The mood in Washington, D.C. these days is to unwind regulation. So I guess we should not be surprised that the Office of the Comptroller of the Currency recently said it is considering going commando, so to speak, on appraisals for residential real estate transactions under $400,000. The current rules in place now do not require appraisals for properties at $250,000 and below. That threshold is being inched up in the name of burden relief.
Instead of an appraisal, transactions below $400,000 would require an “evaluation”. (I’m guessing AVMs.) Ryan Lunquist, who started a petition against what real estate experts are calling a very dangerous move as well as job killer, says it will be individuals who have no appraisal licenses or certification, and are not subject to state regulatory oversight requirements that govern appraisers. The evaluators could even be an “independent bank employee” or unnamed “third part(ies).” They would, however, have to be “competent” and possess “knowledge of the market, location and type of real property being valued.””
What is a bit more disturbing to me, and probably most Realtors, is how the proposal, which is a joint agreement between the Office of the Comptroller of Currency (OCC), the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation, could put a greater emphasis on the property valuations given by real estate portals like Zillow and Redfin, which offer online “zestimates” that we know are not accurate, particularly in a non-disclosure state like Texas. Zillow and Redfin have been sued for vast valuation inaccuracies.
This could also be a real job-killer for the appraisal industry, coming in just as the crosswinds re changing in real estate.