Appraiser Regulation & Licensing

As a result of the financial institution crisis in the 1980″s Congress passed legislation known as The Federal Institutions Reform Recovery And Enforcement Act (FIRREA) including a provision that mandated the regulation of real estate appraisers by the states when involved with federally related transactions. Prior to this time appraisers were unregulated and unlicensed. Many adhered to standards established by various professional appraisal organizations, however, this association was voluntary and a majority of appraisers operated with no regulation at all.

There was much discussion and criticism of appraisers in the 1980’s regarding whether appraisers should be licensed and regulated. Appraisers that belonged to one of the professional organizations that required education and adherence to a Code Of Ethics did not want the federal government to license appraisers since it was their belief that the appraisal profession was better able to regulate itself. However, since only about 35% of the appraisers at that time belonged to one of these professional organizations, most appraisers were able to conduct their business and perform appraisals in any way they wanted as long as it was acceptable to the client. This resulted in many poorly done and even fraudulent appraisals which reflected on the entire industry. Many articles appeared in newspapers blaming appraisers for the financial crisis that was occurring in the Savings and Loan industry calling for the regulation and licensing of appraisers. These articles reflect the criticism and uncertainty that appraisers experienced during those years. The first article was written by William L Pittenger, MAI, SREA, a member of both the Americal Institute Of Real Estate Appraisers and The Society Of Real Estate Appraisers, and reflects the thinking of many appraisers belonging to legitimate Professional Appraisal Organizations in 1985.

William L Pittenger Article

The following articles appeared in the Washington Post and Wall Street Journal from 1985 to 1989:

Washington Post 1985                                                             Wall Street Journal July, 1987

Wall Street Journal Feb, 1985                                                Washington Post Nov, 1987

Washington Post Sept, 1986                                                   Washington Post June, 1988

Washington Post Dec, 1986                                                    Realtor News 1988

Washington Post March, 1987                                               Realtor News July, 1988

Washington Post July, 1987                                                   STL Post Dispatch Letter 1989

As mentioned above approximately 35%of all appraisers were members of a Professional Appraisal Organization such as the American Institute Of Real Estate Appraisers and the Society Of Real Estate Appraisers, two of the largest and respected organizations. Prior to licensing lenders began to require that an appraiser be designated member of a Professional Appraisal organization to receive appraisal assignments. Therefore, many new organizations came into existence for the sole purpose of providing a professional membership and designation to satisfy this lender requirement. Many of these organizations had very low standards and basically allowed the appraiser to “buy” the designation. Those in the legitimate organizations were very critical of these new organizations since they were given equal status in the view of many lenders. In order to prove that these new organizations would give a professional designation to anyone with or without qualifications, one appraiser submitted the name of his pet cat to receive a designation from one of the less reputable organizations and it was given to him as told in the following article.

Cat Given Designation as Professional Appraiser Nov, 1987

It was apparent by this time that some type of regulation or licensing of appraisers would happen. As a final attempt to have some control over the profession, seven major Professional Organizations founded the Appraisal Foundation and came up with the Uniform Standard Of Professional Appraisal Practice (USPAP). The intent was to self regulate the profession based on adherence to these Standards, or if Federal Regulation was to happen, it was hoped that USPAP would be adopted as the Standards for Licensing or Regulation.

The legislation that mandated the regulation of real estate appraisers by the states (FIRREA) sought to protect the federally regulated financial institutions from loss and created the Appraisal Subcommittee (ASC) as a subcommittee of the Federal Financial Institutions Examination Council (FFIEC) to supervise the state boards, including the licensure and certification of appraisers. State licensing laws were passed by each state and in order to provide uniformity, the Uniform Standards Of Professional Appraisal Practice (USPAP) as established by The Appraisal Foundation were adopted as the standards for the license laws. ASC is not a part of the Appraisal Foundation but has authority from Title XI of FIRREA to monitor the activities of The Appraisal Foundation. The Appraisal Foundation is a private, non-profit organization made up of seven professional organizations with voluntary membership of appraisers that existed prior to state regulation. In 1986-87 an Ad Hoc Committee was formed by the Appraisal Foundation to develop the Uniform Standards Of Professional Appraisal Practice (USPAP) in an attempt to self regulate the appraisal profession. When the regulation of appraisers by the states was mandated by Congress with the passage of FIRREA in 1989, USPAP was recognized as an obvious choice to create uniformity of all state laws and USPAP became the standard adopted by the states in the licensing and certification of appraisers throughout the country. Today appraisers must adhere to USPAP to comply with state licensing and regulation. Appraisers must complete a USPAP update seminar every two years in order to stay compliant.

Appraisers in Missouri were first licensed and certified in 1991. The agency in Missouri that is responsible for the examination, licensing and regulation of persons who engage in real estate appraisal business is the Missouri Real Estate Appraisers Commission (MREAC). It is a division of Professional Registration of the Department of Insurance, Financial Institutions and Professional Registration. Appraisers in Missouri are licensed for a period of two years and must complete continuing education requirements including a USPAP update course during that period. Appraisers in Missouri are classified as follows:

STATE CERTIFIED GENERAL REAL ESTATE APPRAISER – may perform appraisal on all types of real estate and appraisal consulting.

STATE CERTIFIED RESIDENTIAL REAL ESTATE APPRAISER – may perform appraisals on residential real estate of  1 – 4 residential units and appraisal consulting in the area of residential real estate.  This designation permits the appraisal of vacant or unimproved land that may be used for 1 – 4  family purposes. This designation does not permit the appraisal of subdivisions  (individual units within a subdivision are permitted) or of agricultural real estate. Agricultural use is defined as improved or unimproved land with a highest and best use and primary purpose devoted to income production by crops, livestock and other products of the soil (fruit, pasture, timber land, etc.).

STATE LICENSED REAL ESTATE APPRAISER – may perform appraisals of real property including 1 residential unit.


Call to request an appraisal: 636-265-5155

Tom Schulte

Tom Schulte


109 Barrington Lake Drive
Dardenne Prairie, MO 63368