It was six months ago on May 1, 2009 when the Home Valuation Code of Conduct was implemented. We all know there has been controversy and complaints galore when it comes to HVCC, and so it’s no wonder there weren’t any “Happy Sixth Month” birthday parties. Or did I miss the local HVCC celebration somehow?

Communication is a bit different now in the real estate world due to HVCC, and so this entry is designed to help foster more effective connections between Realtors and appraisers in a post-05/01/09 market. Yes, Realtors can still talk with appraisers and provide ample information about the real estate market or properties they have sold or listed. The only thing Realtors and agents cannot do is coerce or influence appraisers toward an opinion of value.

Below are some basic suggestions for things to say and not say to an appraiser during an inspection. My hope is that these tips will be very practical and useful for the field.

Tips for talking to Appraisers during an inspection:

• Be conversational. Make a great impression on appraisers.
• Be on time. If you are late, say sorry.
• Helpful statements: “I’m glad to help out where I can.” “Let me know if you have any questions about the property or neighborhood.” “Call me if you need anything.”
• Drop in some comments about the local market, supply and demand, bifurcation, new listings, REOs, price per square foot, or anything relevant you can pull out of your bag of tricks. This might help conversation emerge as well as a mutual market education too.  
• If you want, bring a list of potential comps and say, “Would you like to see any recent sales I pulled in the neighborhood?” This way you leave it up to the appraiser to accept anything from you (no pressure), and you are not even labeling these properties as comparable in any sense either, but only saying “have a look if you’d like”. A method like this might be particularly useful if you sense on the phone that the appraiser may not be in touch with the local market for whatever reason.
• Give a verbal or written list of all upgrades and repairs made.
• If it’s ethical for you to do so, consider letting appraisers know how many offers, showings and calls your listing had. This type of information is often useful. Please be honest and careful not to steer a value conclusion with this information.
• Ask appraisers for any local market insight they might have, and feel free to share your understanding also. Both Realtors and appraisers have expertise when it comes to the real estate market, so sharing knowledge is a tremendous benefit for both groups. For example, if you are aware of upcoming new construction, a thriving neighborhood association, employment trends, eminent domain issues, a school opening or closing, or other aspects of real estate in the immediate neighborhood, that could be resourceful information to discuss. 

Things NOT to say to an Appraiser during an inspection:

• Don’t complain about HVCC. If it comes up, that’s fine, but there are more productive things to talk about (see above).
• Don’t rant about another appraiser who “destroyed your last deal”. Talking about another appraiser like he/she is some sort of village idiot does not leave a good impression.
• “Here are the best comps for you to use in your appraisal report” (this sounds like you are influencing an opinion of value).
• “Is this one going to come in at value?” ”Is it going to appraise for at least the sales price?” ”Do your best to get the value as high as possible”. You definitely want to steer clear of value-pressuring questions or statements.

If you have any other suggestions to help appraisers and real estate agents communicate more effectively and ethically in an HVCC world, feel free to leave a comment or contact me at 916-595-3735 or ryan@lundquistcompany.com. It would be great to hear stories too of your interactions with appraisers or agents. You can comment by clicking “Continue Reading” below.

www.SacramentoAppraisalBlog.com Talking to Appraisers in an HVCC World: Tips for Real Estate Agents

I am making it a habit to answer some of the questions that people are asking on search engines to find this site. The following was typed in yesterday: 

“Is a dishwasher required by FHA”

Great question. The answer is “yes” or “no” depending upon the situation. If the kitchen does not have a place for a drop-in dishwasher, then HUD does not require one to be present. However, if there is an alloted space for a dishwasher in the kitchen cabinetry, then there must be a working dishwasher present. 

“Intended user on an estate settlement real”

I have to go out on a limb here to fill in the blanks. My guess is that you were looking to find out who the intended user is on a real estate appraisal for an estate settlement. The answer is simple. The intended user is whoever the client and appraiser decide it to be when the appraiser takes on the assignment. When an estate settlement appraisal is ordered, figuring out who the intended user is and what the intended use will be are some of the very first items discussed and clarified between the appraiser and client. It is most typical during estate settlement to have the intended user be the home owner or heir as well as a specified CPA or attorney.

“Date of death appraisal”

A “Date of Death” appraisal is usually a retrospective valuation based on the date a certain person passed away. It is very common for home owners or heirs to need appraisals like this for inheritance or estate settlement purposes. Usually an attorney or CPA directs a home owner to hire an appraiser during situations as such. You can read more on a previous post HERE.

“HVCC loan officers can choose appraiser”

On May 1, 2009 something called the Home Valuation Code of Conduct (HVCC) came into effect. HVCC basically means that loan officers and brokers cannot order appraisals directly from appraisers any longer when a conventional loan directed toward Fannie Mae is at hand. However, loan officers and brokers CAN order FHA appraisals directly from appraisers. Anyone doing an FHA loan can choose the appraiser they work with. Why is this? Because HVCC relates to loans that are geared toward Fannie Mae, and HUD is a separate entity from Fannie Mae. I wrote more about this subject HERE and HERE.

“Water park stone creek rancho”

I don’t have photos of the spray park at Stone Creek Park, but I highly recommend this family-friendly park in Rancho Cordova off of Zinfandel & Spoto. See www.crpd.com for details on local parks in Rancho Cordova.

