Customers feel bypassed when it comes to real estate appraisals now resort to the newly formed disciplinary committee of the Jamaica Real Estate Board, REB.
The new committee began its work in March at the insistence of Andrew James, the newly installed chairman of the Real Estate Board, who said, as a real estate broker, he had heard complaints from financial institutions and others at the the subject of questionable evaluations for years.
Her appointment as ERC chair in November 2020 gave her the opportunity to do something about it, with James prioritizing it as his first job. He also promised to go after unlicensed practitioners.
“Even since I was president of the Jamaica Real Estate Association, members of the financial industry were voicing concern. Now that I am on the REB, after consulting with the members, we have decided that this is the way to go in order to preserve the integrity of the real estate industry, ”said James in an interview with the Financial Gleaner.
The three-member disciplinary committee, headed by the National Land Agency’s Assessment Commissioner Eric Allen, has the power to summon licensed assessors, currently 118 in number, to explain their assessments. The other members are Association of Land Economy and Valuation Surveyors President Ryan Taylor and Evaluator David Thwaites.
“If any of the institutions or someone has a questionable assessment, they just have to write to the REB. The board of directors will refer the matter to the committee, which has the power to convene this evaluator to explain its evaluation. The committee will make a recommendation to the board of directors, and that can go as far as revocation of the business license, ”said James.
The real estate board, in fact, does not have real data on the extent of the problem, the real or inflated value of the appraisal market itself and the number of unlicensed services, and relies on anecdotal evidence.
REB can only discipline authorized people, says James, but is looking for unauthorized practitioners, whether appraisers or real estate brokers, who face criminal penalties if caught. .
“There is an inspection service at the CER, so for someone who practices without a license, yes, we are here to look for you,” said the president.
“We want to say very loudly and very clearly that we are prosecuting these people. As for those who operate online, we review the laws. Some amendments have been made and more are to come, ”added James, without giving details.
The Real Estate Board said it only pursued an unlicensed appraiser once and that person is said to have died while the case was pending.
The board of directors came into being after the Real Estate Brokers and Developers Act was enacted in 1987, in response to several cases of questionable land deals and potential owners being at the mercy of unscrupulous developers.
All individuals and businesses involved in real estate transactions in Jamaica are required to register with CER after completing a series of requirements, including training and certification, payment of annual fees, and recertification through certification. ” continuous professional development.
The board has a team of six inspectors, and a seventh will soon be recruited, according to CEO Sandra Garrick. They have the power to investigate complaints as well as to initiate investigations.
REB Discipline Committee Chairman Eric Allen says his committee is an additional part of regulating the industry.
“The Real Estate Brokers and Developers Act, when it came into effect in 1989, introduced the need for university education and this has evolved to require vocational training as well. Now there is a third part, which is regulatory, ”he said.
“While I had my concerns, I would frame them in the context of a global phenomenon. The truth is that valuations are essential for the proper functioning of the market. “
When companies buy goods, he added, they use them as collateral for loans or represent them on their balance sheets.
“Since, in industrialized countries, property can represent up to 70 percent of the GDP, one would want to ensure that the values conveyed there are credible,” said the president.
Committee member Taylor, a certified valuation expert, says there is growing concern about the way appraisers, including chartered appraisers, operate and clients may not be getting professional service.
“There are also issues of unethical behavior and lack of due diligence in performing their duties. We don’t want clients to feel alone when they seek the services of an appraiser. They should expect top notch professional services backed by ethical treatment, ”Taylor said.
Allen, meanwhile, links the problems to the tax burden on real estate transactions, which once accounted for more than 20 percent of the value, due to transfer duties and other charges.
“What it did was people report a value that had nothing to do with the actual transaction, so a property was sold for $ 30 million and they reported it at $ 15 million so to pay less costs, ”he said, adding that the practice has led to market distortions and the need for remedial action.
“You want to have transparency and proper reporting so that everyone has the same information; because without it, it will lead to unbalanced information, which will feed bad valuations which will be at the base of a failure of the market ”, added the president of the commission.
The rates of transfer duties, stamp duties and other charges were reduced during the 2019-2020 fiscal year.
The CER wants to spread the word that it has formed the discipline committee to deter unprofessional evaluations. The real estate industry has been alerted, Garrick says, and a number of lending institutions have requested more information.
Banks and other lenders accept property as collateral for loans and, as such, should trust the word and work of real estate appraisers to determine their value.
“We will be making presentations and talking to their teams about this committee,” said Garrick. “This will happen right after we complete the outreach through an industry wide webinar,” she said.
James advises people buying property to confirm that the appraiser is licensed, which can be done on the REB website; and talk to others in the industry who can vouch for the appraiser’s track record and not let price be the sole determining factor in choosing appraisers.
“There are appraisers, who may be operating from home, who could offer you a cheaper price, but not necessarily the best quality,” said the CER chairman.
“If you’re going to spend, say, $ 200 million on a purchase, it doesn’t make sense to cut corners and pay $ 50,000 on the appraisal, only to find out later that the real value of the property was. of $ 100 million. It is best to go to someone with the right tools, knowledge and skills that will give a better result, ”he said.