An elegant white clock featuring 'DANIELLE LAZIER REAL ESTATE LOGO' on a sleek black background.Vivre Real Estate logo

SF Real Estate Home Sales Affected by New Appraisal Rules

August 25, 2009

I wish I did not know first-hand about the problems arising from the so-called improved appraisal process, aka The Home Valuation Code of Conduct.

My SF home buyer and seller clients and I have danced the dance of this new system and as a manager, I'm privy to many more San Francisco real estate purchases waylaid by out-of-area appraisers driving too many miles from Fresno to appraise a house in the Sunset.
View Larger Map

Fresno to Sunset District SF = 191 miles

Yes, it's supposed to help ensure a safe, transparent home appraisal process whether you are buying  a single family home in Bernal Heights or a Mission Dolores condo. The devil is in the details. As a recent Wall St. Journal article, Reappraising Home Appraisers, states,

Squeezed by a drop in fees, some appraisers are compensating by driving long distances to handle more assignments. Their wanderings are raising questions about whether they know enough about the neighborhoods to accurately assess the value of homes—which has implications for both home buyers and owners...

The debate over appraisals is inflamed by a natural tension: Real-estate agents and mortgage brokers, who need to complete transactions to collect their fees, are unhappy when an appraiser nixes the sale price. But it also suggests that there may be unintended consequences to an attempt by New York Attorney General Andrew Cuomo to reform the appraisal business.

Using the threat of litigation, Mr. Cuomo last year prodded the government-backed mortgage investors Fannie Mae and Freddie Mac into adopting a new code of conduct for appraisers. Since those two companies provide funding for the bulk of U.S. home mortgages, the code, which took effect May 1, has become the national standard for most home loans.

The code bars loan officers, mortgage brokers or real-estate agents from any role in selecting appraisers. One result is that more lenders have outsourced the selection to appraisal-management companies, or AMCs, which take a sizable cut of the appraisal fee, often 40% or more. The AMCs pay appraisers as little as $175 to $200 per assignment, compared with the $350 or more that many get when they work directly for a lender.

"Many appraisers are struggling to survive on the fees paid by the AMCs," says Bill Garber, a spokesman for the Appraisal Institute, a trade group based in Chicago. Appraisers are being asked to work faster even as their fees are cut, and that conflicts with the goal of getting reliable appraisals, he says.

The real problem are the Appraisal Management Companies which are often subsidiaries of the banks doing the lending. Um, yes, that's what I wrote. The bank that is demanding a "fair, impartial" appraisal farms out the job to a company they own!

Lender-owned AMCs are a conflict of interest, don't you think? Plus, the consumer still pays the full amount. The real difference is that the appraiser now gets a fraction of their fee (b/c the bank takes a cut!). Most appraisers I know are sole proprietors so this has had a huge impact on their livelihoods, thus forcing them to do more appraisals in less time and over a wider geographic area.

Personally, I would rather see a San Francisco-based appraiser show up at my door to value my home, wouldn't you? Our inventory and architecture is pretty distinct to put it nicely and just doesn't compare to Fresno!

*Note: This new appraisal code of conduct does not apply to FHA home loans so if you are looking to purchase a single family home in San Francisco using a FHA home loan, you are in luck. Your mortgage broker can continue to call a local appraiser for a reliable valuation. Of course, to get a reliable valuation,  make sure to work with a reliable mortgage broker.

More resources: hvcc_realtor_concerns_081309

Yelp logo
296 reviews
View All
Zillow logo
176 reviews
View All
Danielle Elazier Realtor on Google My Business- image of Google my business logo
117 reviews
View All

Danielle lazier real estate team

We care deeply about our clients and our commitment to exemplary results. Working with us should be a good fit for you. If you feel our team is the right fit for you and you’d like to talk with Danielle to make sure, contact us today for your complimentary initial consultation.
Contact Me

Do You Need Another Real Estate Newsletter?

Probably not. Yet, in our biased opinion, you should definitely sign up for our twice-monthly email for market insights, webinar invites, local news, gorgeous homes, and more. We never share or sell your information. And, when you’re ready to work with us, please email or call to discuss your plans. We’d love to help!

Danielle Elazier botanical illustration - 3 different California poppy flower branches. Black and white with line art
WATCH DANIELLE’S LATEST VIDEOS

DISCOVER LUXURY LIVING IN SAN FRANCISCO

YouTube Channel
View Full Street Address SAN FRANCISCO, CA 94114 (415) 528-7355 ©2009 VIVRE REAL ESTATE. ALL MATERIAL PRESENTED HEREIN IS INTENDED FOR INFORMATION PURPOSES ONLY. WHILE THIS INFORMATION IS BELIEVED TO BE CORRECT, IT IS REPRESENTED SUBJECT TO ERRORS, OMISSIONS, CHANGES, OR WITHDRAWAL WITHOUT NOTICE. ALL PROPERTY INFORMATION, INCLUDING, BUT NOT LIMITED TO SQUARE FOOTAGE, ROOM COUNT, NUMBER OF BEDROOMS, AND THE SCHOOL DISTRICT IN PROPERTY LISTINGS SHOULD BE VERIFIED BY YOUR OWN ATTORNEY, ARCHITECT, OR ZONING EXPERT. IF YOUR PROPERTY IS CURRENTLY LISTED WITH ANOTHER REAL ESTATE BROKER, PLEASE DISREGARD THIS OFFER. IT IS NOT OUR INTENTION TO SOLICIT THE OFFERINGS OF OTHER REAL ESTATE BROKERS. WE COOPERATE WITH THEM FULLY. EQUAL HOUSING OPPORTUNITY. ALL INFORMATION DEEMED RELIABLE BUT NOT GUARANTEED AND SHOULD BE INDEPENDENTLY REVIEWED AND VERIFIED.
enteruserclockmagnifiercross