You may have heard by now all the talk about how the new HVCC, which is in full force, Appraisers are more often "Blowing" Real Estate closing by coming in with values that are lower than the contract price.
**** Don't know what the new HVCC is? Please contact us and find out.****
I have been a Real Estate Broker in Collier County Florida for over 25 years and a full time Appraiser for the past 7 years, so I do have some knowledge regarding this "Problem".
Since HVCC went into effect and there is no longer any communication between appraisers/banks/mortgage brokers, etc, ordering an appraisal because now it has become the responsibility of a third party with apparently no vested interest in the out come of the appraised price nor the contract price. Sound like a great idea!
The problem is the third party companies ordering these appraisals very often send those orders to Appraisal Companies that do not have the local knowledge or access to current sales information in order to make a qualified appraisal report in different subject markets. Some demand 24 hour turn around times and a reduced fee structure from the appraiser, of which they keep the difference and also charge the buyer an additional fees for "Handling" the Appraisal.
So once again, when the Government gets involved, it's the consumer that ends up on the "Short end of the 'Stick", in many cases, an inferior appraisal due to time restrances and increased fees.
For example, I specialize in Collier County, Florida properties, that's it period. I understand the different sub - markets of the county, have memberships in all relative MLS'S and can use properties that closed today, not 5, 10 or even 30 days or more after closings while the recording of a sale makes it way from the closing company, the Clerk of Courts then the Property Appraisers office or some other data base available to appraisers.
While these third party entities may help deter some collusion or undue pressure on appraisers by banks or other lending institutions to "Hit The Right Number," very often they are ordering appraisals from firms that do not have current knowledge or sales in the local market and pass over the local Appraisal Firms to increase their bottom line.
Being a Real Estate Broker in my area of expertise, I hear time and time again from Realtors, Buyer's and Seller's who are are dealing with Appraisal Firms that are not from the local market area and use outdated Comparables, in many cases "Blowing" the sale.
All Appraisers know or should know that working on an assignment that is outside their area of expertise is a Violation of USSAP, a set up of rules and regulations Nation Wide to direct appraisers what they can and can not do in performing their Appraisal practice. Having direct Knowledge of a local area you are appraising is part of this code.
If you find that an appraisal does not have the most recent sales information to justified the appraised value, check and find out if the firm ordering the appraisal used a local Appraiser or had some one 40 or 50 miles away or even from a different county perform the service.
In many areas of the United States, where there are great distances between small towns and rural areas this may not be possible. However, if you live in a metropolitan area or it's fringes there should be no excuse to hire an Appraisal Firm that is out of the local area of the subject property being appraised.
In some areas or sub market areas, sales have reach the bottom and it is truly a buyer's market. However, if the only comparables are short sales or foreclosures you may find that values still show a decline because these sales represent the current market and are the only closed sales (comparables) the Appraiser can use.
If you have any questions or have any input, please contact us at
greg@bowerappraisalinc.com
We look forward to hearing from you and hope this sheds a little light on the subject for you.
Greg Bower RD5791
President
Bower Appraisal Inc.
992 Winterberry Dr
Marco Island, Collier County, FL 34145
239-564-1813
941-240-2104 Fax