I hope this was helpful. Please let me know if you have a need for clarification or any further questions.

www.SacramentoAppraisalBlog.com Answers to Questions from Search Engine Inquiries Yesterday on the Lundquist Appraisal Blog

Dear Local Buyers & Agents in the Greater Sacramento Region-

The Home Valuation Code of Conduct (HVCC) is a new law that went into effect on May 1, 2009. What this law aims to do is eliminate pressure from loan departments on appraisers to arrive at a certain conclusion of value. One of the biggest changes since HVCC took root is that loan departments can no longer directly communicate with the appraiser about value-related issues and so they must use an appraisal management company (middle man who takes away part of the appraiser’s fee) or work out some other arrangement to have an in-house department that handles appraisal ordering. As you can imagine, this has certainly changed business for many appraisers as well as loan officers and banks because many of our business contacts are no longer viable sources of connection for doing business. Everyone is adjusting and there are many people who are unhappy at the process.

THE GOOD NEWS though is that when FHA financing is being used, the buyer, agent or broker can readily choose whatever appraiser he/she wants because HUD is not bound by HVCC. In a market full of FHA financing, it is still possible then to work with any appraiser you want to.

NOTE: Home owners, lawyers, investors and others can hire a real estate appraiser any time they want to. If the purpose of the appraisal is not a loan geared toward Fannie Mae (eventually sold to them), then the Home Valuation Code of Conduct DOES NOT apply at all. There has been some confusion on this matter since May 1, 2009, but the truth is that HVCC only applies to loans that may eventually be sold to Fannie Mae. I do appraisals for estate settlement, divorce, property tax appeal, bankruptcy, second opinion of value, home-repair loan programs, litigation and other purposes that have nothing to do with a loan geared toward Fannie Mae. Thankfully in these cases I am able to work directly with home owners, investors, agents or local governmental agencies among others.

Please let me know if you have any questions. Thank you.

Your local appraiser,

Ryan Lundquist
Lundquist Appraisal Company
PH: 916-595-3735 
FAX: 916-361-1964
EMAIL: ryan@lundquistcompany.com
WEBSITE: www.lundquistcompany.com

Dear Local Realtors,

You can still talk to appraisers. The Home Valuation Code of Conduct (HVCC) went into effect on May 1, 2009 and it means that loan departments and other parties cannot influence an appraiser’s opinion of value. HVCC basically means that an appraiser’s opinion should be independent and not have any outside influence to “hit the number” (meet the sales price, meet the minimum amount for loan qualification, etc…).

This sounds fairly straightforward, but the problem is that there is some confusion in the marketplace about who can speak with appraisers. For instance, last week I emailed a local Realtor to ask her about the details of one of her recent sales. I wanted to obtain information about the condition of the property and any financing terms that were not made available in MLS. The Realtor emailed me back and stated that she could no longer speak with appraisers due to the new law (HVCC). Unfortunately this is not an isolated incident, but most of all it is absolutely wrong.

As far as property details, the Listing & Selling Agent are often an outstanding source of information. When we get answers to questions like, “Why did your buyer purchase this one?” or “How come this was on the market for so long?” or “What did you mean by ‘conversion’ or ‘needs TLC’ in your MLS description?”, we get valuable insight. Just think of the word “fixer”, for example, and how this one word in an MLS listing can mean anything from “infested with mold” to “needs new paint”. Discussing details like this is all a part of the appraiser’s job in analyzing the market to determine a fair market value. Besides, we are not even talking about a value here, but only property characteristics. Keep in mind too that most of the time we are asking about properties that we are not appraising anyway because we are trying to get information on potential comparables to use in an appraisal report.

HVCC simply means that nobody can influence us toward a certain value opinion. Can you still provide property details? Yes. Can you help us understand a certain neighborhood market better? Absolutely yes. Are you able to give us insight into the financing of one of your deals? Yes. Are you within the law to coerce us and influence an opinion of value? No. That’s the gist. 

Your insight is valuable and providing basic information to appraisers really helps us do our job well. Thank you in advance for your communication and expertise. 

Your local appraiser,

Ryan Lundquist
Lundquist Appraisal Company
PH: 916-595-3735 
FAX: 916-361-1964
EMAIL: ryan@lundquistcompany.com
WEBSITE: www.lundquistcompany.com

When talking recently with local Realtors, Brokers, and Loan Officers about the Home Valuation Code of Conduct (HVCC), there has been concern and fear about how HVCC might shape the mortgage industry, not to mention, their business. 

Important News from the National Association of Mortgage Broker website:

McLean, VA – The National Association of Mortgage Brokers (NAMB), with the support of Baker & Hostetler LLP, filed a lawsuit today with the United States District Court for the District of Columbia against the Federal Housing Finance Agency (FHFA) Director James B. Lockhart over the controversial Home Valuation Code of Conduct (HVCC) included in the appraisal agreements between the FHFA, Fannie Mae and Freddie Mac (GSEs), and New York Attorney General Andrew Cuomo. 

What does this mean for local mortgage brokers, real estate agents, and all involved parties (including appraisers)? Well, there is nothing definitive to report, but with the lawsuit filed it may be possible to see the deadline for HVCC postponed ,or who knows, maybe they’ll throw it out altogether. We shall see.