HVCC doesn't allow market to set prices
Letter to the Editor
By Inman News, Monday, November 23, 2009.Re: 'HVCC makes cash buyers king' (Nov. 23)
Dear Editor:
I agree with your commentary that the Home Valuation Code of Conduct is causing lower prices in some areas. The market value of a home is what a ready, willing, able and informed buyer is willing to pay, not what the comps say it is worth.
As more sales go in as new comps at what the strict HVCC lowered the final sales price to versus what the buyer was willing to pay -- you have a (distorted) database of HVCC final prices vs. true market prices a buyer was willing to pay.
So lower is the only direction prices can go by law. Sad for consumers, and our country.
Joe Bingham
Bingham and Co. Inc.
Denver, Colo.
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Submitted by jim bogris on November 24, 2009 - 5:59am.
The HVCC, is causing lower values to appear lower as a result of execution.
Most HVCC work is in the hands of the appraisal managements, who will for the most part collect anywhere from $400-$500 from the applicant, while paying the appraiser$165-220 for a typical single family appraisal.
I know of several appraisers doing this work who have to do 2-3 jobs a day, to retain the income they were making with 1-2 jobs a day.
As a result they are going for the easiet value to support with the least work involved; they are appraising to the AVM and not the subject.
Keep the value, close to the AVM and you don't have to take phone calls as to why you did not use a comparable sale that you noted to be 1/2 the size as the subject and so on, these guys are going for the easiest appraisal they can do.
No way to do 3 a day if they're done right.
Jim Bogris
visit our webpage to win$1,000
www.bogrisappraisal.com
Submitted by Jeanne L Turnock on November 24, 2009 - 9:47am.
The HVCC may be causing lower values but that is because it does what it was designed to do -- remove outside influences from the appraiser to inflate the value so the appraiser can now determine a value by using settled sales that reflect what a ready, willing, able and informed buyer is willing to pay. It is only by looking at settled sales that one can make that determination, for settled sales represent what a ready, willing, able and informed buyer is willing to pay. What else should one use to determine value? There is NO value until a buyer puts the money on the table. Talk is not worth anything. A seller's feeling as to the value of their home is worth nothing if no one is willing to pay that amount.
Jeanne L. Turnock, Broker & Appraiser
Turnock Real Estate Services, Inc.
Baltimore, MD.
Submitted by William Metzker on November 24, 2009 - 10:08am.
Let's not forget that a zillion buyers were ready, willing and eager to seriously overpay for a couple of years while lenders cascaded cheap money on them. Sorry, I do not agree at all that HVCC causes lower prices. Whatever it's infirmities, that's not one of them.
Appraisers also rightfully ask the purpose of the appraisal. Lay people don't get this, thinking that a property is worth what it's worth. But outside forces dramatically affect value. If owners are heirs who want to take their money and run, that's one value. If a lender is advancing mortgage funds and has to acknowledge the possibility of foreclosure, that's another value.
And what if the buyer is a starry-eyed first-timer visualizing the white picket fence and the dog in front of the fireplace, with a real estate agent wink-wink telling her what a great investment a house is, and the agent hasn't had a closing in a couple of months? She may be ready, willing and able, but someone needs to provide a reality check.
From my prospective, independent appraisers are insulating everyone with their objectivity, and I'm grateful for them. A whole set of appraiser guidelines emerged from the S & L catastrophe, and more will emerge from the one we're in now.
AMC's suck, HVCC overreached, but let's look at the problems with process and not make ridiculous charges.
Submitted by Ruthmarie Hicks on November 24, 2009 - 10:22am.
When everything was going up-up and away - no one cared. However, in our area at least, HVCC is creating lower values specifically in homes that have been renovated.
VALUE is what an informed buyer is willing to pay. Unless the buyer is certifiably insane, no one is over paying for anything right now. I've had $500k deals nearly falling apart over $500! Everyone - especially buyers are trying to wring every dime out they can for their side.
The problem here is that an impeccably renovated home is getting comped to the dump down the street that has had the same owners for 50 years who have done nothing to the home. This is penalizing those who put time and $$$ into their homes and are selling them in pristine condition. I just sold a down to the studs renovation that had difficulties because the other comp hadn't seen an improvement since World War II.
Also, the financial squeeze on appraisers is making it tough for them to stay a float. I agree that undervaluing seems to cause less headaches for them - and with the money the (aren't) earning - the fewer headaches the better. Understandable - but this is not a good way to fly. Further, the LAST thing we need right now in this economy is needlessly low appraisals pushing down prices. This is bad for the general economy.
Submitted by Douglas Quenzer on November 24, 2009 - 2:18pm.
If a deal falls apart over $500 then as an agent cough up the $500. Especially if it is a 500,000 deal. I was a broker that made deals work that way all the time. Then you would get some sales to support higher values.
The HVCC doesn't cause lower values. Lower values are caused by lower market sales. Plus appraisers are under very strict underwriting guidelines. Remember an appraiser is there to protect the collateral of the bank, not to make the deal fly. The lender is the client, and the client often sets parameters that must be adhered to. That's not the HVCC problem.
Submitted by Ted Jernigan on December 13, 2009 - 6:14am.
Ted Jernigan
Ebby Halliday REALTORS
McKinney, Texas 75071
www.TeamJernigan.com
972-489-6173
The very fine lines between the homogeneous neighborhood and the houses that are updated and upgraded. We have a lot of development done in the last 20 years. Houses that have been updated and well maintained often get short shrift from appraisers because they only compare houses from the exact same neighborhood, and they are giving very little allowance for extensive updates that have been recently completed. I recently had a buyer purchase a home that had extensive outdoor kitchen and pool facilities. The apprasial came in $35,000 below the contracted price. My buyer had seen every house in the area that met his needs. I could not justify the price based on comparables. The buyer concluded that he could not reproduce the ammenities for the price the appraiser was willing to allow. Given all the information the buyer chose to buy for cash at the original agreed upon price. His rationale was that he was getting exactly what he wanted, with the features he wanted, and he couldn't recreate it for the price he was paying. Luckily he could pay cash.
Submitted by Ruthmarie Hicks on December 13, 2009 - 7:08am.
I have Kicked in money from time to time, but this is becoming and ALL THE TIME event now. I have finally been forced to put the brakes on it altogether. Further, people keep thinking that agents can still get a fat 3% on each sale. In high priced areas like mine that has been cut by as much as 1/3. People can barely run a viable business on that. For listings I also have the investment in the marketing. Lets not even discuss referral fees. Some people want to scarf up 30% for me to do all the work. The margins have become too thin in our area for me to kick in anything. That's what happens when discounters grab a foothold. If that aspect isn't part of your market - count yourself lucky, but know that its coming - eventually.
Submitted by Paul Turcotte on December 14, 2009 - 5:37am.
I have yet to see the wisdom in the creation of the HVCC. Correct me if I am wrong, appraisers primary job is to confirm property value not set the market as is happening all to often since this new system has came into play. We have seen a number of circumstances where qualified buyers have walked on questionable appraisals despite the so called recent adjustments or fixes.
In my opinion the HVCC has created more problems than it was intended to fix. It's more feel good legislation that does more damage than good.
Paul Turcotte
http://www.insidedestiny.com