Starting in May, real estate agents and lenders will not be allowed to have any contact with appraisers. Lenders will be ordering their appraisals from large "Appraisal Management Companies" (as opposed to directly from the appraiser himself) that take a cut of the appraisal fee off the top, and farm appraisal orders in mass to registered appraisers. Follow the link to read the new rules imposed by the HVCC (Home Valuation Code of Conduct).
While I do understand the rationale behind this new law, I think it creates a whole new set of problems.
- Instead, appraisal issues like the one I experienced last week will not be resolved. Agents will not receive a copy of the appraisal, nor will agents be allowed to contact the appraiser.
- Appraisers will be forced to try to do the same work for less compensation. An appraisal fee is usually anywhere between $350 - $450...with the management companies taking a bite out of that fee, appraisers will be expected to turn out the same quality of work for less money...either that, or I imagine the cost will be passed along to the consumer, making appraisals more expensive. Which do you think is more likely to happen?
- Out-of-town appraisers will be determining values for areas in which they are not familiar. The management companies will be dispatching appraisers from all over northern California to do Sacramento appraisals. Gee - Land Park vs Oak Park...Arden Park vs Arden Manor - they are close enough together, so they must be comparable, right?
Wouldn't a better solution be to crack down on the shady appraisers, lenders, and agents?