The Impact of the New Rules for Appraisals
Posted by Nancy Comenitz on Saturday, July 11th, 2009 at 4:00pm.On Appraisals: The Impact of HVCC
July 6, 2009
By Jed Smith, Managing Director, Quantitative Research
A preliminary analysis indicates that the implementation of the Home Valuation Code of Conduct (HVCC) appears to be having adverse impacts on the housing markets. Appraisal issues associated with the implementation of HVCC have recently been in the news. NAR Research has developed information on the subject through a statistically representative survey of the membership. A preliminary analysis of Realtor® responses includes the following:
- Approximately 76 percent of Realtors® representing buyers or sellers indicated that the time to obtain a completed appraisal increased after May 1; 69 percent of those reporting increased appraisal times reported an increase of over 8 days.
- Lost sales were reported by 37 percent of Realtors® attempting to complete home sales, with 17 percent reporting one lost sale and 20 percent reporting more than one lost sale.
- Reports of lost sales will impact the fallout rate in Pending Home Sales, although some of the sales may ultimately be completed on a delayed basis.
- An increased use of out-of-area Appraisers was reported by 70 percent of Realtors® seeking to complete a sale.
- The number of NAR Appraiser members reporting that they obtain over 50% of assignments from AMCs increased from 14 percent to 39 percent after May 1.
- Approximately half of NAR Appraiser members reported a reduction in fees received by them, and 70 percent of NAR Appraiser members reported that consumers were paying higher fees.
- Time for an appraiser to submit an appraisal to the AMC decreased, as reported by 71 percent of NAR Appraiser members.
- Approximately 85 percent of NAR Appraiser members reported a perceived reduction in appraisal quality.
- Among Realtor® respondents obtaining an appraisal for a client, 55 percent reported a perceived decrease in appraisal quality.
- NAR Appraiser members reported a significant number of assignments in unfamiliar geographic areas: for example, 16 percent reported that more than 11 percent of their assignments were in unfamiliar areas.
The above are preliminary results of the survey. An analysis of survey responses at the state level is projected in the near future.
This is one in a series of commentaries by the Research staff of the National Association of REALTORS®.
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