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The Appraiser and the Real Estate Agent

By
Real Estate Appraiser with North Country Appraisal Services

The past 9 months since the enactment of the HVCC have been a period of great turmoil for appraisers and real estate agents alike.  As generally is the case, the government fix for a problem has not only left it unfixed, but created a landslide of new problems.  Appraisers who had built up longstanding relationships with lenders through good, competent service had these relationships instantly dissolved.  AMC's took over the general appraisal process increasing the fees to the consumer while lowering the quality of the appraisals by using low paid and often incompetent appraisers, many times from quite a distance from the market area.  Real estate agents lost their ability to provide market information and suggested comparable sales to assist the appraiser.  Or did they?  HVCC does not prohibit contact with the appraiser by the real estate agent.  It does prohibit coercion.  I have always and continue to welcome input from the real estate agents/brokers involved.  It then is my decision as to what extent that information is applied in the report.  It makes no sense in developing the most supportable valuation that I would not want all the possible data available.  Working a generally rural and widespread marketplace, I have developed my "go to" list of local real estate agents who have a great grasp on the local market.  I welcome comps from the agents of the transaction to consider and review since it's not uncommon to find only 1 or 2 comps in some rural areas.  But I reserve the right to utilize or reject those comps in my report following my inspection and own comparable search.  By having all the proposed comparables, it is much easier to evaluate each one for the report and, in the event they're not good comparables, I have a ready explanation for not using them.

Comments (13)

Cherry Wings Realty
Cherry Wings Realty - Traverse City, MI
Your Traverse City Michigan Realtor

It is very sad that our governments typical, knee jerk reaction to a problem has caused so much turmoil in our industry.  we now have appraisers in our areas that are from hundreds of miles away and have NO idea what is going on in our markets, yet they are the ones making the determination of the value of a home.  It is truly a sad state of affairs.

Feb 07, 2010 10:52 PM
Jack Hughes
Hughes Appraisal Group Inc. HUD/FHA Approved) - Lehigh Acres, FL
LGBTQ PROUD !!!

Very nice Blog. My business has declined about 70% since the HVCC. And now with FHA following the same path of destruction I don't know how much longer I can survive in the business

Feb 08, 2010 02:21 AM
Richard Glesser
North Country Appraisal Services - Gaylord, MI

Jack - We need to diversify, and fast!  Fortunately, as a commercial appraiser, that has picked up during the past several months and does not fall under the HVCC umbrella.  I've also gotten a couple second and home equity appraisals which are held in-house and not affected.  Check with previous lenders, primarily banks and credit unions who do these loans.  I posted a comment on your recent blog as to a starting point to reach AMC's.  Also, I've been doing some tax appeal work and have found that the economy and HVCC have no effect on deaths so probate work through local attorneys can be an option.  Recent years have had the IRS tighten up requirements which work in our favor as appraisers.  Knowledgeable attorneys would prefer appraisals over BPO's to avoid complications later.  Also, being tax time, accountants may use services in preparing complex returns where property devaluation may create a loss.  Just some thoughts.  We need to educate the local attorneys/accountants of the importance of a quality appraisal.  I'm sure an appraisal prepared for tax purposes would also be an expense of the tax preparation and a deduction.  I know there are some publications circulated for sale on the internet of AMC contact information but have not ventured forward as I have not found anyone who has made major gains by purchasing the list.  Sort of like the AMC's which charge an annual fee for being on their panel.

Feb 08, 2010 02:41 AM
Richard Glesser
North Country Appraisal Services - Gaylord, MI

John - I agree with your comment.  I do have a second blog outlining ways to help the appraiser.  One item is providing an information package similar to that you described but even more inclusive.  With appraisers coming from out of the area and having less experience, it is evn more imperative to educate them.  I'm also going to develop a blog expanding on the new appraiser concept you brought up.  Before AMCs, a major difficulty in beginning in this profession was establishing yourself when experience was lacking.  Now, if you possess a license and will work for nothing, the AMCs will hire you.

