Appraisers can access RESNET
home energy ratings database
The Residential Energy Services Network announced Oct. 28
that its National Registry is open to the public, which gives
appraisers performing “green” property valuations access to
valuable home energy ratings data. RESNET is the recognized
national standards-making body for building energy-efficiency
rating and certification systems in the U.S.
RESNET’s National Registry has information on certified
HERS raters and ratings, and allows appraisers to research a
property’s HERS Index score and confirm that a HERS rater’s
certification is in good standing. Previously, appraisers only
had access to HERS data if a builder or rater provided it.
Opening up the National Registry also should make it much
easier for appraisers to verify the HERS Index data included
in the multiple listing service — data that previously proved
unreliable because a property could be given a HERS rating
of 0, but only because it lacked a HERS Index rating in the first
place and not because of poor performance or construction.
ACT ON ISSUES
AI wants bank regulators to address
valuation and competency issues
The Appraisal Institute and the American Society of Farm Managers and
Rural Appraisers asked federal bank regulatory agencies in a Sept. 2 letter
to re-evaluate policies related to appraisal exemptions established under
Financial Institutions Reform, Recovery, and Enforcement Act regulations.
AI and ASFMRA asked the Office of the Comptroller of the Currency, the
Federal Deposit Insurance Corporation and the Board of Governors of the
Federal Reserve to align their regulations with Dodd-Frank requirements,
which allow financial institutions to use professional designations and
other competency tests when hiring appraisers.
The organizations also asked the agencies to resist any calls for
increasing loan appraisal thresholds ($250,000 for residential, $1 million
for commercial), citing appraisals as a “gold standard” in real estate risk
assessment. The organizations further asked the agencies to review their
regulations in light of recent changes to appraisal standards, such as the
Scope of Work rule that provides more client flexibility.
The comments were part of an agency review of regulations pursuant
to the Economic Growth and Regulatory Paperwork Reduction Act.
Read the joint AI, ASFMRA letter at www.appraisalinstitute.
Valuations part of new rules for nontraded REITs
The U.S. Securities and Exchange Commission approved a rule change on
Oct. 14 that is intended to provide investors with greater insight into the
costs of unlisted real estate investment trusts. The change allows the use
of two methodologies, including appraised value.
The Financial Industry Regulatory Authority proposed the change, which
will allow broker-dealers to utilize two methodologies to calculate per-share
estimated value for REITs — a net investment methodology or an appraised
The net investment methodology would be based on the net investment in
the issuer’s most recent periodic report and the amount available for investment shown in the offering prospectus or another equivalent disclosure. This
methodology also would require firms to be transparent about the part of
customers’ distributions that include a return of capital.
Under the appraised value methodology, FINRA would require share value
to be based on the valuation of the REITS’ assets and liabilities. The valuations must be performed at least annually, be conducted by a third-party
valuation expert and come from a methodology that conforms to standard
FINRA also is asking for revisions to a rule that would prohibit firms from
participating in a public offering of a REIT unless the issuer has disclosed the
per-share estimated value in a manner that’s reliable based on the valuations
of the REIT’s assets and liabilities.