New System for Property Appraisals has Realtors Up in Arms

I received an email from a colleague the other day that addresses a growing concern with Realtors and homeowners – property appraisals that don't reflect the real value of the house and the new system of property appraising that is not so much a cure for what was wrong as much as it is, once again, an overreaction and an over-regulated response that is worse than the problem it was meant to address.

Here's an excerpt from the email:

• Are you having problems getting your properties appraised for their value?
• Have you had a property appraised by an appraiser from out of the area?
• Has a poor property appraisal killed one of your transactions?

Here's why!  The HVCC regulation that went into effect this year has changed the rules under which appraisers are allowed to work.  This regulation is ruining our clients values.  We are getting appraisers from out of the area who do not know our neighborhoods, our school system or the value associated with these features.

Consequently, the values given to our clients' homes are not what they should be because appraisers are not taking valuable area information into account.  In addition, appraisers are now only allowed to be paid $175.00 of the appraisal cost.  The banks and lenders are taking the rest of the money from the appraisal and this is becoming a profit center for them!  Appraisers are not willing to take the additional time to consider and then substantiate neighborhood information because of the additional time it takes to document the reason for an increase in value.

A case in point: An appraiser from Daly City was recently called in to appraise a home in Danville. And why not, appraising a house is nothing more than finding "comps" with similar square footage and features – right? WRONG!

If this were the case, we might as well import cheap third-world labor to do the job and lower the cost to $25.

The appraiser from Daly City had no clue about the value of the location of the home he was appraising. It is one of only 40 or so homes in the Shadow Hills neighborhood that sit at the top of the hill (end of the court), backing up to open space and having great views. These homes don't come on the market very often – there is very limited supply and high demand when they do.

Using comps from further down the hill or from Greenbrook or Danville Station is a fine example of an appraiser committing homicide on a homeowner's property value.

The email continues with:

HVCC UPDATE:

Representatives Childers (D-MS) and Miller (R-CA) introduced legislation (H.R. 3044) requesting an 18 month moratorium on the Home Valuation Code of Conduct (HVCC). ThinkBigWorkSmall applauds the introduction of H.R. 3044 and would like to thank Representative Childers (D-MS) and Representative Miller (R-CA) for their continued efforts and leadership on this issue but it is not enough. Tens of thousands of consumers have already been robbed of their opportunity to enjoy historically low rates by Attorney General Andrew Cuomo’s rule. HVCC needs to be permanently reversed in order to lower costs to the consumer and to restore the thousands of real estate transactions stalled by this horribly misguided code.

The problem HVCC is intending to address is appraisers being influenced by the Realtor or the Mortgage Broker or some other party with a vested interest – to make sure the home appraises at???? A situation that clearly needs attention and consequences – but HVCC is not the cure – it is its own nightmare.

The Daly City appraiser valued the Danville home about $250K below asking price. The recent "comp" down the hill certainly matched the square footage and since he has able to ignore location, upgrades and demand – it's a fair appraisal – right?

If you're tired of watching your home value drop, then perhaps you would like to take action on this issue to help ensure that your property is appraised by an appraiser who acftually lives in your town and doesn't have to BART or fly in for the apprasal.

Please sign the following petition and forward to everyone you know who is concerned with fair property valution: www.hvccpetition.com

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Contact Craig for more information – 925-984-4910