Sep

1

Long Island Real Estate Market: Home Valuation Code of Conduct

Filed Under Sellers, Sellers & Buyers | Comments Off


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There are new guidelines called Home Valuation Code of Conduct for the appraisal process. In a “normal market”, during a transaction where a buyer and seller agree on a contract for the sale and purchase of a home, the bank would get in touch with the appraisal company and the real estate agent would be in contact with the appraisal company. Of course, during the earlier years in this new millenium, there were many instances of fraudulent mortgages written.

As per the Home Valuation Code of Conduct, now the bank cannot have any contact directly with the appraisal company hired to appraise a prospective transaction. The rules continue to change, but since Appraisal Management Companies were created (AMC’s), introducing a “middle man” into the process, the process has slowed down. Additionally, AMC’s are getting paid and paying appraisal companies less, so appraisers are getting paid less. If the appraiser is not open to completing a particular appraiser, AMC’s are hiring appraisers outside of the local area, exposing homeowners to poor appraisals.

Fannie Mae and Freddie Mac issued clear guidance on two very important points. First, the guidance states that lenders should use appraisers who have clear experience in the geographic area. Second, it clarifies that appraisers are not prohibited from talking to real estate agents. However, these guidelines do not require lenders use appraisers having clear experience in a particular geographic area, so the bottom line is, no seller or buyer knows who they’re going to get to appraise a particular home.

This is just a sample for sellers and buyers to be aware of regarding the new appraisal process. If you’re working with a real estate agent right now and they’re not discussing this issue with you, you should contact them and at prepare for any appraisal issues that may arise and jeopardize your prospective deal. For more information, call 631-587-1700, ext. 51.


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