Appraisal Accuracy Can Best Be Described As A Roller Coaster Ride

Mortgage and Lending with George Souto NMLS #65149 FHA, CHFA, VA Mortgages NMLS #65149

Many efforts have been made to try to ensure better and more accurate Appraisals.  While improvements have been made in some areas, holes have been created in others.  The ups and downs of the Appraisal Accuracy Can Best Be Described As A Roller Coaster Ride.

Several efforts have been made to create a reliable, and transparent appraisal process, but all have failed.  It seems when one problem is solved, the solution creates a new problem in another area.  In the early to mid 2000's appraisals were very lose, properties appraised for values beyond what they probably should have.  From the mid to late 2000's the appraisal process tried to adjust back to more realistic values, but created issues for those who had purchase homes at the height of the market.

In 2009 the "Home Valuation Code of Conduct" (HVCC) was created in an effort to take pressure away from Appraisers by Loan Originators out of the process.  While the HVCC took Loan Originators out of the process, it created a you can't touch me attitude from Appraisers, and with the attitude came the under appraisal of properties.

Since the introduction of the HVCC several modifications have been made to the Home Valuation Code of Conduct in an effort to bring a balance back into the appraisal process, and improve the quality and accuracy of appraisals.  The latest effort was the creation of the "Uniform Collateral Data Portal" (UCDP), but it two has holes  which has led Freddie Mac to request a new appraisal check to be added to the UCDP.

In doing so Freddie Mac has request Clear Capital, an appraisal management company to develop a new appraisal check in the UCDP which will work with Clear Capital's ClearQC software.  The hope is that the new appraisal check will bring the UCDP closer to a consistent approach to appraisal reviews,  accuracy and quality.

According to an article in the National Mortgage News by Austin Kilgore, the goal is "to evaluate appraisal data received by the UCDP provide; lenders with prefunding feedback about the quality of appraisal data, property valuation and appraiser compliance; and to score and validate appraisals to improve the quality of information backing funding decisions."  That sounds like a great goal, but the track record to date to accomplish this has not been very good.

While the issues identified by Freddie Mac are a major concern, there is another concern which needs to be address, and in my opinion easier and less costly to correct.  Freddie Mac as well as the other GSE's would better off instituting a process to ensure appraisals are not performed by Appraisers who are not familiar with the area they are performing the appraisal in.  This to me is presently a major problem and causing a needless number of inaccurate appraisals.  Ensuring appraisals are not performed by appraiser who are not familiar with the area they are performing an appraisal in would go a long way in correcting the reason why the Appraisal Accuracy Can Best Be Described As A Roller Coaster Ride, and finally get the appraisal process back on the right track.




 Info about the author:

George Souto NMLS# 65149 is a Loan Originator who can assist you with all your #FHA, #CHFA, and #Conventional #mortgage needs in Connecticut. George resides in Middlesex County which includes #Middletown, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum, #Haddam, #East Haddam, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or

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 Info about the author:

George Souto NMLS# 65149 is a Loan Originator who can assist you with all your #FHA, #CHFA, and #Conventional #mortgage needs in Connecticut. George resides in Middlesex County which includes #Middletown, #Old Saybrook, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum, #Haddam, #East Haddam, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or


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Ginny Gorman
RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in North Kingstown RI and beyond

Hallelujah and well said George...local appraisers are so important!

Jun 29, 2014 09:41 PM #13
Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

George, I think that out of area appraisers are the worst.  I had one who must have parachuted out of an airplane from Nebraska. 

Jun 30, 2014 04:02 PM #14
Conrad Allen
Re/Max Professional Associates - Webster, MA
Webster, Ma, Realtor

Appraisers are just aggregators of sales information George.  It is now a violation of USPAP if you are doing appraisals in an area where you are not geographically competent.  Get rid of the HVCC's.  It is up to the agents to file complaints against incompetent appriasers

Jun 30, 2014 07:56 PM #15
Debbie Gartner
The Flooring Girl - White Plains, NY
The Flooring Girl & Blog Stylist -Dynamo Marketers

Yes, I've always heard issues with the process.  The biggest complaint I've heard is out of area appraisers.  I don't get why they would even be considered.

Jun 30, 2014 08:37 PM #16
Pamela Seley
West Coast Realty Division - Murrieta, CA
Residential Real Estate Agent serving SW RivCo CA

I'm with Lisa comment #10. I agree, wouldn't it be interesting to see appraised values if appraisers didn't know the contract price?

Jun 30, 2014 09:09 PM #17
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

I have not had appraisal issues recently. I agree appraisers should not know the purchase price when they do the appraisal.

Jun 30, 2014 09:16 PM #18
Morgan Evans
Douglas Elliman Real Estate - Manhattan, NY

I like many agents have been lucky and have not had appraisal problems, but I can see the many valid issues that have to be dealt with in this area of the mortgage process. 

Jun 30, 2014 09:22 PM #19
Jeff Pearl
RE/MAX Distinctive / LIC in VA - Lovettsville, VA
Full Service Full Time Realtor

Seems like appraisal methods are always varying. I just had an appraisal done and appraiser was on the property 11 minutes. Other times they stayed for over an hour. In reality, no matter where an appraisaer comes from, they should all read and evaluate the same information, and come up with close to the same value. But they don't, because of their preconceived values they carry with them from the areas in which they came. I had one appraiser come from WV to Loudoun, and he said " this house would sell for x amount in Charlestown." I felt like saying " We're not in Charletown WV idiot, were in Leesburg VA". Appraised just need to look at the math, and leave their feelings out of the process.

