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Old 09-29-2009, 12:07 AM
 
Location: Sacramento
2,568 posts, read 6,740,529 times
Reputation: 1933

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Quote:
Originally Posted by Disneyjamie View Post
Our house was bought in January 2008 for $235K, and we put in over $100,000 in improvements (all new electrical, plumbing, roof, bathrooms (2.5) and kitchen. It was appraised in August 2008 for $340K. We just got it appraised again for refinancing, and this one came back at $228K! A drop in $112K over a years time. This does not seem right to me.

The appraiser said our property was just average, and thus similar to the properties that sold around here that have not been upgraded since the 1980's/1990's. Is that allowed? To just ignore all of the improvements done on a house?

I am very upset about this.

Thanks for your comments, Jamie
Well our neighbors paid 390k for their house in Oct/Nov 08 and just the other day a real estate agent told me the same floor plan was a pending sale for mid 200k. Yes this was a foreclosure but this houses were built 07/08 so no fixer upper. So it can happen.
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Old 09-29-2009, 01:20 PM
 
Location: Tempe, Arizona
4,511 posts, read 13,554,308 times
Reputation: 2201
Quote:
Originally Posted by VictorBurek View Post
...This law is so bad that FHA does not follow the new guidelines due to the problems it has created.
Effective Jan 1st, even FHA will follow similiar HVCC rules:

FHA Announces Several Policy Changes. Adopts HVCC Guidelines

Although it appears they may have additional rules limiting what AMC's can charge.
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Old 09-29-2009, 01:33 PM
 
Location: The Big D
14,862 posts, read 42,779,122 times
Reputation: 5787
Quote:
Originally Posted by VictorBurek View Post
Say hello to the problems with the Home Valuation Code of Conduct. This new law changes how appraisals are ordered and has severly impacted the quality of appraisals. Since this law has started, I have seen the lowest quality appraisal done. Do a google search on Home valuation code of conduct or HVCC.
This law is so bad that FHA does not follow the new guidelines due to the problems it has created.

And it is driving me crazy right now.


Quote:
Originally Posted by Bette View Post
I did fight it and won but it cost us time and the consumer is out of pocket close to $1000.00.
.

I'm in the process of fighting one now. URGH!!! The appraiser was off on the square footage he came up with by over 300 sq ft. He refuses now to come out and remeasure. How in the world he can say one room is 11' wide when in actuallity it is 14'2" (he can't tell THAT standing in it ) and he totally missed an entire area that is about 8'x28'. Yes, he used one of the electronic instruments to measure and obviously has no sense of space.

I'd love to know how to go about getting it done. The rebuttal that is. We already filed it once thru our mortgage broker. I'm now threatening to call my credit card company and dispute the charges and turn the appraiser into the state.

Quote:
Originally Posted by rjrcm View Post
Effective Jan 1st, even FHA will follow similiar HVCC rules:

FHA Announces Several Policy Changes. Adopts HVCC Guidelines

Although it appears they may have additional rules limiting what AMC's can charge.
And more loans won't go thru and the market will get worse.
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Old 09-29-2009, 06:05 PM
 
Location: OK
2,825 posts, read 7,530,825 times
Reputation: 2056
Quote:
Originally Posted by momof2dfw View Post
) and he totally missed an entire area that is about 8'x28'.
What is that space?
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Old 09-29-2009, 06:27 PM
 
328 posts, read 884,556 times
Reputation: 202
Quote:
Originally Posted by NCGT View Post
Not to get off topic but the HVCC doesn't cause bad appraisals. The HVCC prevents lenders from direct contact with appraisers which is designed to eliminate lender pressure and promote an "unbiased" opinion of value.


Homeowner35, in this particular case (and I can't pass judgement without seeing the appraisal) I'd say you have a host of things contributing to the current value of your home. First of all, it is extremely unlikely you'd get back "dollar for dollar" what you spent on upgrades and improvements. Second, generally speaking property values in most markets across the country are declining and have been for the past two years. Third, your appraisal from a year ago may have been inflated if the lender was trying to get your $100,000 in improvements plus your $235,000 purchase price refinanced. If you bought the house in 2008 for $235,000 and it was in similar condition as surrounding houses, it it very unlikely it increased to $340,000 six months later even if you did spend $100,000 in improvements.