Feb 10, 2010 02:45 AM
Craig Chapman
Call Realty / Access Appraisals - Mesa, AZ
The Value Guy

Your comment about the AMCs taking over & raising fees is interesting as I was thinking the other day about that situation & how it relates to RESPA.  RESPA claims to be looking out after the consumer & un necessary loan fees etc.  I e-mailed RESPA to see what they had to say about this situation of raised fees, no competition in terms of choice for the borrower etc.  They just said they were not concerned about appraiseal fees.  Seems like part of the HUD-1 loan costs to me.  Most of the lenders choose only 1 AMC to do business with, even if most of their loan agents hate the AMC.  I know 1 lender, (a former client) where the LOs really dislike the current AMC because of the higher fees, long 3 - 4 week completion times, etc.  The borrower has no choice & gets stuck paying an extra $100 bucks or so.  Take it or leave it if they want the loan. People should start refusing to pay the high fees, & demand their lender hire the appraiser direct to lower the fee.  They can do that, just not the LOs or processors.

Feb 10, 2010 02:07 PM
Coast to Coast Appraisal Group
Coast to Coast Appraisal Group, LLC. - Fullerton, CA

HVCC killed my appraisal business. Forced me to get my Real Estate license. I went from 12-15 appraisal orders per week to 2-4 per week. Hmmm, HVCC sucks! The Gov't has and is contributing to the unemployment rate.

 

Feb 12, 2010 05:21 AM
Richard Glesser
North Country Appraisal Services - Gaylord, MI

Tim - I think everyone is affected negatively by HVCC except the AMCs.  I just got an e-mail from Appraisal Loft titled "Appraiser Indepedence" slanting the upcoming transition of FHA work as a blessing for appraisers by removing lender pressure.  What a spin!!!  My workload was good in November but took a dive in December and January.  Hoping it's more the winter dormant season since others have had the same decrease.  Just checked my VA volume and that seems to indicate a marketwide decline with VA work still being controlled by the VA and out of the hands of the AMCs.

Feb 12, 2010 05:45 AM
Coast to Coast Appraisal Group
Coast to Coast Appraisal Group, LLC. - Fullerton, CA

Has anyone heard that the HVCC may be recinded this comming November?

Feb 25, 2010 02:05 AM
Richard Glesser
North Country Appraisal Services - Gaylord, MI

The HVCC was a temporary agreement, not a long-term binding document.  It does expire but its effects will remain unless altered legislation or market changes.  Even after expiration (if it isn't extended), many like FHA, FANNIE MAE, etc. will continue to follow until it hits them between the eyes that it IS NOT WORKING!!!

Feb 25, 2010 02:21 AM
Coast to Coast Appraisal Group
Coast to Coast Appraisal Group, LLC. - Fullerton, CA

So, if it does expire in Nov. Does this mean that brokers will have the ability again to contact the appraiser? Or will they still have to order through an AMC?

Feb 26, 2010 01:06 AM
Richard Glesser
North Country Appraisal Services - Gaylord, MI

Time will tell.  If there is enough vocal opposition to it and negative effects caused by HVCC, it could be amended or changed or dissolved.  However, if all those experiencing the negative effects remain quiet and restrict their complaints to a forum like this, then it may well be renewed or extended as is since the AMCs are presently campaigning on how well it is working.

Feb 26, 2010 01:51 PM
Coast to Coast Appraisal Group
Coast to Coast Appraisal Group, LLC. - Fullerton, CA

I actually sign the petition to oppose the HVCC. It has collected well over 130,000 signatures so far. So, the voices will be heard

Feb 27, 2010 02:56 AM
Richard Glesser
North Country Appraisal Services - Gaylord, MI

Hopefully they'll recognize the voices of reason rather than the voices of $.  It's amazing that, as a result of a major lender and an AMC being brought to task by the New York Attorney General Office for inflating values for fraudulent loans, the resulting HVCC agreement nearly requires use of AMCs.

Feb 27, 2010 03:39 AM