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President Signs Bill Authorizing 4-month Extension of Flood Insurance Program

President Trump on July 31 signed legislation that extends the National Flood Insurance Program by four months — until Nov. 30, the White House reported. The extension gives lawmakers a small window to craft a longer-term extension for the program, which is underfunded by about $20 billion.

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Construction Costs, Zoning May Slow Office Sector: Cushman & Wakefield

Written by Patricia Kirk

While new office construction has been robust so far in 2018, next year developers might begin pulling back, according to David Bitner, head of Americas capital markets research with real estate services firm Cushman & Wakefield. He cites rising construction costs, concerns about the end of the real estate cycle and zoning issues as the reasons.

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IRS Final Rules Define Qualified Appraisers, Standards Flexibility

The IRS on July 30 finalized rules for substantiating and reporting cash and noncash charitable deductions, stating that any tax deduction of more than $500,000 requires a qualified appraisal conducted in accordance with generally accepted appraisal standards. The rules take immediate effect.
 
“The final rules confirm that professionally designated appraisers, such as those conferred by the Appraisal Institute, are well positioned to satisfy the qualified appraiser requirements of the IRS,” said AI President James L. Murrett, MAI, SRA. “This is a highly contested area of tax law and appraisal practice, and users of appraisal services can remove doubt by turning to competent Appraisal Institute Designated Members.”  
 
“We also are pleased to see the agency provide for standards flexibility to appraisers, recognizing generally recognized appraisal standards as opposed to strict adherence to one particular standard,” said Murrett. “This protects taxpayers and the public interest, while providing more flexibility to appraisers and taxpayers procuring real estate appraisals for conservation and historic preservation easement purposes.”
 
The IRS received mixed feedback about the standards issue, but ultimately sided with the Appraisal Institute’s position on standards flexibility, noting in the final rule: 
 
Several commenters recommended that the final regulations require appraisal documents to be prepared “in accordance with USPAP” and not merely in accordance with the “substance and principles of USPAP.” Other commenters indicated that strict compliance with USPAP would eliminate use of all other appraisal standards, including some that are generally accepted in the appraisal industry. The Treasury Department and the IRS agree that it is beneficial to provide some flexibility by requiring conformity with appraisal standards that are consistent with the substance and principles of USPAP rather than requiring that all appraisals be prepared strictly in accordance with USPAP. Accordingly, the final regulations do not adopt the recommendation to require strict compliance with USPAP and retain the requirement of consistency with the substance and principles of USPAP.
 
Review the final rule.

Appraisal Institute Honors 13 National Award Winners

Craig M. Harrington, SRA, AI-RRS, of Prior Lake, Minnesota; and Leslie P. Sellers, MAI, SRA, AI-GRS, of Clinton, Tennessee, were honored Tuesday with the Appraisal Institute’s Lifetime Achievement Award and Timothy P. Runde, MAI, of San Francisco, was named the recipient of the Outstanding Service Award during the Appraisal Institute Annual Conference in Nashville, Tennessee.

Two individuals also were announced as winners of the annual President’s Award from the Appraisal Institute, the nation’s largest professional association of real estate appraisers with nearly 18,000 professionals in almost 50 countries. Additionally, eight individuals were honored by the Appraisal Institute Education and Relief Foundation, the Appraisal Institute’s charitable organization that offers education scholarships and disaster assistance to appraisers.

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More than 550 Attend AI Annual Conference in Nashville, Tennessee

NASHVILLE, Tennessee (July 30, 2018) – More than 550 real estate professionals from around the world today attended the opening session of the valuation profession’s most important annual event, hosted by the Appraisal Institute, the nation’s largest professional association of real estate appraisers.

The 2018 Appraisal Institute Annual Conference, being held at the downtown JW Marriott Nashville today through Wednesday, features world-renowned keynote speakers, nearly 30 breakout sessions on trend-setting valuation topics, networking opportunities for industry professionals, an exhibit hall featuring cutting-edge products and services, and an awards ceremony honoring the valuation profession’s best and brightest.

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Fannie Mae Drops Form 1004MC, the GSE Reveals at AI Annual Conference

Fannie Mae is discontinuing the use of Form 1004MC (Market Conditions), the government-sponsored enterprise announced July 30 at the Appraisal Institute Annual Conference in Nashville, Tennessee. The GSE is expected to officially announce the change when it releases its updated Selling Guide in the coming weeks. 
 
