Katina Wright â€“ The lender want to lend money and we lending at a lot of it.
Appraisals are hindering the recovery!
Most appraisals are now order through AMC aka Appraisal Management Companyâ€™s and this is due to HVCC aka Home Valuation Code of Conduct. The logic behind HVCC is good, but it turned independent appraisers to slaves of large AMCâ€™s. Consumers are paying about 1/3 more for appraisals and many times appraisers are only earning about half of the appraisal fee prior to HVCC. As a result many experienced appraiser left the industry, and many the ones who stayed hired inexperienced apprentice appraisers to drive to properties, measure and take photos so they complete more appraisals to make the same amount of money they did prior to HVCC.
HVCC has been a huge failure! Consumer loose because; 1) Quality of the appraisal is way down because of the loss of experienced appraisers. There is no fear of losing business because it takes two weeks to complete the appraisal or you or your apprentice was in a hurry and only counted 3 of the 4 bedrooms 2) Consumers are paying the price, literally with inflated appraisal fees. 3) The remaining appraisers are under so much scrutiny and limited by the scope in what they are allowed to use and comps, etcâ€¦
Example: I had a purchaser go under contract to buy a home that was almost 5,000 square foot for $199,000.00, the home was like new, only about 10 years old in a nice subdivision in Paulding County. The home had been foreclosed on and purchased for arround $135,000, the new buyer painted the home, added hardwoods, granite counter tops, landscaping and staged the home. The home only appraised for $172,000.00. There were several reasons; This was one of the larger homes. There were a couple other homes on the same street that had recently been foreclosed on in the $160,000 range. We rebutted the appraised value and stated that our home was larger and nicer and it would take $10â€™s of thousands of dollars to bring the foreclosed homes to condition of our property. Reality is most people done have the cash to fix up a property after they just put down a substantial payment and/or they just donâ€™t want to the hassle of fixing up the home themselves. The buyer and seller compromised on $188,000 sales price and the buyer brought the additional funds to closing. The buyer was smart enough and had the cash means to realize that there was no way to build the same for less than $40.00 per square foot and took advantage of the market. Now this is setting the home values in that neighborhood in the $188,000 range instead of the $198,000 range, which would infuriate me if I were a homeowner in that subdivision. Letâ€™s take this a step further, if the seller had accepted the $172,000 sales price, the neighborhood would have been valued about $20,000 to $30,000 less.
I personally think the home values should be market driven and a home should be worth whatever someone is willing to pay. This is why consumers hire Realtors, to find home that meets their needs and ensure they are paying a fair price.
Larry F Delbridge II NMLS Loan Officer# 114090
Loan Officer | Team Manager
National Direct Lender | Direct Seller/Servicer Fannie/Freddie , FHA , VA & USDA
Georgia Mortgage License # 6521
Primary Residential Mortgage Corporation NMLS # 3094
5755 North Point Parkway, Suite 38 Alpharetta, GA 30022