Following a public comment period, the Federal Trade Commission has approved a final order settling charges that the Louisiana Real Estate Appraisers Board violated Section 5 of the Federal Trade Commission Act by unreasonably restraining price competition for appraisal services in Louisiana and limiting the freedom of individual appraisers and their customers to engage in bona fide negotiations to determine fees for real estate appraisals.
Under the terms of the order, the Board cannot adopt a fee schedule for appraisal services or take any other actions that have the effect of raising, stabilizing, or fixing compensation levels for appraisal services. The Board must rescind its rule in the Louisiana Administrative Code, known as Rule 31101, which effectively set minimum fees for real estate appraisals.
First announced in May 2017, the complaint noted that the 2010 Wall Street Reform and Consumer Protection Act, popularly known as “Dodd-Frank,” required appraisal management companies to pay “a rate that is customary and reasonable for appraisal services performed in the market area of the property being appraised.”
The complaint alleged that the Appraisal Board’s regulations exceeded the scope of the federal mandate by requiring appraisal fees to equal or exceed the median fees identified in survey reports commissioned and published by the Board. The complaint also alleged that the Board investigated and sanctioned companies that paid fees below the specified levels, and that Dodd-Frank neither requires nor authorizes the restrictions that the board imposed.
The Commission vote to approve the final order was 4-0.