If your second appraisal (the one for $340,000) was inflated due to lender pressure, it wouldn't happen today because of the HVCC. If I had to bet, I'd say that's likely what happened.
I am not the op. I agree with you.
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Old 09-30-2009, 08:58 AM
 
Location: The Big D
14,862 posts, read 42,779,122 times
Reputation: 5787
Quote:
Originally Posted by Annemieke Roell View Post
What is that space?
Part of the breakfast room, a full bathroom, utility room and hallway.
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Old 09-30-2009, 12:32 PM
 
Location: OK
2,825 posts, read 7,530,825 times
Reputation: 2056
Quote:
Originally Posted by momof2dfw View Post
Part of the breakfast room, a full bathroom, utility room and hallway.
Wow. Hope you send it to the state.
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Old 09-30-2009, 01:31 PM
 
2,776 posts, read 3,969,192 times
Reputation: 3049
My wife and I had this happen before the recession - back in 2005. Things were simple too... we didn't do many improvements on the property. To our shock our property was appraised at exactly the same value it was purchased/built for 12 years earlier! LOL, it was a rude awakening to many of the things mentioned in the thread above as we had thought that the value of real estate typically kept pace with inflation. The value seemed most significantly affected by 1 specific comparable in our neighborhood which was sold a year earlier for a steal due to owner financial difficulties. My wife and I couldn't believe a single home in the nieghborhood sold for a massive discount could affect property values so much.

If there's one thing we learned from the experience it's that appraisal and real estate value are very subjective things.
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Old 09-30-2009, 04:23 PM
 
Location: OK
2,825 posts, read 7,530,825 times
Reputation: 2056
Quote:
Originally Posted by mbuszu View Post
My wife and I had this happen before the recession - back in 2005. Things were simple too... we didn't do many improvements on the property. To our shock our property was appraised at exactly the same value it was purchased/built for 12 years earlier! LOL, it was a rude awakening to many of the things mentioned in the thread above as we had thought that the value of real estate typically kept pace with inflation. The value seemed most significantly affected by 1 specific comparable in our neighborhood which was sold a year earlier for a steal due to owner financial difficulties. My wife and I couldn't believe a single home in the nieghborhood sold for a massive discount could affect property values so much.

If there's one thing we learned from the experience it's that appraisal and real estate value are very subjective things.
Unless most sales in the neighborhood were sold as a distress sale or other non-arms length transactions, that sale should have never been used.

I don't know what state you are in but I would seriously consider taking action, even after 4 years.
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Old 09-30-2009, 06:03 PM
 
Location: Plano, Texas
1,673 posts, read 7,008,907 times
Reputation: 697
Quote:
Originally Posted by NCGT View Post
Not to get off topic but the HVCC doesn't cause bad appraisals. The HVCC prevents lenders from direct contact with appraisers which is designed to eliminate lender pressure and promote an "unbiased" opinion of value.


Homeowner35, in this particular case (and I can't pass judgement without seeing the appraisal) I'd say you have a host of things contributing to the current value of your home. First of all, it is extremely unlikely you'd get back "dollar for dollar" what you spent on upgrades and improvements. Second, generally speaking property values in most markets across the country are declining and have been for the past two years. Third, your appraisal from a year ago may have been inflated if the lender was trying to get your $100,000 in improvements plus your $235,000 purchase price refinanced. If you bought the house in 2008 for $235,000 and it was in similar condition as surrounding houses, it it very unlikely it increased to $340,000 six months later even if you did spend $100,000 in improvements.

If your second appraisal (the one for $340,000) was inflated due to lender pressure, it wouldn't happen today because of the HVCC. If I had to bet, I'd say that's likely what happened.

FHA will not apply the HVCC standards on any FHA loan, why is that? Well, they recognize the problems with HVCC.

Keep in mind, HVCC came around because a lender was sued, not a broker or loan officer, for pressuring appraisers to hit a value. Now, with HVCC the lender orders the appraisal through a appraisal management company that they decide to use. So the power in order appraisals is with the lender and the reason for HVCC was a lawsuit against a lender for pressureing appraisals, does that make any sense? They order the appraisal through the AMC and the AMC picks an appraiser to do the appraisal. How do they select the appraiser? Nobody knows. In my opinion, they are shotgunning requests to multiple appraisers asking who will do the appraisal for the least amount of money so the AMC can make more. the price is set up front, so if the appraisal costs $400, the least money they pay the appraiser the more they make. I specifically asked a lender if AMC are doing this and the lender said no. However, when i asked the lender if the AMC provides the information for how much they pay the actual appraiser that did the appraisal, they said the AMC will not provide that information. Why wouldnt they? In my opinion, they dont want the lender to know they are searching for the cheapest appraiser to maximize their profit.

I have seen many appraisals since the start of HVCC, and the quality is horrendous. AMC are using appraisers that have to drive a couple hours to the property so they are not familiar with the area which is vital for properly selecting comps.
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