Florida Mortgage Blog

The Home valuation Code of Conduct

May 6th, 2010 6:56 AM by Preston Ware

The Home Valuation Code of Conduct One Year Later


I wrote about this legislation when it came out and at the time I said it was a mistake. One year later I still feel that it was a mistake. The reason for this is that the need for service or quality when it comes to performing an appraisal has been completely removed from the equation.  If you providing a service in any kind of business the market mandates the survival of the fittest. The person with the best product or service at the lowest price wins.


Competition is always good. This country was founded on the free market system and competition. With the Home Valuation Code of Conduct (HVCC) the appraiser is randomly appointed by an appraisal management company appointed by the lender.  There is no service level that has to be met by the assigned appraiser and most likely he will never see this customer or mortgage broker again. Just as long as value is squashed as much as possible in favor of the lender, that appraiser will get another job again.


In the passed year I have seen some of the most atrocious appraisals ever. I have seen values come in 30-40% lower than an appraisal done one month prior. I have seen turn times go from two or three days to a week or more. I have seen comparables that make no sense, using completely different types of construction and neighborhoods. I have seen perfectly good maintained homes compared with distressed properties that were foreclosures.


The HVCC hasn’t really brought any more objectivity to the appraisal process. It has cut the margin of doing business for the appraiser who has spent his whole life building up a book of business. If the standard fee for an appraisal was $375 before the HVCC, and the same fee applies today, the management company is grabbing $120 for simply assigning the job. Does it make sense that the appraiser is going to do a better job? Of course not.


The HVCC is the by-product of someone in government trying to lay blame for the fallout of our real estate market meltdown. It hasn’t helped the mortgage process, it has made it worse. Many folks very well have been turned down for their loan because they don’t have a quality appraiser guy doing the appraisal. Every purchase counts in our economic revival. It is always better to have a professional doing the job rather than a scab.



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Posted by Preston Ware on May 6th, 2010 6:56 AM


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