Originally published in the May 26, 2026, issue of AI’s Appraisal Now
Reprinted with permission from AI

A recent warning from the Federal Trade Commission (FTC) to mortgage industry firm Mortgage Connect highlights growing regulatory scrutiny of noncompete agreements, a development that could have implications for real estate appraisers and appraisal firms.

According to reports, the FTC cautioned the Pennsylvania-based lender after allegations raised in litigation suggested that some employment restrictions may have exceeded legal boundaries. While the agency did not announce a formal enforcement action, the warning reflects the FTC’s continued focus on worker mobility and competition within housing finance industries.

Noncompete clauses are relatively common in portions of the appraisal profession, particularly among appraisal management companies (AMCs), larger valuation firms, and certain independent contractor arrangements. These agreements may restrict appraisers from working for competitors, soliciting former clients, or starting competing businesses for a period of time after leaving a company.

Supporters argue that such provisions protect legitimate business interests, including client relationships, training investments, proprietary systems, and market research. Critics, however, contend that overly broad restrictions can limit professional mobility, reduce competition, suppress earnings, and contribute to appraiser shortages in some markets. The legal landscape remains complex. State laws governing noncompete agreements vary significantly, with some states sharply limiting or banning them altogether while others permit reasonable restrictions tied to geography, duration, and business necessity.

Although the FTC’s proposed nationwide ban on most noncompetes remains tied up in court challenges, regulators continue examining restrictive employment practices on a case-by-case basis.

For appraisers, renewed attention serves as a reminder to carefully review employment and contractor agreements, particularly provisions related to competition, client solicitation, geographic limits, and post-employment restrictions.

As labor mobility issues gain more attention nationwide, noncompete agreements may become an increasingly important issue across the valuation profession.