Agents vs. Appraisers: Is the HVCC to Blame?

The National Association of Realtors (NAR) is on the war path, it appears that a number of home appraisals have been coming in below the contracted sales price of the homes.  In a recent NAR blog post, see http://narblog1.realtors.org/mvtype/president/2009/06/all_is_not_quiet_on_the_midwes.html, a VP with NAR commented that NAR wants this "problem" to end, and that if NAR has to force the government to begin a moratorium on the use of the Home Valuation Code of Conduct (HVCC) so be it.

An e-letter circulated to Realtors by Mr. Charles McMillan, NAR's 2009 President similarly stated that NAR is working hard to resolve the appraisal problem quickly.  He stated that he is meeting with a Deputy Attorney General in New York who worked on the HVCC and with the Director of the Federal Housing Finance Agency (FHFA) in an effort to "ensure that appraisals are accurate."

While appraisers generally detest the HVCC, mostly because it creates new third-party managers (AMC's) in place of the old and it works against established business relationships, I'm not so sure that they are 100% in alignment with Mr. McMillan's conclusion that current appraisals are inaccurate because they don't match with the sales contracts being written.

The NAR blog that discusses the appraisal "problem" notes that in Ohio "there is an oversupply of houses, and home values are still in a general decline."  Then in the following sentence the NAR blogger states that "the average sales price (of homes) is up."  Either sales prices are moving up or they are moving down, it can't be both.  It sounds to me like there is an oversupply of homes and home prices are moving down, but Realtors are upset that appraisers are considering the anticipation of buyers and sellers (market participants) that the market will continue down when they conclude lower value opinions.

One has to ask what is motivating NAR and its Realtor members.  Is it poor appraisal quality and inaccurate appraisals, are they just getting bad reports from those inferior appraisers that I keep hearing about, or does the motivation have to do with the fact that the appraisal conclusions just don't match with the figures needed to get their deals done.  

With a bit of luck there will be some people paying attention to NAR as it pounds on the doors of the New York Attorney General's Office and FHFA making demands about appraisal accuracy.  There are lots of reasons why the HVCC should be abolished, but bringing appraisal reports in line with the expectation of Realtors is not one of them.

Update 2014: Things always get better between appraisers and Realtors when home prices are moving up and not down, and a lot of the angst over appraisers and appraised values seems to be gone, or maybe I’m just not hearing about it as often.

For more appraisal information contact Glenn Rigdon, MA, MRICS, ASA a Las Vegas / Henderson Nevada appraiser via email or via his business website Horizon Village Appraisal (http://www.horizonvillageappraisal.com), or you can also click on “Contact Us” on the home page of this website.     

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