New rules check unethical appraisers

Submitted by Joe Loomer on July 2, 2009 - 4:19am.

Glenn,

NAR's chief economist, Lawrence Yun, in speaking about the disparity between the Pending Home Sales Index and actual sales, noted:

“Closed existing-home sales have improved but are coming in lower than expected because some contracts are delayed or falling through from the application of new appraisal rules for many transactions,” he said. “Rises in contract activity show buyers are becoming more active even as they face much more stringent loan underwriting standards. Speedy clarification of the appraisal rules could smooth a housing market recovery and support the overall economy.”

He also noted:

“The big question is how much the appraisal issue will impact the ability of contracts to go to closing,” Yun said. “We are currently conducting a study to assess the degree to which new appraisal rules are impacting home sales.”

Furthermore, NAR President Charles McMillan - who traveled to New York and DC over the last two weeks to address HVCC issues with both Appraisers and Congress, added:

“In many cases appraisers from outside the area are being used, but as everyone knows real estate is local and appraisals should be done by an expert with local expertise."

It seems to me that the NAR is trying to help everyone of it's members - and the general public - by clarifying HVCC and other appraisal trends that may inadvertently discount home values across the nation.

Augusta GA Homes
Navy Chief, Navy Pride
Joe Loomer (USN Ret.)
Associate Leadership Council, Growth Chair
Keller Williams Realty Augusta Partners

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Submitted by Jill James on July 2, 2009 - 7:25am.

Glenn,

Frankly, I never did like the way that the appraisers used to have the contract price before they did the appraisal because, on many/most occasions, the appraisal was completed to the contract price, which could have been low -- I think that I am a pretty good negotiator and was able to get some pretty good purchase prices for the Buyers I was supporting. Anyway, that was then...

Now, we are faced with the other extreme and extreme is never good -- you know, everything in moderation. If the previous rules were not enforced, which allowed for part of the problem to get out of hand, why not just enforce the rules, rather than disadvantaging the consumer -- Buyers and Sellers -- with new rules that are allowing some really incompetent and unprofessional practices by some appraisers -- there is no way to avoid those appraisers now, since they are assigned randomly, as I have been told.

Several of my clients -- again, Buyers and Sellers -- have experienced some great negative impact by a few of those lesser appraisers, but there is no recourse to improve or to rid the industry of these inadequate appraisers because no one can talk to anyone! And, by the way, I am not talking about talking to the appraiser to get the right price. I am talking about talking to the appraiser to get the job done in a reasonable amount of time -- as I mentioned in a previous post, 4+ weeks to answer an FHA questionnaire about a 30+% high appraisal and, then, after 4 weeks, admitting that he didn't even have the appraisal anymore is just NOT acceptable!

If, as you state, the previous rules were good rules, but not enforced and, thereby, the loopholes or unethical participants were taking advantage, isn't it reasonable to go to those rules and enforce them? Instead of creating new rules, that are hurting the consumer and, eventually, probably won't be enforced either, stay with what can work if the right checks and balances in place!

As usual, we threw the baby out with the bathwater and now we have to run around frantically to save the baby!

Think it through... Ready, Fire, Aim only works if the Aim is actually done, which it probably didn't until "all the bad stuff" hit the fan!

Jill

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Submitted by Barry Noble on July 2, 2009 - 1:31pm.

Believe me there is a majority of good, independent and very accurate appraisers out there, and the number of cheating, low ethics appraisers has given everyone a horrendous name. This brought about one of the most flawed efforts to control so called lender influence on appraisers.

Instead of creating a way of keeping the appraisers anonymous and independent, they have created a new intermediary line of companies called Appraisal Management Companies (AMCs) and they take part of the appraisers fees (sometimes as much as 1/3 to 1/2) plus add more to charge a lot more money for the appraisal - and many of these companies are owned by subsidiaries owned by the big banks/lenders - so where is the anonymity? The AMC's still have fee "panels" and these are approved by the.....lenders. They can thus use the same appraisers they controlled before.

I have been appraising for some 18 years and have remained independent and, I am proud to say, ethical and honest in all my reports. If there ever was a hint of pressure from a lender - or Realtor, I have stopped it instantly or dropped the appraisal assignment flat!

Now, I sit here, spending my time I could be providing lots of good, honest and fast appraisals - looking for work in other aspects of the appraisal profession - insurance, estate, legal, divorce etc., or listing and occasional non Fed. regulated work - I am close to giving up a profession I love so much, and am good at - and I may have to return to Real Estate Brokering again. I don't want to - HVCC should be withdrawn and - if they still think something is necessary - then contact us - the honest and hard working, independent appraisers and we will tell you how we can do the work without influence. Appraisers do not decide property values - it is an art form and an intricate profession - we confirm the Current Market Value - which is decided by the buyers and sellers and the economy. We only report on it - and sometimes the messenger bringing the truth, is the one people want to shoot. Sorry.

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