Please ensure Javascript is enabled for purposes of website accessibility

What is the new Fair Appraisal Act Addendum?

What is the new Fair Appraisal Act Addendum?

Twice a year the California Association of Realtors will come out with new forms and/or they will revise already existing forms. These are highly important changes that Realtors® need to be up to date on so that they can provide you, the consumer, with up to date and correction information.

Some changes are minor, for example, CAR will revise language in an already existing form. The form itself basically consists of the same bottom line, but they do some tweaks a little reworking of the wording and it is a clearer and stronger version of an already known and used form.

Then there are completely new forms. Which means Realtors® need to know about them and be well versed in what the form says, prior to it being eligible to use. One of the most recent forms that CAR came out with was the Fair Appraisal Act Addendum. This addendum should be included with a residential purchase agreement when you put in an offer to purchase a home.

This form was generated in part due to the mass media attention when a black couple from Marin City received a low appraisal on their home. The Austin’s received an appraisal in March of 2019 for a substantial amount over $1M. To their surprise while the housing market was gaining traction and property values were increasing, the Austin’s received an appraisal where their home was valued just under $1M in 2020. The Austin’s decided to get a second appraisal and they decided to take down all their family photos and replaced them with some family friend’s photos. The family friends were a white family. When the second opinion appraisal results came in, it was higher than the appraisal that was done in March of 2019, as the market indicated it should be.

Thanks to the Austin’s speaking out and making a compliant to the federal court along with the story going viral, changes have been made. The government acted by creating AB 948 that makes it unlawful for an appraiser and an appraisal business to discriminate in the availability and performance of their services. An appraisal is supposed to be based on the home’s physical specifics, shape, size, etc. An appraisal should never be based on who lives there and how people chose to live.

The next time you decide to purchase a home, you should come across the new form, the Fair Appraisal Act Addendum. This form puts buyers and sellers on notice that any appraisal is to be unbiased and objective. It also gives information, so you know who to contact and issue a compliant if you feel your rights have been violated.

As always, the best way to purchase real estate is by using a local Realtor® who stays up to date and informed on the always change world of real estate.