Form 1004MC was released in November 2008, and from the start many appraisers said they found its use inappropriate for many market situations and conditions. Members of the AI Government Relations Committee expressed this opinion to Fannie Mae during recent discussions on ways the GSE could improve its policies and procedures. 
 
Reporting market trend activity will remain an important undertaking for appraisers and they will continue to do so even without the requirement to complete Form 1004MC. 
 
Freddie Mac has yet to make a similar announcement about discontinuing use of 1004MC, but the move by Fannie Mae may compel a similar policy change to maintain competitive posture. 
 
AI will monitor the situation and report new developments when they are announced. 

Commercial Real Estate Prices Steady as Market Matures: Report

Written by Michael Tucker

Commercial real estate asset prices have "plateaued" and transaction volume has moderated as the real estate cycle matures, reported Green Street Advisors, Newport Beach, Calif., and CoStar, Washington, D.C.

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Fed Beige Book Reveals Mixed Results in Residential, Commercial Sectors

Some Fed districts reported moderate improvements in the residential real estate sector, but their reports on commercial activity revealed largely stagnant conditions, the Federal Reserve reported July 18 in its newest Beige Book.

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Scott Robinson, MAI, SRA, AI-GRS, AI-RRS, awarded Appraisal Institute President’s Award

Congratulations to NCAI member Scott Robinson, MAI, SRA, AI-GRS, AI-RRS, who was presented with the Appraisal Institute President’s Award today at the Institute’s National Meetings in Nashville! Scott was the President of the Appraisal Institute in 2016 and has been integral to the success of the organization at the state, national, and global levels before, during, and after his Presidency. Scott has chaired multiple committees at the national level and continues his service to the organization by leading the CEO search. The North Carolina Chapter is proud of Scott and his many accomplishments!

  

Housing Industry Loses Status as Economic Driver: Fed Chair

Written by Kelsey Ramirez

Last Wednesday, Federal Reserve Chair Jerome Powell had his second hearing this week, this time before the House Committee on Financial Services for his semi-annual monetary policy report.

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Appraisal Institute Opposes Effort to Reduce Risk Management for SBA Loans

The Appraisal Institute today announced its opposition to proposed federal legislation that would reduce the requirements for appraisals in major Small Business Administration loan programs.

The Appraisal Institute objects to the provisions of H.R. 6347, the 7(a) Real Estate Appraisal Harmonization Act, and H.R. 6348, the Small Business Access to Capital and Efficiency Act, both of which would adjust upward the real estate appraisal thresholds for SBA loan programs. An appraisal threshold is the amount of a real estate transaction above which an appraisal is required.

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Nationwide Rents at New High: Report

Written by Ben Lane

We’ve known that the rent may be too high for quite a while now, but a new report shows that rent has never been this high before.

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Net Lease Retail Market Sees Cap Rate Increases, Report Shows

Written by Liz Wolf

Cap rates for net lease retail properties have finally pushed upward.

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New AI videos: Unusual Challenges and USPAP Optimization

The Appraisal Institute has posted new videos to its YouTube channel

You can see the related blog posts on AI’s “Opinions of Value” blog.

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Cordaro v Harrington Bank Court of Appeals

NCAI remains committed to keeping you informed of recent legal issues affecting the appraisal industry in North Carolina. The NC Court of Appeals issued a decision this week that may impact appraisers and their clients. According to David Ferrell, our legislative consultant, the case is about the potential liability of a bank for providing an inaccurate appraisal value to its borrower in connection with a residential loan. The Court ultimately ruled that the borrower’s complaint failed to sufficiently plead a contractual duty owed to him by the bank with regard to the appraisal – so the Court upheld the trial court’s dismissal of the case. 

Click here to view a copy of the court opinion. We will also have a copy on our website for future reference. NCAI will continue to keep track of these issues.

Court Finds Tax Appeal Attorneys Not Engaged in Appraisal Practice

The Circuit Court of Cook County, Illinois (Chancery Division) on June 20 ruled that attorneys who referenced comparable property valuations and market values based on an income approach as part of tax appeal proceedings were simply engaged in the traditional practice of law and not in appraisal practice.
 
The case, Illinois State Bar Association vs. Illinois Department of Financial and Professional Regulation, was filed in July 2017 after two Illinois attorneys were accused by the IDFPR of engaging in unlicensed appraisal practice after they submitted comparable property valuations, income approach information and market value opinions as part of two tax assessment appeals in DuPage County and McHenry County. 
 
