Men from Mars, Women From Venus, Appaisers from Uranus!
Appraisal Rules Are Causing Problems on Staten Island!
All Politics Are Local...Well it's the same for appraisals or at least it should be.
Just yesterday I received a call from an appraiser. She needed comparables for a 2 Family Semi Detached home on Staten Island but could only find 2 family detached homes. That's strange. There are tons of 2 family semi detached homes on the island for sale; "Haven't you looked on the MLS?" I asked her. The owner of her company doesn't belong to the MLS, he doesn't want to spend the money, she explained. She was simply searching Realtor.com like any consumer would to form her appraisal.
So, for perhaps the most significant purchase of someone's life this appraiser was cobbling together home details from Realtor.com, in fact, that's how she found me! It got even worse. When I asked her if she's familiar with the area (one of the most important elements of an appraisal) she explained she lives in New Jersey, although her office is in Queens but she's doing an appraisal on Staten Island! How's that for a round-a-bout.
Local markets are all different so how can an out of the area appraiser who isn't familiar with the neighborhoods perform a proper appraisal? Remember, this is important. If the home doesn't appraise correctly, the loan isn't approved. If the loan isn't approved the home doesn't sell, when homes don't sell our economy remains stuck in neutral.
The Home Valuation Code of Conduct (HVCC) went into effect on May 1st, 2009. It was supposed to put an end to corrupt practices in the appraising properties - appraisers would produce appraisals solely aimed at getting the loan approved. The more the home was worth the easier for the bank to approve the loan - hence one of the main ingredients to the bubble. Well the solution, HVCC, has caused even more problems. Under the new rules, neither the mortgage broker nor real estate agent can choose the appraiser. The bank can but it can't be anyone in the bank associated with the loan process. Banks are now using 3rd party Appraisal Management Companies (AMC) that receive the request and select an appraiser from their list of approved appraisers - regardless of location, knowledge or experience. It's a sort of HMO plan for appraising. Instead of having appraisers who banks worked with regularly, local people who knew the markets, we have people who don't know the area or the homes and don't have the tools or ability to familiarize themselves with the market. It will take a bit of time for this to change, government moves slowly, but if there's one concept they should understand it's that "all appraisals are local", or should be.
For more information, please contact me, Claire Chesnoff, your real estate broker, at (917) 974-2238 or clairechesnoff@gmail.com.
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