Posts Tagged ‘Real estate appraisals’

An Update on HVCC

June 1st, 2010

The Home Valuation Code of Conduct (HVCC), about which we’ve written several blogs, was enacted to provide better, more honest real estate appraisals. To say that the HVCC was and is controversial is a massive understatement, and most real estate appraisers have been counting down the days until November 1, 2010, when the HVCC agreement between Freddie Mac, Fannie Mae, and the New York state attorney general is set to expire.

Unfortunately for appraisers, November 1 may not be a day for confetti and champagne after all. Though that is the expiration date, it doesn’t necessarily mean that HVCC will disappear on that day. Fannie Mae, Freddie Mac, and other lenders are not required to remove HVCC guidelines from seller service agreements after the deadline, and as of right now, the belief within the industry is that the HVCC will linger well after the expiration date.

As they have been since its inception, new problems created by the well-meaning HVCC seem to keep cropping up and the issues appear to be growing. It’s more important than ever to make sure you use an established, licensed appraiser.

By: Present Value

Additional Reading:

Working with HVCC Regulations

Recent Articles about HVCC Changes

HVCC: The Comp Check Killer

Be Sure to Use a Reputable Appraiser

May 20th, 2010

An article in the May 19 edition of The Champion tells an important cautionary tale about a Georgia-based real estate appraiser who was sentenced to almost three years in federal prison for his part in a real estate appraisal scam.

According to the article, Edward Farley, the so-called ringleader in the scam, caused $23 million in losses to lenders by having Walter Herman, a real estate appraiser, inflate the value of each property he appraised by $50,000 to $100,000, and then found inexperienced investors to purchase the properties from one of his real estate companies. Farley received a 25-year sentence, and Herman received the nearly three-year sentence for complicity.

This incident underscores the importance of a point we’ve made many times across many blogs – be sure you use a licensed, established, reputable real estate appraiser. Thoroughly check their credentials. Find out if they belong to appraisal organizations, like NEBBI and NAPA. And if something seems wrong, be sure you speak up.

By: Present Value

Additional Reading:

HVCC and Uncertainty

Pointing Fingers

Not the Appraisers’ Fault, Either

Appraisers Seeking Resources to Determine the Value of Green Buildings

May 6th, 2010

Real estate appraisers are struggling to determine the value of green building construction because the market is still in its infancy; there is lack of comparable property data and other market information. The current real estate market poses difficulties for any new construction appraisal, and the nascent green building construction market is exceedingly more difficult for appraisers.

There are some resources available for appraisers, however, to be better equipped to appraise in this burgeoning market. The Appraisal Institute, membership association of professional real estate appraisers, offers seminars and a certification program that can help appraisers value green buildings, including its upcoming webinar: Residential Green Valuation: Tools for Valuing High Performance Properties. The proposed Green Resources for Energy Efficient Neighborhoods (GREEN) Act legislation will mandate that appraisers have all relevant information about residential property – including plans and specs, green energy labels, and certifications and Home Energy Rater Score (HERS) ratings.

It is clear that green building is only going to become more popular, especially once the real estate market turns around; although it may take some time, appraisers will need to understand all the new complexities in this field of appraisal and adapt.

By: Present Value

Additional Reading:

Obtaining Loans for Green Construction

What Exactly Are You Doing, Appraiser?

Working with HVCC Regulations

November 19th, 2009

A recent article in Banker & Tradesman suggests that consumer confidence in the real estate market is coming back. Coming out of the 2009 Realtors Conference & Expo in San Diego, the article indicates that in spite of the decline of the market, buyers are still looking for vacation and recreational properties.

Industry experts, however, still appear to be concerned about issues surrounding real estate appraisals and the unintended consequences of the implementation of the Home Valuation Code of Conduct (HVCC). As we have discussed in other blog posts, the perceived problem is that appraisers, working for appraisal management companies, are often working outside areas with which they are familiar and may not have access to information about specific markets. Realtors argue that as a result of valuations that sometimes are too low, sales have been delayed and even cancelled.

This Banker & Tradesman article provides some interesting suggestions by realty agents of ways to work with the HVCC changes, including providing appraisers with detailed property comparison information and background materials to help appraisers achieve the most accurate appraisals.

As always, Present Value LLC is both an appraiser and an appraisal management company, which means that it can play the role of the third party required by the HVCC changes and save you the step of having to seek out a separate appraisal management company.

By: Present Value

Present Value LLC and the upcoming HVCC changes

March 31st, 2009

Earlier this month, we wrote about the Home Valuation Code of Conduct (HVCC) changes that will go into effect on May 1 of this year. You can read the full post here. Essentially, the changes state that lenders seeking a conventional appraisal, as opposed to an FHA appraisal, will be required to find an appraiser through a third party, such as an appraisal management company.  

If you’re seeking an FHA appraisal, your interaction with Present Value won’t change. Because the HVCC changes don’t affect FHA appraisals, lenders can still contact Present Value directly. And more good news – if you’re seeking a conventional appraisal, your interaction with Present Value will also remain the same. Present Value LLC is both an appraiser and an appraisal management company, which means that it can play the role of the third party required by the HVCC changes and save you the step of having to seek out a separate appraisal management company. One of the principles to which Present Value adheres is to provide the best possible customer service. As these changes go into effect and people begin to navigate what the changes mean for them, we hope that the lack of disruption in service you’ll experience by working with Present Value will prove our dedication to this principle.

In other news, have you had the chance to check out our introductory video? Click here to watch.  

By: Present Value

Upcoming HVCC Changes

March 10th, 2009

The Home Valuation Code of Conduct (HVCC) dictates rules regarding the interaction between appraisers and the lending industry. A copy of the full HVCC can be found here. On May 1, 2009, changes to the HVCC will go into effect. The changes state that rather than going to an appraiser directly, lenders must order a real estate appraisal through a third party, such as an appraisal management company.

It is important to keep in mind that these changes only affect the way that conventional appraisals are obtained and not Federal Housing Administration (FHA) appraisals for FHA-insured loans. Lenders will still be able to order an FHA appraisal directly from an FHA-approved appraiser after May 1, 2009.   The underwriting requirements for an FHA-insured loan are stricter than those for a conventional loan, and the fundamental difference between an FHA appraisal and a conventional appraisal is the FHA appraiser’s focus on the health and safety of the borrower. Both types of appraisers look for standard characteristics that can affect the value of a property, such as the location of the property, the overall real estate value in the area, or a flaw that could negatively impact a home’s value, like a crumbling foundation. But an FHA-approved appraiser takes the appraisal a step further and looks for environmental toxins like asbestos, mold, and peeling lead paint; and safety features like handrails, smoke detectors, and window screens.  

The certified and licensed appraisers at Present Value LLC are FHA certified and experienced with this type of appraisal. Click here to order a real estate appraisal. By: Present Value LLC