ISBA filed a complaint seeking a declaration that the IDFPR lacked authority to prosecute, discipline or sanction lawyers for engaging in the practice of law for advocating on behalf of clients in real estate tax assessment proceedings. The case also sought to enjoin the IDFPR from initiating, maintaining or threatening prosecution of attorneys for engaging in that activity.
 
The main question before the court was whether an attorney representing a client in a tax proceeding violated the state’s Appraisal Act and functioned as an unlicensed appraiser when providing an analysis of comparable property valuations or developing an opinion of market value utilizing the income approach in a legal brief supporting a tax appeal. 
 
ISBA issued a statement when it filed suit noting, “Arguments based on property valuation are common in many legal fields and have long been typical of real estate tax assessment practice. The ISBA believes that making such arguments on behalf of clients clearly constitutes the practice of law, does not entail the submission of an appraisal, and is well beyond the authority of the IDFPR to regulate.”
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Congratulations to Our Newly Designated Members

Congratulations to our newest designees:

  • Claire M. Aufrance, MAI, SRA
  • Brian Crowder, MAI, SRA
  • Rusty C. King, MAI
  • C. Thomas Kirby, SRA, AI-RRS
  • Andy E. Piner, MAI
  • B. Kyle Saylors, MAI

Home Sales and Prices to Rise this Year, NAR Reports

A stronger economy, wage growth and an improving job market are expected to march home sales and prices higher in 2018, but low supply and weakening affordability will tamper the rate of increases, according to speakers at a residential real estate forum during the 2018 REALTORS® Legislative Meetings & Trade Expo.

Lawrence Yun, chief economist of the National Association of Realtors®, presented his 2018 midyear forecast and said despite headwinds a moderate and multiyear increase in home sales is likely ahead. After accelerating 3.8 percent in 2016, existing home sales rose only 1.1 percent to 5.5 million in 2017 and are forecast to finish 2018 at a pace of around 5.6 million (up 1.8 percent). He projects 5.7 million sales for 2019.

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Appraisal Institute Contributes at Major Industry Events in June

The Appraisal Institute announced June 27 that its elected officers and others represented the organization at various events throughout the month.
 
AI President James L. Murrett, MAI, SRA, was joined by President-Elect Stephen S. Wagner, MAI, SRA, AI-GRS; Vice President Jefferson L. Sherman, MAI, AI-GRS; and Immediate Past President and Acting CEO Jim Amorin, MAI, SRA, AI-GRS, at the Appraisal Institute of Canada Annual Conference, June 13-16, in Quebec City.
 
Sherman also addressed the Ohio Coalition of Appraisal Professionals Real Estate Appraiser Seminar, June 19, in Columbus, Ohio, where he presented “Issues Affecting the Appraisal Community.”
 
Amorin attended the National Council of Real Estate Investment Fiduciaries Summer Conference, June 19-22, in Charlotte, North Carolina; Sherman represented AI at the International Right of Way Association Education Conference, June 24-27, in Edmonton, Alberta, where AI also exhibited; and Wagner joined Murrett at the Institute for Professionals in Taxation Annual Conference, June 24-27, in Vancouver, British Columbia.
 
AI 2016 President Scott Robinson, MAI, SRA, AI-GRS, AI-RRS, addressed the World Association of Valuation Organizations’ and International Valuation Standards Council’s Global Valuation Conference, June 25-26, in Singapore where he presented “Fundamentals of Separating Real Property, Personal Property and Intangible Business Assets.”
 
AI exhibited at the CRE Finance Council June Conference, June 11-13, in New York.

NCAI Announces New Management

The North Carolina Chapter of the Appraisal Institute (NCAI) is pleased to announce our new partnership with TH Mgmt., Inc. The Executive Committee and the Board of Directors are confident that this exciting organizational change will help us further the mission of the Chapter and stay true to the professional growth of our members.

TH Mgmt., Inc. is a full-service, accredited association management company and has delivered high-quality management to professional associations like ours since 1991. Among their clients are the Charlotte Region Commercial Board of REALTORS® (CRCBR), Urban Land Institute (ULI) of Charlotte, National Association for Industrial and Office Parks (NAIOP) of Charlotte, and CoreNet Carolinas. Their professionalism, experience, and marketing prowess were major factors to which the Chapter leadership was drawn.