The Appointed Appraiser…Are You On Board?

Has anyone heard of this “code of conduct” involving real estate appraisals?  The one that’s supposed to protect borrowers and lenders from faulty appraisals?  Yea that one.  Well, needless to say, it’s caused a whole lot of choas in the real estate industry.

“Mortgage brokers, appraisers and real-estate agents are up in arms over the new rules, which dictate how lenders select an appraiser when they originate certain home loans,” said Marcie Gaffner of BankRate.com.  ”Few borrowers care much, if at all, about how appraisers are hired or paid, but those borrowers whose loans have been delayed or derailed due to the new rules may take a very keen interest, indeed.”

“The code was originally put in place to ensure that home valuations would be “‘less inappropriately influenced.’” says David Feldman, president of First American eAppraise.  The problem now comes in the form of accuracy, timeliness, and cost, and whether or not borrowers are actually being protected.

In terms of accuracy, the main concern is wether or not you are getting an accurate estimate of home value.  The rules of “the code” state that an appraiser can no longer be selected by the lender.  On the one hand, this makes sense seeing as in the past, there were sketchy activities going on between lender and appraiser.  On the other hand, now you’re getting appointed an appraiser who could completely screw up your finances with a lackadaisical approach to the estimate.

Also, in terms of timeliness, you never know how long it’s going to take to be appointed an appraiser.  In the past, lenders kept one pretty much on hand.  Now, turnaround time could take weeks, something that can be extremely annoying to homebuyers with a specific purchase timeline.  Also, the cost has increased with demand, and oftentimes borrowers are asked to pay out of pocket and up front, something that used to be covered within the terms of the loan.

The best thing potential buyers/borrowers can do right now is research the market and be realistic about what you can get.  If you do your homework, understand comparable prices, but also appreciate the fact that we’re in a slow economy, things should turn out all right.  Also, having a real estate professional to help guide you through the process couldn’t hurt either.

Looking for a home doesn’t have to be chaotic.  That’s why we’re here…