Jun 30, 2014 10:25 PM #20
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

George, the last two sales I worked on were purchased way under market value. The appraisals came in at contract price on each one. Can't complain, but they should have come in at least at market value.

Jun 30, 2014 10:36 PM #21
Michael Frank
American United Mortgage Corp. - Sandy Springs, GA

I haven't had a problem with georgraphy lately. But some appraisers will claim they are MORE objective because the come from out of the area!

Jun 30, 2014 10:46 PM #22
Bernadine Hunter, SFR, ACRE
Keller Williams Greater Columbus Realty - Pickerington, OH
"Finding Solution to Your Real Estate Needs"

Interestingly enough, my last two appraisals came in at slightly above market, when I was sure (because of the condition) they would be below market. The pendulum swings back and forth.

Jun 30, 2014 10:48 PM #23
Ed Silva
RE/MAX Professionals, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

George, I just had that argument with a buyer's agent that had an appraisal done on a special property of mine.

I had to let them know that it was so special that if 5 appraisals were ordered, there would be 5 different values as it is all perception and appraisal of the individual and the data can always be interpreted differently. That is why several newspapers, when there were several, would all have a different slant to the same story.

Jun 30, 2014 11:16 PM #24
Rob Spinosa
Guaranteed Rate, Marin County, CA - San Anselmo, CA
Vice President of Mortgage Lending, Marin County

In every other facet of life, lack of communication leads to problems.  But in appraisals, it's codified.  Then we all wonder why common sense and solutions-based approaches seem so confoundingly out of reach.

Jun 30, 2014 11:50 PM #25
Than Maynard
Coldwell Banker Heart of Oklahoma - Purcell, OK
Broker - Licensed to List & Sell - 405-990-8862

Heard of an appraiser that came from another state and was 6 hours away from the home. You tell me if he was familiar with the area.

I am getting appraisers from several hours away on a regular basis AND they are not on the MLS. Yes, all the data should be available at the courthouse, but these guys are lazy and are going for the quick buck. They are not checking at the courthouse. They might check online, but our courthouse records are notoriously inaccurate. Any one familiar with the area knows this.

Jun 30, 2014 11:59 PM #26
Marc McMaster
RE/MAX Centre Realty - State College, PA
Putting my clients before myself

The more the government has goten involved the more complicated the process has become. Less government, less problems. 

Jul 01, 2014 12:56 AM #27
ReadySetLoan Condo Approval Team
ReadySetLoan Condo Team LLC - South Windsor, CT
The FHA/VA Condo Project Approval Specialists

Hi George - isn't that the way it is with government.  They "solve" problems that create others to be solved.  To try to control certain species of bugs and plants, they bring in predator species to eradicate the "pests".  These species then take over and have unintended consequences on the environment.  I don't see this changing...

Jul 01, 2014 01:57 AM #28
Jesse Skolkin
Independent New York State Certified Real Estate Appraiser - Fresh Meadows, NY

George - a couple of comments:


1) The HVCC has been retired and replaced by Appraisal Independence Requirements (AIR) effective 10/15/2010.

You can find the full text of the AIR at the links below:


2) Appraisals are opinions and therefore the standard to judge an appraisal is not "accuracy" (at least as it pertains to the Opinion of Market Value, or course accuracy is important when dealing with factual matters) - the standard by which appraisal are judged is credibility, i.e.: is the opinion of market value well supported by the facts gathered by the appraiser (comparable sales, adjustments, rental information for income producing properties, etc.).

Jul 01, 2014 02:29 AM #29
Olga Simoncelli
Veritas Prime, LLC dba Veritas Prime Real Estate - New Fairfield, CT
CONSULTANT, Real Estate Services & Risk Management

George, couldn't agree more that out-of-area appraisers create issues. I try to work with them by helping them with information about the updates in the home and local sales.

Jul 01, 2014 05:36 AM #30
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

I've been fairly lucky with appraisers over the years.  However, because I didn't get involved in short-sales, I've skirted a lot of the issues some agents have endured with out-of-area appraisers.

After reading some of the comments asking why it is appraisers sometimes ask for a copy of the contract.  I would suspect that the "willing buyer - willing seller" component in evaluating may be part of that.  Also, sometimes a buyer will make a more generous offer if certain personal property items are left behind - refrigerators, washers, dryers, etc.  That can often cause issues in appraising.

Jul 01, 2014 09:43 AM #31
Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

George, I know I was the victim of HVCC in 2009 when the appraisal for my listing came lot lower! However, things have changed a lot since then.

One thing I fail to understand - why should there be a restriction on who should appraise the property? We are in the different world today - and frankly knowing the market is as simple as getting onto Internet! I have helped my friends living thousands of miles away give an idea on what their homes could be worth (not boasting about it, though.) And appraisers have lot better tools than we do have, as Real Estate professionals.

Jul 01, 2014 03:16 PM #32
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