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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.
Yes, of course the AMCs do all these things and of course the lenders know this.
I think that the reason why we are seeing more and more low quality appraisals is that the appraisers I know, myself and partner included" do not accept assignments for fees lower than our standard fees. So what you end up with are the less educated, less experienced appraisers who will do that appraisal 150 miles away for $200.
I cannot, however, blame the HVCC for appraisers accepting assignments in areas where they are not geographically competent. That is a USPAP issue, not a distance issue.
Has anyone mentioned that just because upgrades cost $100,000 doesn't mean that is what they were worth. Aside from what someone did mention that you don't necessarily get back dollar for dollar, there were and are many companies charging way more for improvements than what the job(s) should cost. I constantly hear about someone that paid twice what someone else did for the exact same job and quality of materials and construction.
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
It is very curious that you put 100k into a house that you paid $235 for. IMO you went anal overboard with the improvements, if you stop & think if you would have sold the house for the first appraisal price you would have a net of 5k.
The perceived real estate bust (markets that didn't experience the inflated prices, but still suffered) has affected many, many areas. Last year we started shopping for condos and found an area we really liked. Recently the remaining units were sold to a real estate company and with the original price list from a year ago we were shocked (and happy) the prices on those units had fallen anywhere from $30-$90k. Personally I'm glad we waited.
Has anyone mentioned that just because upgrades cost $100,000 doesn't mean that is what they were worth. Aside from what someone did mention that you don't necessarily get back dollar for dollar, there were and are many companies charging way more for improvements than what the job(s) should cost. I constantly hear about someone that paid twice what someone else did for the exact same job and quality of materials and construction.
Yes, that has been mentioned. Of course, if you had read the entire thread you would have known that
It is very curious that you put 100k into a house that you paid $235 for.
Is there a point to that observation? You have no idea what the improvements involved. Could have been new roofing and other big ticket things.
Quote:
IMO you went anal overboard with the improvements, if you stop & think if you would have sold the house for the first appraisal price you would have a net of 5k.
That is pure speculation on your part.
Quote:
The perceived real estate bust (markets that didn't experience the inflated prices, but still suffered) has affected many, many areas.
But not all, and as we don;t know where the OP is located this, again, is pure speculation on your part.
Moral of this story? Don't leap to conclusions based on a SWAG. It is annoying and does not contribute anything to helping the OP solve the problem.
Yes, of course the AMCs do all these things and of course the lenders know this.
I think that the reason why we are seeing more and more low quality appraisals is that the appraisers I know, myself and partner included" do not accept assignments for fees lower than our standard fees. So what you end up with are the less educated, less experienced appraisers who will do that appraisal 150 miles away for $200.
I cannot, however, blame the HVCC for appraisers accepting assignments in areas where they are not geographically competent. That is a USPAP issue, not a distance issue.
Appears you and I have the same opinion regarding HVCC. Hopefully it ends.
Appears you and I have the same opinion regarding HVCC. Hopefully it ends.
My position is that if appraisers conducted themselves according to USPAP and the state boards would enforce USPAP we wouldn't need HVCC. And , in my opinion, the only thing the HVCC is good for is Mr. Cuomo's career.
My position is that if appraisers conducted themselves according to USPAP and the state boards would enforce USPAP we wouldn't need HVCC. And , in my opinion, the only thing the HVCC is good for is Mr. Cuomo's career.
My position is that if appraisers conducted themselves according to USPAP and the state boards would enforce USPAP we wouldn't need HVCC. And , in my opinion, the only thing the HVCC is good for is Mr. Cuomo's career.
^Absolutely true. Personally, I've had no bad experiences (yet) with the HVCC. Lender pressure is something I can DEFINATELY live without. And since 80% of my work comes from AMC's, I have no problem with them either. If a lender accepts an appraisal from someone that traveled 200 miles to perform it, that's the lender's fault just as much as anyone elses. The HVCC doesn't designate which appraisers the lender's hire, only how they are hired. AMC's use a rotation system but they certainly control WHO goes on that rotation list. The lender still chooses the AMC so it's not like they have zero control over the appraisal process. Lenders can (and do) block certain appraisers from their approved list. The HVCC hasn't affected that.
Ultimately the HVCC spawned from a real estate market that was inflated by relaxed lending guidelines and a bunch of "get rich quick" flippers. I remember getting fussed at during 2005/2006 by lender's who called our appraisal methods "antiquated" when I didn't "hit the number". Too bad they didn't listen because now those same properties are getting foreclosed on by the thousands. Now the lenders are fussing about the HVCC because they can't pressure the appraiser. If an appraisal is not accurate, you can go after the appraiser's license. That's a two way street, high appraisal or low. The HVCC hasn't changed that. If a lender or borrower feels an appraisal is not accurate there are several options to remedy the problem. They can ask to have the appraisal reviewed by another appraiser, they can get another appraisal on their own and dispute the original if necessary and they can certainly file a complaint with the appraisal board.
Another thing people need to remember. A real estate appraisal DOES NOT necessarily determine your loan amount. The bank is free to loan whatever amount it sees fit to whomever it sees fit.
I still think the original poster in this thread got a raw deal on the $340,000 appraisal and I'd pin that on a dishonest appraiser and a dishonest lender. Appraisers don't write loans.
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