HVCC - Home Valuation Code of Conduct 10 questions to ask your appraiser
10 questions to ask your appraiser
Examiner.com - USA
http://www.examiner.com/x-13259-Atlanta-Mortgage-Examiner~y2009m6d15-10-questions-to-ask-your-appraiser
The complications of the Home Valuation Code of Conduct are killing real estate deals in every corner of the country, forcing buyers to pay more in closing ...
Over the last few weeks, dozens of Realtors, Borrowers and Sellers have contacted me and Appraiser Active relating horror stories about appraisers with an apparent lack of Professional or Geographic Competency. Their tales disclose appraisers from over 100 miles away accepting and completing assignments, appraisers with no access to the local Multiple Listing Service doing the same, and appraisers routinely using short sales and properties marketed as "pre-foreclosures" as Comparable Sales.
Although such stories are not new, they are becoming much more prevalent since the implementation of the Home Valuation Code of Conduct (HVCC). Appraisers are bound by something called the Uniform Standards of Professional Appraisal Practice (USPAP). Within the USPAP are a number of Rules and Standards; among them the Competency Rule.
Mike Kennedy, a New York State Certified Residential Appraiser, suggests Real Estate Agents, Appraisers, and Loan Originators should supply owners and borrowers (and their Listing Agents) with a "flash card" to phone interview ANY Appraiser contacting them for access PRIOR to setting an appointment to help determine the competency level of the appraiser.
Here's his list of questions, with a couple of minor modifications:
- what license do you hold, what is the number?
- when did you first obtain your license?
- are you a licensed or certified appraiser, or are you a trainee appraiser?
- where are you from?
- when was the last time you appraised a property in my neighborhood?
- do you know any of the local long term Realtors or Agents in this area?
- after visiting the property how long will it be until the report is delivered to the lender?
- do you have any idea approximately how much my home is worth? ballpark? (you may not get an answer to this question)
- do you have access to the local Multiple Listing Service? Does my Assessor know you? (my Assessor-County Property Appraiser knows me, but only because I ran against her in the last election. This answer to this question is important in locations where the Assessor is THE source of property and sales data)
- please give me a general physical description to enable me to recognize you at the appointment
The appraiser's answers will help you gauge his/her Competency to accept and complete the assignment. If the Lender does not insist on Professional and Geographic Competency, the borrower should. After all, they are entitled to a copy of the appraisal report and will be responsible for repaying the loan.
Here is reprint of the COMPETENCY RULE from the 2008-2009 Edition of the Uniform Standards of Professional Appraisal Practice. My emphasis on the points that may be of interest.
COMPETENCY RULE
Prior to accepting an assignment or entering into an agreement to perform any assignment, an appraiser must properly identify the problem to be addressed and have the knowledge and experience to complete the assignment competently; or alternatively, must:
- disclose the lack of knowledge and/or experience to the client before accepting the
assignment;
- take all steps necessary or appropriate to complete the assignment competently; and
- describe the lack of knowledge and/or experience and the steps taken to complete the
assignment competently in the report.
Comment: Competency applies to factors such as, but not limited to, an appraiser’s familiarity with a specific type of property, a market, a geographic area, or an analytical method. If such a factor is necessary for an appraiser to develop credible assignment results, the appraiser is responsible for having the competency to address that factor or for following the steps outlined above to satisfy this COMPETENCY RULE.
The background and experience of appraisers varies widely, and a lack of knowledge or experience can lead to inaccurate or inappropriate appraisal practice. The COMPETENCY RULE requires an appraiser to have both the knowledge and the experience required to perform a specific appraisal service competently.
The COMPETENCY RULE requires recognition of, and compliance with, laws and regulations that apply to the appraiser or to the assignment.
If an appraiser is offered the opportunity to perform an appraisal service but lacks the necessary knowledge or experience to complete it competently, the appraiser must disclose his or her lack of knowledge or experience to the client before accepting the assignment and then take the necessary or appropriate steps to complete the appraisal service competently. This may be accomplished in various ways, including, but not limited to, personal study by the appraiser, association with an appraiser reasonably believed to have the necessary knowledge or experience, or retention of others who possess the required knowledge or experience.
In an assignment where geographic competency is necessary, an appraiser preparing an appraisal in an unfamiliar location must spend sufficient time to understand the nuances of the local market and the supply and demand factors relating to the specific property type and the location involved. Such understanding will not be imparted solely from a consideration of specific data such as demographics, costs, sales, and rentals. The necessary understanding of local market conditions provides the bridge between a sale and a comparable sale or a rental and a comparable rental. If an appraiser is not in a position to spend the necessary amount of time in a market area to obtain this understanding, affiliation with a qualified local appraiser may be the appropriate response to ensure development of credible assignment results.
Although this Rule requires an appraiser to identify the problem and disclose any deficiency in competence prior to accepting an assignment, facts or conditions uncovered during the course of an assignment could cause an appraiser to discover that he or she lacks the required knowledge or experience to complete the assignment competently. At the point of such discovery, the appraiser is obligated to notify the client and comply with items 2 and 3 of this Rule.
USPAP 2008–2009 Edition
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