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Nevada Lawmakers Fight Appraisal Regulations

By Mike Wheatley | May 25, 2011

Lawmakers in Nevada are attempting to have appraisers in the state stop basing property values on sales of distressed homes, which is causing a situation where homes are being artificially devalued.

The attempt is being followed very closely by numerous other US states that are considering similar measures to protect their real estate markets.


Home appraisals shouldnt take distressed property sales into account

Appraisers are valuing homes too low, say Nevada lawmakers. courtesy of Appraisal Linspokane

Las Vegas has seen its housing prices tumble by more than 50% in the last five years, according to Greater Las Vegas Association of Realtors president Paul Bell.

“We’ve had dozens of cases where contracts for new homes have fallen through because appraisers value them at less than the construction costs,” he complained.

Senator Mike Schneider is one of those who supports the lawmaker’s attempt, proposing a new bill to stop appraisers from factoring in the sale prices of distressed properties when determining a home’s value. However, there is a problem with the bill’s wording, as it contradicts the Uniform Standards of Professional Appraisal Practice, federal regulations which appraisers have to follow.


Sen. Mike Schneider is attempting to have appraisers add less weight to distressed property values

Senator Mike Schneider is trying to force through a new bill. Courtesy of Las Vegas Sun

This issue has led to several other states, notable Missouri and Maryland abandoning their own bills, while similar legislation in Illinois has also been halted.

To get around things, Schneider has been attempting to tweak the wording so that his own bill won’t also go down the drain. By removing the distressed property wording and introducing a “rounding up” element into the bill, he hopes it means appraisers will be able to assign higher values to foreclosed properties.

“Properties are just being dumped left, right and center by banks, and it’s not at all relevant to real prices,” says Schneider. “These shouldn’t be given the same weight as real sales, their values need to be adjusted somehow.”


Foreclosures in Las Vegas are having a big impact on appraisals. Courtesy of Assets Portfolio

One problem that appraisers are quick to point out however, is that many parts of the country have seen hardly any sales which were not foreclosures, meaning that it would be almost impossible to accurately determine a property’s value. For example, last year in Sedona, Arizona, just 2 out of almost 1,000 property sales were not foreclosures.

Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected].
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