The National Association of Realtors (NAR) recently put out a survey to members asking what impact, if any, the new Home Valuation Code of Conduct (HVCC) has has on the real estate business.
From the preliminary data received it appears that the HVCC is having a negative impact on real estate sales across the country.
Realtor and appraisers members of NAR are reporting that:
- 75% of Realtors representing buyers or sellers said that the time to obtain a completed appraisal increased after May 1st (when HVCC took effect). 69% reported an increase of over 8 days.
- Lost sales were reported by 37% of Realtors trying to get a sale to closing with 20% reporting more than 1 lost sale.
- Reports of lost sales will impact teh fallout rate in pending home sales although some of these sales may be completed after a delay of who knows how long.
- Increased use of out of area appraisers was reported by 70% of Realtors trying to complete a sale.
- NAR appraiser members say they now obtain over 50% of their appraisal management companies (AMC).
- Around half of NAR appraiser members say their fees have been reduced by AMCs. 70% says consumers are now paying higher fees. Of course the AMCs are getting the difference.
- 85% of NAR appraiser members reported a perceived reduction in appraisal quality!
- NAR appraiser members reported that a 'significant' number of their assignments were in unfamiliar areas. 16% said that 11% of their assignments were in unfamiliar areas.
There you have it boys & girls. Appraisers are being forced to work in unfamiliar areas for less money while consumers are paying higher fees for a poorer product.
I know lots of you will have antecdotal stories of simiar situations. I had a $135,000 condo I put some folks in last year on a lease purchase. We tried to close and our appraisal came in $8,000 low because an out of area appraiser used some lower end comps.
I supplied the underwriter some more relevant comparable sales and we were able to complete the sale at the original price. Buyer payed $100 more for his appraisl and it took 3 weeks longers to close than it should have.