Certification Standards for Appraisers Proposed

Article excerpt

Ensuring ethical and competent real estate appraisals is vital for the health of the real estate industry, said the American Institute of Real Estate Appraisers.

Many real estate professionals, government officials, lending institutions and mortgage insurers hope a regulatory system will be instigated soon, said the institute.

Robert E. Gray, Tulsa, president of the Oklahoma Chapter 25 American Institute of Real Estate Appraisers, said the best way to regulate real estate appraisers would be with an "industry-based system of state certification. It benefits everyone involved by assuring a quality appraisal product and establishing an appropriate level of appraiser training and education."

The Institute's plan for promotion of a "state-administered, self-regulatory program" is modeled after the certified public accountant system which governs the accounting profession. It includes legislation enacting voluntary certification of qualified appraisers. It would enable states to administer certification and recertification standards for qualified appraisers, and enforce standards of the Standards Board of the Appraisal Foundation.

It also would entail formulation by the foundation's Appraisal Qualification Board of minimum requirements for a voluntary state certification program.

Part of the plan, the establishment of a private national Appraisal Foundation, already has been accomplished.

The Appraisal Foundation, a private, non-profit corporation incorporated in November 1987, created and supports the Standards Board, which promulgates industry standards, and the Appraiser Qualification Board.

Appointed trustees of the Appraisal Foundation come from many groups, including the American Institute of Real Estate Appraisers, American Society of Farm Managers and Rural Appraisers, American Bankers Association, Mortgage Bankers Association, Urban Land Institute, Real Estate Educators Association, and the U.S. League of Savings Institutions.

Another part of the blueprint for regulation of appraisers is state-by-state legislation. Since the law would not be federal, certification requirements in each state where mandated "will not be identical, but none will be below the minimum requirements set by the Appraiser Qualification Board," Gray said.

Since this type of system has worked for the accountants, it can also work for appraisers, Gray said.

"The majority of appraisers doing business in this country will be held to a uniform set of appraisal standards," Gray said.

"Under the model bill, the certification of appraisers is voluntary; persons not certified are not prohibited from stating that they are appraisers, or from accepting appraisal assignments," Gray said.

The institute believes a voluntary program is superior to one which is mandatory.

"A voluntary certification program identifies those who have the qualifications to perform appraisal work that requires a higher level of knowledge, experience, and ethical conduct. It also provides users of appraisal services with some assurance of professional competence. Mandatory licensing would do very little to raise the level of competency."

Although certification would be voluntary, state legislation would still carry the penalty of law, and subject appraisers who violate board standards to censure, suspension, or revocation of certification.

The law would require appraisers to take their state's certifying examination, and the institute believes those unqualified "will either refuse to take the . . . examination or will enroll in the appropriate courses to help them pass."

Founded in 1932, the American Institute of Real Estate Appraisers is the oldest and largest professional appraisal organization in the U.S. It has more than 23,000 members who operate within a strictly enforced code of professional ethics. …