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Important Announcement from the Appraisers' Coalition of Washington

WASHINGTON REALTORS® COMMENT | FEB. 20, 2024 

In recent months, there has been confusion over how local or state increases to residential zoning could impact the ability of residential appraisers to appraise residential properties that currently have 1 to 4 dwelling units, but have been upzoned to allow redevelopment of 5 or more dwelling units. Washington REALTORS® has been working with the WA Department of Licensing and the Appraisers’ Coalition, and the Appraisers’ Coalition recently sent out a new document clarifying that a residential appraisers can perform appraisals of residential properties that could be redeveloped with more than 4 dwelling units, based on their education, experience and training. See information from the Appraisers Coalition of Washington below. 

READ THE FULL ANNOUNCEMENT: 

"Finally, a Little Clarity
Update on Middle Housing and Zoning

The Appraisers’ Coalition of Washington board has been working diligently to obtain clarification from the WA Department of Licensing (the Department) and other entities as to whether a residential classified appraiser can perform the highest and best use analysis on a property with zoning that allows for more than 4 residential dwelling units.
 
Question:
Would the Department consider it a violation if a residential classified appraiser accepts an assignment for a property that may meet the upzoning requirements for multi-family housing, complete the HBU analysis to determine if they can complete the assignment, or must depart?
 
Response:
The Department will continue to enforce RCW 18.140 and WAC 308-125 based on the facts specific to each appraisal assignment.
 
For assignments to appraise commercial property or residential property with more than four units, an appraiser’s statutory authority to accept such an assignment is clear. For assignments to appraise residential property with four or fewer units that has been rezoned to allow for additional units, the allowable residential zoning is not determinative of an appraiser’s statutory authority to appraise the property. Rather, the client assignment, the credibility of appraiser’s hypothetical or extraordinary assumptions, the appraiser’s analysis for the highest and best use of the property, and other USPAP factors will all help determine whether the appraiser is acting within their statutory authority. Since USPAP provides appraisers with tools to use the specific facts of the assignment to appraise a property, in many instances, the facts of one assignment may allow an appraiser to appraise a property with four or fewer units, zoned to allow for more, but in some instances may not.
 
In all instances in which the Department receives a complaint about an appraisal, the Department reviews the appraisal assignment, data and methodology used by the appraiser to determine if the assignment was within the appraiser’s scope of practice and conducted in accordance with state law.

How does this impact WA appraisers?
USPAP provides guidance on the appraisers’ responsibilities when defining the scope of work of the assignment AND to disclose if the appraiser lacks the competency for the assignment.

Bottom Line:
According to the WA Department of Licensing, a Certified Residential Appraiser can perform the H&BU analysis of a property that allows for the development of more than 4 dwelling units so long as they have the competency including requisite education, experience, and training when it is necessary to analyze the potential value of more than 4 units on a property. The H&BU analysis will require a greater amount of analysis, and documented support to comply with USPAP guidelines, reporting standards and record keeping requirements. The H&BU analysis of appraisals must address reasonably probable changes in zoning regulations. Though implementation of HB1110 is not effective until 2025, these regulations are known to be reasonably probable to occur today.
 
We greatly appreciate the support we have received from our legislators including Representative Bateman and our lobbyist, our partners at the WA Department of Licensing and Department of Commerce, The Appraisal Foundation, The Appraisal Institute, The Washington Association of Mortgage Professionals, of course the GSE’s and many others who have been spent hours “talking this out”.
 
Join us for an in-depth discussion on best practices for highest and best use analysis at our Spring Conference at the Seatac Airport Conference Center on May 16th and 17th".

DISCLAIMER: THIS ARTICLE WAS WRITTEN AND PUBLISHED BY THE APPRAISERS' COALITION OF WASHINGTON 

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