Congratulations, Arizona

By a vote of 28 to 0 in the Senate yesterday (2 not voting) and 55 to 4 (one not voting) in the House today, the Arizona legislature has passed the Conference Committee’s version of SB 1291 (originally, the Get Zillow Bill). And they did everything right.

The Conference version of the bill differs markedly from the amended version that the House returned to the Senate. A committee comprised of three members of the House and three members of the Senate rewrote the legislation to deal with more than the Zillow issue.

First, they eliminated the original bill’s amendment to the definition of appraisal. Thus, that definition remains as it was: clearly descriptive of a real appraisal, rather than the proposed broader definition that would have encompassed any estimate of value by any person using any means.

The Committee also adopted the Reagan amendment to the Bill that rejected an effort to change the composition of the Appraisal Board by creating an absolute majority of appraiser members.

Most importantly, perhaps, the Committee broadened the Reagan “exception” to appraisal-activity-for-which-a-license-is-required. The new language reads that the law shall not apply to:

A PERSON WHO PRODUCES A STATEMENT THAT IS PROVIDED TO ANY OTHER PERSON CONCERNING THE ESTIMATED VALUE OF REAL PROPERTY THROUGH AN INTERNET WEBSITE, AUTOMATED VALUATION OR OTHER SOFTWARE PROGRAM OR OTHER MEANS OF COMPARATIVE MARKET ANALYSIS AND WHO DISCLOSES THAT THE ESTIMATE IS NOT AN APPRAISAL.

The exception applies, therefor, not only to Internet sites providing free AVM’s, but also to real estate licensees performing comparative market analyses and broker price opinions.

Why is this important? On the eve of its anticipated victory in getting the original SB1291 passed before anyone understood what was in it, the Arizona Appraisal Board sent at least one shot across the bow of the Real Estate Commission signalling that it intended to go after real estate agents who were preparing BPO’s (probably for beverly hills corporate housing). The amended definition of appraisal (that could have been read to encompass BPO’s) would have given them the ammunition for a sustained volley.

Why is the ability of real estate licensees to provide estimates of value (with the appropriate disclosures) to consumers and to banks important to the people of Arizona? Because CMA’s and BPO’s provide more cost effective alternatives to appraisals that are more than adequate for many uses. Where, after all, do many appraisers go to get market comps and local market information? Real estate agents.

Not to mention that a Federal banking law specifically permits banks to use “evaluations” (such as BPO’s) in lieue of appraisals in many real estate related loan transactions. Other state appraisal boards have sought state legislation or made their own rules in defiance of this Federal mandate - and ultimately failed because the Federal law in this area expressly overrules state regulation to the contrary. But it can result in costly, taxpayer-funded litigation to get to the inevitable result.

We applaud the Arizona legislature for taking a careful look at the Bill that almost got by them, giving it due consideration and then acting in the interests of its many consumers rather than its few appraisers.

Do any of you have friends in Tennessee?