FTC Approves Final Order Prohibiting Minimum Appraisal Fees in Louisiana

Recently, the FTC approved a final order settling charges that the Louisiana Real Estate Appraisers Board (LREAB) violated Section 5 of the Federal Trade Commission Act by unreasonably restraining price competition for appraisal services in Louisiana. The final order requires that the LREAB cease and desist from raising, fixing, or stabilizing the prices or compensation relating to the pricing for real estate appraisal services.

The 2010 Wall Street Reform and Consumer Protection Act included a requirement that appraisal management companies pay rates customary and reasonable for services performed in the market area of the property. The LREAB had passed a rule known as Rule 31101 that effectively set minimum fees for real estate appraisals. The complaint against the LREAB alleged that the LREAB’s regulations exceeded the scope of their mandate and limited the freedom of individual appraisers and their customers to engage in meaningful negotiations to determine fees for real estate appraisals.