With the implementation of HVCC (Home Valuation Code of Conduct), we've all been experiencing, or hearing about, the problems with "travelling appraisers". These are real estate appraisers from out of the area, often without access to the local MLS, often also without knowledge of the nuances of the local market, who travel in to do an appraisal. I've been advising students in my classes to talk to lenders before their buyers make a final selection. The questions I urge them to ask: "How has your company/institution implemented HVCC?" In some cases, this will generate an answer like you would get from Sovereign Bank, in my home state: "We didn't really have to change; we already had an internal department which ordered appraisals." That's good news, because they already know who is competent in which markets. If they say, however, that they have hired an AMC (Appraisal Management Company), then I recommend that the next question the agent ask be: "How can you ensure me that my buyer client will get an appraiser who has geographic competence in this market?" If the lender starts stuttering, time to say: "Perhaps my client should investigate other lenders; it is important to both of us that the appraiser have local, geographic competence." It's also a requirement of USPAP (Uniform Standards of Professional Appraisal Practice).
But, lest agents consider themselves blameless, let's consider geographic competence for agents. My husband, an agent, specializes in a resort market in northern Lycoming County, Pennsylvania. A couple of weeks ago, an agent licensed in Lancaster County (about 2-2 ½ hours away) requested permission to show one of Jim's listings-which he allowed. Of course, a license is good in all counties in a state. The agent showed it, and then opined about the value. Gee that's interesting. He doesn't belong to our local MLS, and I'm willing to bet that he does not subscribe to our online courthouse data. Fully 60% of the sales in this market are non-brokered. Just how does he think he is able to estimate value in a market he doesn't know? I wouldn't consider opining about market values in Lancaster County, and neither would Jim.
Article 11 of the REALTOR® Code of Ethics requires REALTORS® have competence such as would ‘reasonably be expected' by the consumer. Of course, the best solution for the consumer would be to refer the consumer to a local expert-but I'm guessing that this agent is considering the difference between a referral fee and a commission split, and figuring he can get more. And believe me, I'm not saying an agent from one area can't become competent in another area-but I am saying that if you don't know what you are doing, act ethically and put your clients in the hands of someone who does. Just as agents, buyers and sellers don't deserve ‘travelling appraisers' who don't know the local market doing appraisals, buyers don't deserve ‘travelling agents' who don't know the local market.
Comments(1)