KNOWLEDGE IS POWER CONCERNING APPRAISALS

The challenges facing all those who choose to participate in real estate today are varied and complicated.  Arming yourself with knowledge may alleviate at least a few of said challenges.

With the best of intentions, HVCC (Housing Value Code of Conduct) was implemented by Fannie Mae and Freddie Mac at the urging of Andrew Cuomo.  The intention of this guideline was to put at arms length the relationship between the appraiser and the entity doing the hiring.  While a noble idea, the results of implementation have proven to be a nightmare for sellers, buyers, Realtors, appraisers and lenders.  The only entity that appears to have come out unscathed are the banks.

Appraisals, in many instances, now take more time, are unreliable, are more costly to buyers, less profitable for appraisers, a new revenue generator for those companies who own appraisal management companies, and are devaluing properties.

There are, however, steps that can be taken to mitigate some of these issues.  Here are just a few:

• Until the guidelines for FHA are changed to adopt some of the new appraisal guidelines, FHA can still select their own appraisers…a definite edge that should be considered.
• Be certain, when evaluating a list price, that the value is provable.  Have quality comparables ready to show the value of the property.
• After the property is in contract, take the keys out of the lockbox to be certain the appraiser must contact the listing agent for access and that the listing agent will be there.
• The listing agent should bring printouts of the comparable properties and offer them to the appraiser.  In doing this, the agent is not permitted to attempt to sway the appraiser, but can give comparables.
• Ask for a business card from the appraiser.  See where the appraiser is from.  If he/she is further than 2 counties away, the listing agent would have every right to question the knowledge the appraiser might have about the area. The listing agent may want to bring a map of the area explaining the idiosyncracies of each neighborhood around the property being appraised.
• After receiving the appraisal, the buyers agent may want to check to see if the name on the business card is the same as the name at the bottom, left of the appraisal. If it is not, the state regulators for appraisers should be contacted.

A little knowledge goes a long way.  Until the HVCC is tweaked to be a more realistic entity, be aware of the issues and the solutions!