Legislation would establish statewide standards for appraisals, mitigating risk for residents
(BOSTON–1/18/2024) Today, the Massachusetts Senate passed legislation to enhance consumer protections for residents receiving appraisals for their own real estate, or prospective real estate. Senator Cindy F. Friedman (D-Arlington) joined her colleagues to advance the bill.
S.2550—An Act providing consumers with equal protection for all real estate appraisals—would require that all real estate appraisals in the state be conducted exclusively by certified or licensed appraisers. If passed into law, the bill would help build consumer trust in the appraisal process by ensuring appraisers are qualified and fall under appropriate regulatory oversight.
“It is so important that we protect consumers when they purchase real estate, especially given the challenges the shortage of affordable housing puts on those looking to buy a home,” said Senator Friedman, Vice Chair of the Senate Committee on Ways and Means. “This bill affords a sense of security to consumers often making the largest purchase in their life, ensuring that real estate appraisals are performed only by certified and qualified appraisers.”
Under current law, Massachusetts allows any person, without having to meet any standards such as education and experience, to perform valuation services for estate settlements, divorces, business dissolutions or litigation, among other things. This exposes consumers to unreasonable risk, as an individual who is not licensed or certified may prepare unsupportable valuations while operating outside of regulatory oversight and accountability. Unlicensed appraisers also mean that there is no recourse by state’s Division of Occupational Licensure when a consumer is harmed.
According to the Appraisal Subcommittee of the Federal Financial Institutions Examination Council, forty-two other states ensure consumers are protected by requiring the use of certified or licensed appraisers for all real estate appraisals. By contrast, with licensing required only for federally related transactions such as some mortgages, Massachusetts fails to fully protect consumers. This laxity permits unlicensed individuals to conduct real estate valuation services for any other purpose.
Under the legislation, to attain and retain state certification or licensing for appraisals an individual would be required to meet national and state standards, which include:
- Completing 200 to 300 hours of classroom appraisal education and passing exams.
- Participating in 15 hours of classroom instruction on the Uniform Standards of Professional Appraisal Practice.
- Accumulating 1,000 to 3,000 hours of supervised appraisal experience.
- Passing a 4- to 6-hour national licensing examination.
- Completing 28 hours of continuing education every two years, including 7 hours focused on the Uniform Standards of Professional Appraisal Practice.
The effort to increase appraisal licensure has robust support from real estate appraisal professionals.
“Today’s action by the Senate brings the Commonwealth closer to providing all consumers with assurance that their real estate appraisal is performed by a qualified, licensed professional,” stated Howard Dono, MRA, President of the Massachusetts Board of Real Estate Appraisers. “The MBREA appreciates the leadership of the bill’s sponsor, Senator Cynthia Creem, and Senate President Spilka for their commitment to consumer protection.”
Having been passed by the Senate, the legislation now moves to the Massachusetts House of Representatives for consideration.