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Residential Real Estate Appraisal Challenges 2009

by Administrator on Mar 5, 2009 Residential Appraisal 556 Views

In 2009 residential appraisers are facing a number of challenges.  There are new FHA requirements and residential appraisers will have to comply with the Home Value Code of Conduct (HVCC).  They will, however, be provided with new opportunities that may carry them through the next decade.  When you consider the fact that just a few years ago many residential appraisers were predicting that their businesses may end due to automated valuation models (AVMs), you can understand that things have in some ways changed for the better.

Appraisers via their appraisal organizations are currently attempting to convince Treasury Secretary Geithner that it is in the best interest of the public to continue to utilize appraisers to form opinions regarding the market values of homes for loan restructuring under President’s Obama’s Homeowners Stability Program.  While most people would assume that using licensed and certified appraisers would be a "no brainer," the fact is that the use of broker price opinions has become a concern in some states.  Broker price opinions (BPOs) are developed by real estate agents who have no formal training in valuation.  Agents also do not follow uniform standards and are not responsible for errors and / or bias.  A number of states have already adopted legislation to thwart the use of BPO when they are prepared for lending purposes.

While BPOs and AVMs are still out there, and are a cause for concern to appraisers, they are generally poor substitutes for a professionally prepared appraisal report.  The data used in AVMs is in fact taken from appraisal reports, but there is a time delay and value models are a detached "far cry" from the individual property analysis that is completed by an appraiser in an appraisal report.  Both BPOs and AVMs are clearly less reliable than appraisal reports and they can be the cause for lending problems in a World that is focused on reliability.   

Residential appraisers have thus found themselves in a new world that actually needs their skills.  Since some appraisers have not lived through an entire real estate cycle and have never seen a downturn during their appraisal career, some have found themselves being tested.  It has become increasing difficult to find comparable sales, and buyers of appraisal products now want to know what is going on in the market.  More attention is now being paid to an appraiser's description of market trends, and appraisers must keep in closer touch with changing market conditions.  It was a relatively easy task when prices were all moving up, now that we have been in a downward slide since late 2007, everyone wants to know "how much lower" prices will go, and whether the appraiser can forecast "when prices will stabilize."  The shift from appreciation to depreciation and back again to appreciation is something that will happen, and as an appraiser you want to know when the changes have occurred. 

It is important for residential appraisers to keep themselves in touch with the market.  Follow all of the newspaper articles, published demographics and websites that provide valuable statistics on your market.  There is nothing wrong with looking at AVM results, foreclosure data, auction results, employment information and local indices.  Listings and sales are an appraiser's bread and butter, but there are many other sources that can help make you an expert on your market.

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.      

Article source: http://www.appraisalarticles.com/Real-Property-Appraisal/Real-Property-Appraisal/Residential-Appraisal//500-Residential-Real-Estate-Appraisal-Challenges-2009.html

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