Data Collectors and Real Estate Appraisal Companies

QUESTION: One of my residential listings is being purchased by an investment firm. The transaction was going fine until the buyer agent asked me when the “data collector” could come inside the home and gather appraisal information. I asked the buyer agent whether the data collector is a licensed appraiser, and he said “no.” I informed the buyer agent that the data collector could come in the home, but only if the buyer agent attended the inspection. The buyer agent got very angry and accused me of creating unnecessary work for him. Can the buyer agent refuse to attend the data collector’s inspection?

ANSWER: We do not believe so. We have previously written here that buyer agents must attend all inspections with two exceptions: (1) inspections by licensed appraisers; and (2) inspections that do not require interior access of the home. Since the data collector in your case wants to come in the home and is not licensed, neither exception applies.

The National Association of REALTORS® has recently written an article about data collectors and their role in real estate appraisal management companies (“AMCs”). NAR’s article explains that in some transactions, lenders may hire an AMC to perform appraisal and data collection services. The AMC usually determines whether an appraisal is necessary once it looks at the data, and then it makes an appropriate recommendation to the lender. By separating the appraisal from the data collection process, lenders and buyers hope to save on appraisal costs.

Article 2 of Chapter 93E of North Carolina’s General Statutes regulates AMCs and states that they must be licensed and registered with the North Carolina Appraisal Board. AMCs can be subject to discipline for violating Chapter 93E or the Board’s rules, which are located in Subchapter 57A of the Administrative Code.

However, no part of Chapter 93E requires an AMC to perform background checks on data collectors, even though many AMCs do so anyway. Thus, there is no guarantee that a data collector has passed a thorough background check similar to a licensed appraiser. This makes the buyer agent’s attendance at the home just as important as when any other unlicensed person conducts an inspection, such as an unlicensed contractor/handyman or the buyer themselves in most cases. If the buyer agent in your transaction will not attend the data collector’s inspection, then they may be in violation of the Real Estate License Law (Chapter 93A of North Carolina’s General Statutes).