Lehigh Valley Real Estate - New Appraisal requirements will be implemented by the Federal Housing and Financing Agency which will effect the way appraisals are done on Conventional Home Loans nationally as of May 1, 2009.
To keep things simple.
BEFORE May 1st, 2009.
1) The Loan officer who the home buyer contacted to get a loan would be the same person who would select,contact and talk to the appraiser to conduct the appraisal on your home.
2) The company/bank/lender who is actually giving you the money to buy your home is actually who needed the appraisal results to make sure that the money they are giving you for the home is the same amount the home is actually worth. Just in case you do not pay the loan or loose your job and can not pay the loan, the bank can list the home for sale and get back the money you owed them.
3) The problem with the loan officer selecting the appraiser and being involved or the real estate agent being involved is that neither of these two people get paid if the home does not appraise for the purchase price. So, in SOME situations this could make for some appraisers feeling pressure from people calling them directly and telling them things like if you do not appraise the property for the purchase price we will not hire you again or if the home did not appraise through one appraiser then in some situations another appraiser was then hired to make the home appraise.
FINALLY the powers above us found out that these things were going on in the Real Estate Industry and they have came out with this new law.
HVCC or Home Valuation Code of Conduct - If you want to read the actually law or go to FAQ's about the law.
As with all Laws - Reading the actual code is Very confusing, Very detailed, Very Strict.
I believe this is a step in the right direction for Lehigh Valley Real Estate Market. BUT...
There are some things that the consumer and the Real Estate Agents need to be aware of in SOME situations. It is better to do your homework and make sure you are protected then to take any chances on things not being done the right way.
AFTER May 1st, 2009 on Covnentional Loans only.
1) The appraiser is only contacted by the lender/bank and/or their representitives which may be a third party Appraisal Management Company. The major point is that the Loan Officers, Mortgage Broker and/or Real Estate Agent is NOT permitted to hire the appraiser.
2) Now there will be no unfair influence given to the appraiser about the home appraising "or else" which it should have been this way from the begining.
3) THE BUT part: There needs to be some management/homework done by your real estate agent. They should inquire as to what your lenders/bank procedures are for hiring appraisers. Because in SOME situations Lenders are putting out the appraisal process to a bidding process which means the appraiser hired MAY NOT be from the county where the home is located.
4) When an appraiser is suppose to conduct research on current market value...just like your real estate agent...these people should be have extensive knowledge about the area and specialize in working in the area where the home is located. The appraiser must have access to the Local MLS data and if they are not from the area they will not have access to this information. So, how can they determine the correct Market Value?
5) The home Buyer and/or Real Estate Agent needs to get involved and find out what the appraisal procedure is for the lender and if needed the Real Estate Agent may need to provide the appraiser with local sold and settled property data from the local mls. This can be done by meeting the appraiser at the home the day of the inspection to provide them with this information which will support the purchase price. If you can not prove the Market Value...BEFORE YOU MAKE an offer then do not even bother making an offer at that amount. Your Real Estate Agent should be doing a very detailed Market Value Report for you BEFORE you make an offer on a home.
6) Once last note: Paying for the appraisal...The home buyer should be prepared for paying for the appraisal out of pocket on or before the appraisal is conducted. I mention this because in SOME cases the appraisal was paid by the Loan officer/Mortgage Broker and then the home buyer would reimburse them at settlement. Now, the Home Buyer will need to pay the Lender or their representatives direct.
There are many other parts to is new extensive Home Valuation Code of Conduct and you can read all the FAQ's if you want..BUT I just wanted to share my new found knowledge with Lehigh Valley Home Buyers and hope it helps you in some way.
Other Helpful News & Updates
Lehigh Valley Real Estate: Days on Market & Total Sales 1996 to 2009 for the Month of March
FHA Appraisal Changes Effective April 1, 2009 - Link Coming by 4-20-09
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