was not prepared in my capacity as a real estate appraiser and might not comply with the Uniform Standards of Professional Appraisal Practice."
Education Requirements for Licensure or Certification. DOL is directed to adopt rules as of specific dates which require:
Evaluation is defined as an opinion of the market value of real property or real estate provided to a financial institution in conformance with the interagency appraisal and evaluation guidelines adopted jointly by the federal financial institution's regulatory agencies for use in real estate-related financial transactions that do not require an appraisal.
PRO: This bill clarifies that appraisers are allowed to do evaluations. They are already qualified to do this work. This just makes sure that they can do this work. We need people with the qualifications of an appraiser to do these evaluations. There is a late amendment coming and we are supportive of that amendment. Evaluations are used for low risk real estate transactions and do not require a full blown appraisal. Appraisers are the most qualified to do evaluations, but current law does not allow appraisers to conduct evaluations. An evaluation is an estimate, not an opinion. Valuation bias and fair housing education needs to conform with federal standards, and the amendment would allow for that.
OTHER: We had some concerns on the original bill. We have an agreed upon amendment that allows the Department of Licensing to have oversight over these evaluations. The valuation bias and fair housing education requirements need to comply with federal standards, and the amendment allows for this.