TITLE 876 INDIANA REAL ESTATE COMMISSION

Economic Impact Statement

LSA Document #07-744

On behalf of the Real Estate Appraiser Licensure and Certification Board and the Indiana Real Estate Commission, the Indiana Professional Licensing Agency has prepared this analysis of the fiscal impact on small business based on the requirements or costs imposed by the attached proposed rule, which amends 876 IAC 3-6-2 and 876 IAC 3-6-3. The agency is submitting this proposed rulemaking action and economic impact statement for your review and approval pursuant to Indiana Code 4-22-2.1-5. The public hearing for this proposed rule is scheduled for January, 23 2008, at 10:45. Pursuant to IC 4-22-2.1-6(a), the agency is requesting that your written comments on the proposed rule and economic impact be submitted to the agency by Monday, January 7, 2008. If you have any questions or concerns about this rule, please contact me at 234-3046 or e-mail me at nrhoad@pla.in.gov.

The Indiana Professional Licensing Agency has determined that this proposed rule will impose requirements and costs on small businesses as described herein.

Our analysis establishes that this rule will not have an economic impact of greater than $500,000.

LSA Document #07-744 amends 876 IAC 3-6-2 and 876 IAC 3-6-3 to incorporate by reference the 2008-2009 edition of the Uniform Standards of Professional Appraisal Practice (USPAP) and to update the revisions to USPAP based upon the changes in the 2008-2009 edition.

The Real Estate Appraiser Licensure and Certification Board (Board) has the authority to recommend to the Indiana Real Estate Commission (Commission) rules governing the real estate appraisers licensed and certified under IC 25-34.1-3-8. Under IC 25-34.1-2-5.1, the Commission also has the authority to promulgate rules establishing standards for the competent practice of the various occupations regulated in IC 25-34.1.

There are 2,787 appraisers licensed in the state of Indiana. Although the proposed rule affects the practices of appraisers specifically, the small business for which these appraisers are employed will also be affected because of the licensees' compliance. The number of small businesses affected by this proposed rule will be less than the total number of appraisers; however, the Board is unable to determine the actual number of small businesses that will be affected. This rule also applies to real estate brokers doing appraising in Indiana. There are approximately 12,547 real estate brokers; 85 real estate branch offices; 2,524 real estate broker companies; and 119 real estate professional corporations licensed in Indiana. Indiana does not collect data on the number of brokers who perform appraisals. All brokers are required to follow USPAP. However, brokers do not need to have an appraiser's license to perform appraisals, as long as the appraisal is not used for a federally insured loan.

Although the proposed rule affects the practices of broker performing appraisals specifically, the small business for which these brokers are employed will also be affected because of the licensees' compliance.

The costs imposed on these small businesses will occur because the licensed and certified appraisers and real estate brokers that are directly affected by this rule will have to comply with the most recent Uniform Standard of Professional Appraisal Practice requirements.

The 2008-2009 USPAP that is being incorporated in the Board and Commission's proposed rule requires some recordkeeping requirements. The Board and Commission estimate that there will be no annual reporting requirements and no annual administrative costs incurred by small businesses to comply with this rule.

The Board and Commission estimate that there will be an impact on small businesses as a result of compliance with this rule. In order to comply with this proposed rule, an appraiser may have to replace the 2007 USPAP edition with the 2008-2009 USPAP edition.

Assuming all appraisers purchase the book, the cost to purchase the book is $50, which will cost all licensed or certified appraisers in Indiana approximately $139,350 (2,787 licensed and certified appraisers × $50) and cost real estate brokers $627,350 (12,547 real estate brokers × $50); however, not all brokers perform appraisals and no data is collected on the number performing appraisals. USPAP cannot be downloaded for free as it has been available in years past. However, an electronic version can be purchased for $40.

Compliance with the new 2008-2009 edition of the USPAP is not intended to have or will have minimal costs because appraisers and brokers doing appraisals are already complying these professional standards as opposed to the version of the standards currently in effect.

The proposed rule was permitted by IC 25-34.1-3-8 for the Board to enforce and administer its article and by IC 25-34.1-2-5.1 to establish the standards of the competent practice of real estate brokers. The Board and Commission have not analyzed alternatives to this proposed rule.

The Board is incorporating these standards in their rules to keep current with the national standards. In addition, the federal government requires appraisers to use and comply with the Uniform Standards of Professional Appraisal Practice as a requirement for federal agencies. The standards established by USPAP are for all appraisers and brokers doing appraising in Indiana no matter the size of the business.

Because there are no reporting requirements, there was no need to establish less stringent schedules or deadlines for small business compliance.

There are no other reporting requirements imposed by the proposed rule. The standards established by USPAP are for all appraisers and brokers doing appraising in Indiana no matter the size of the business.

The standards imposed by this rule were developed by the Appraisal Foundation's Appraisal Standards Board. The standards established by USPAP are for all appraisers and brokers doing appraising in Indiana no matter the size of the business.

This proposed rule does not impose additional reporting requirements or costs. The standards established by USPAP are for all appraisers and brokers doing appraising in Indiana no matter the size of the business.

DIN: 20071219-IR-876070744EIA

Composed: May 14,2024 6:10:31AM EDT

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