Driving 356 miles for an appraisal inspection

I am looking at an appraisal on my desk right now where the appraiser drove from Fresno to Mather to complete the appraisal. Google Maps estimates the 178-mile trip would take 3 hours and 10 minutes (that’s only one way – 356 miles roundtrip). This distance is a very long way to go for a standard tract home inspection, yet technically acceptable so long as the appraiser truly knows the local market. Keep in mind the roundtrip in gas would’ve cost about $45.00 based on 30 mpg.

In this case it’s questionable to think the appraiser understands the local market. There is no mention of “Independence at Mather” being a PUD with a monthly HOA fee. In fact, the appraiser says there is no HOA fee. There is no mention of the neighborhood being located within close proximity to the Sacramento Speedway or Mather Airport (formerly an air force base that is a Superfund site). The appraiser probably didn’t know portions of the neighborhood were formerly military barracks before new houses were built by SHRA and KB Homes. The appraiser was likely not aware of Aerojet, the meat rendering plant nearby, the limited amount of commercial properties and future plans with the Anatolia area. The appraiser most likely was not aware that Mather is not a city or CDP, but rather an area of Sacramento County.

I don’t bring this up to toot my own horn, but only to say that it’s important for an appraiser to know the local market well. This is called geographic competency. When you hire an appraiser, ask him if he has experience in your area and if he understands issues that may impact real estate values in the local neighborhood. Unfortunately there is very limited control over hiring a local appraiser for a loan, but home owners, attorneys and agents can still pick their own appraisers for estate settlement, divorce, bankruptcy, pre-listing, tax appeal, etc…

Questions: How do you think it might impact value on an appraisal report if the appraiser does not know the local market? If you are an agent, do you find most of your appraisers lately have been local, or are they coming from far away?

If you have any questions, or real estate appraisal or property tax appeal needs in the Greater Sacramento Region, contact Lundquist Appraisal by phone 916-595-3735, email, Facebook or subscribe to posts by email.

One Year of HVCC & My Son’s Birthday

It’s my youngest son’s birthday tomorrow and it’s also the one-year anniversary of the Home Valuation Code of Conduct. People ask me all the time what I think about HVCC, so I figured on the eve of twelve months of HVCC, it would be appropriate to have a little discussion. In short, I think the Home Valuation Code of Conduct has been difficult for the appraisal industry, the consumer, and the real estate industry.

Appraisers definitely make less money now for loan work. I know, who cares, right? But listen between the lines because what if the government stepped into your industry and said you could no longer do business with clients you’ve had a relationship with for years. Many appraisers have gone out of business because their client-base was swept under the rug last year when HVCC was implemented.

Secondly, the consumer pays more for a real estate appraisal now. Under the direction of HVCC, appraisals geared toward Fannie Mae & Freddie Mac cannot be ordered directly by a lender or broker, but must be ordered from a neutral third-party (often times an AMC – Appraisal Management Company). These companies charge the consumer more than what an appraiser would typically charge, and many times pay the appraiser quite a bit less than what is customary in the market. There are some upstanding AMCs out there that I am thankful to do business with, but on the other hand it’s too bad to see some companies really taking advantage of the situation at hand. For example, I received an email yesterday from an AMC offering appraisers $125 for an appraisal order, while their website shows fees at nearly $500.

Lastly, HVCC has definitely impacted the real estate market. Since appraisers cannot be chosen directly by lenders, loan officers or brokers, the best appraiser for the job may no longer be hired. One might make the case therefore that there is a serious issue right now with the quality of real estate appraisals because of less experienced appraisers being hired to complete appraisals they are not as qualified to do. That’s definitely the case, but on the other hand I also think HVCC has been a bit of a microscope to the appraisal industry in some regards because it has illuminuated some shoddy work in the appraisal field.

Ultimately, I’m thankful that HVCC only applies to loans geared toward Fannie & Freddie (HUD/FHA has something similar in place now too). I still do many appraisals for investors, Realtors, and home owners, and these types of valuations are NOT affected at all by HVCC. Of course I’m not immune to some of the consequences of HVCC as I mentioned above, and the whole thing upsets me, but I’m choosing to focus on other things. I may be limited in business right now with what I can do for loan appraisals, but I can still chase other avenues of appraisal work such as bankruptcy, divorce, estate settlement, investor valuations, and assignments from local governmental agencies. In fact, just yesterday I had another Sacramento estate settlement retrospective appraisal come my way.

I know this almost sounds like a positive spin, but there is something philosophical here for me because it’s about focus. HVCC has been a sincere difficulty, but focusing all my attention on it and being negative won’t do me any good (and it won’t pay the bills either). Therefore HVCC won’t define me today, and it won’t be fuel on the fire tomorrow either on the one-year anniversary. Tomorrow I’ll be burning some hot dogs on a grill, enjoying the company of family as we celebrate my youngest son’s birthday, and intentionally not focusing on HVCC.

I’d like to hear from you as a real estate agent, consumer, or appraiser. How have you seen HVCC impact the real estate market over this past year?

Pricing and Details for Bankruptcy Appraisals

I put together an audio clip to help home owners sift through why a real estate appraisal is needed during bankruptcy, a few things the appraiser should know, and how much appraisals typically cost (two different price levels). Please click the play button below to listen. If you subscribe by RSS or email, you may need to click on the post title to hear the message online.

I work with both home owners and attorneys in ten counties throughout the Greater Sacramento Region, and I am available to help answer any questions or talk with you about your situation. Feel free to give me a call at 916-595-3735 or email ryan@lundquistcompany.com