In a turf war of sorts, appraisers are fighting a Connecticut bill that would allow real estate agents and brokers to make informal, “walk-around” price opinions on properties as part of the mortgage or sale process.
“We have witnessed the near collapse of our mortgage and finance industries over the last four years,” said Al Franke, managing director of Grubb & Ellis Landauer Valuation Advisory Service, which runs its Connecticut operations in Stamford. “We are still climbing out of the rubble. To allow salespeople with minimal education, training, and experience requirements to estimate the value of property for a lender in this post-Lehman Brothers”™ climate is unfathomable.”
Franke said agents and brokers have an inherent conflict of interest in wanting listings ”“ not to mention the motivation of making a quick sale to limit the time, effort, or out-of-pocket advertising dollars that are normally part of the listing process.
“Why stop with market analysis by real estate agents?” Franke said. “Why not ”¦ use a free service like Zillow for an estimate of value? I would certainly have more confidence in the ability of a complex algorithm crunching data on 80 million properties to estimate a property”™s value than the ability of a newly licensed salesperson.”
Testifying on behalf of the Connecticut Association of Realtors, Linda Fercodini argued that the bill is intended to speed the process for experienced real estate professionals who will not be blind to a property”™s true value. The Dodd-Frank financial reform law does not prohibit the use of broker price opinions in such transactions.
“In fact, 44 states do not have restrictions we have in Connecticut,” Fercodini said. “There is little harm in permitting sophisticated parties such as mortgagees and attorneys to decide whether they require a market analysis or the time and expense of a full-blown appraisal.”
The Connecticut Bankers Association and the Real Estate Advocacy Association also testified in favor of the bill, but others joined Grubb & Ellis”™ Franke in opposing it.
“It”™s kind of like the fox watching the henhouse,” said John Galvin, past president of the Appraisal Institute. “We”™re the only unbiased person in this transaction ”“ we”™re the only ones in there who don”™t really care what happens, you know?”
