Dear Local Realtors,
You can still talk to appraisers. The Home Valuation Code of Conduct (HVCC) went into effect on May 1, 2009 and it means that loan departments and other parties cannot influence an appraiser’s opinion of value. HVCC basically means that an appraiser’s opinion should be independent and not have any outside influence to “hit the number” (meet the sales price, meet the minimum amount for loan qualification, etc…).
This sounds fairly straightforward, but the problem is that there is some confusion in the marketplace about who can speak with appraisers. For instance, last week I emailed a local Realtor to ask her about the details of one of her recent sales. I wanted to obtain information about the condition of the property and any financing terms that were not made available in MLS. The Realtor emailed me back and stated that she could no longer speak with appraisers due to the new law (HVCC). Unfortunately this is not an isolated incident, but most of all it is absolutely wrong.
As far as property details, the Listing & Selling Agent are often an outstanding source of information. When we get answers to questions like, “Why did your buyer purchase this one?” or “How come this was on the market for so long?” or “What did you mean by ‘conversion’ or ‘needs TLC’ in your MLS description?”, we get valuable insight. Just think of the word “fixer”, for example, and how this one word in an MLS listing can mean anything from “infested with mold” to “needs new paint”. Discussing details like this is all a part of the appraiser’s job in analyzing the market to determine a fair market value. Besides, we are not even talking about a value here, but only property characteristics. Keep in mind too that most of the time we are asking about properties that we are not appraising anyway because we are trying to get information on potential comparables to use in an appraisal report.
HVCC simply means that nobody can influence us toward a certain value opinion. Can you still provide property details? Yes. Can you help us understand a certain neighborhood market better? Absolutely yes. Are you able to give us insight into the financing of one of your deals? Yes. Are you within the law to coerce us and influence an opinion of value? No. That’s the gist.
Your insight is valuable and providing basic information to appraisers really helps us do our job well. Thank you in advance for your communication and expertise.
Your local appraiser,
Ryan Lundquist
Lundquist Appraisal Company
PH: 916-595-3735
FAX: 916-361-1964
EMAIL: ryan@lundquistcompany.com
WEBSITE: www.lundquistcompany.com
http://www.lundquistcompany.com/blog Can Realtors Still Talk to Appraisers After May 2009? (HVCC went into effect on 05/01/09)
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Tags: Can realtors still talk to appraisers?, How does HVCC impact realtors and agents in conversation with appraisers?, HVCC
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Ryan,
With HVCC stating that in instances other than FHA/VA etc… that the loan officer cannot choose which appraiser to hire, it should be welcoming for an agent to be able to at least know who the appraiser is, where they came from (hopefullly not a bay area appraiser appraising Folsom etc…) As an agent we know there are going to be instances where the appraiser is not necessarily familiar with the area that he or she is appraising. In those instances particularly I welcome being able to talk to the appraiser. Great article Ryan.
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Thanks Kellie. It’s helpful to have agents like you in the marketplace.
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Hi,
I have a question on whether loan officers are able to talk to appraisers, and to what extent. My house is currently under contract, and we just got back a really low appraisal that we believed very much undervalues our house (as did the potential buyer), to the extent that it used the wrong property and tax records as its baseline (a property that is less desirable than ours)… and even labeled the report with the wrong address!
My realtor took two approaches to try and clear up the mess. First, she contacted the appraiser and alerted her of her errors as politely as possible. The appraiser refused to review her appraisal. When my realtor called the loan officer to point out the errors and ask for a second appraisal, the loan officer got extremely snippy and said that any errors in the report were merely “typographical errors.” Lo and behold, my realtor then got an email from the appraiser that said that any errors she had made were “typographical,” which is a term she had not used before and clearly indicated that she and the loan officer were talking with each other. Then, the loan officer sent my realtor another email with a “corrected” appraisal back that removed any “typographical errors.”
If a home loan doesn’t go through and everyone is above board, that’s fine, but I think that the appraiser and loan officer are walking a very fine ethical line. We have now gotten the loan officer to agree to a second appraisal (because the buyer requested it), and I’m keeping my mouth shut for now. But, after this is all over, regardless of the outcome, I want to know what type of recourse there is out there for homeowners (such as a better business bureau) that would either alert others to our troubles with both the appraiser and loan officer, or better yet, have our case looked into by FHA.
Thanks
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I should have mentioned… this is an FHA loan.
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Hi Emily. Thank you for the comment.
The appraiser could have been instructed by the AMC (Appraisal Management Company) to fix “typographical” errors, so your scenario does not necessarily mean that the appraiser and loan officer have been discussing the appraisal or even talking at all. Appraisers and loan officers could ethically discuss typographical errors in the report anyway in my opinion because a value conclusion or value-related issues are not behind discussed (which HVCC would have a problem with).
It sounds like a good thing that the loan officer agreed to a second appraisal because of the original appraisal. I’d be curious to hear how things go. Please keep me posted.
Best wishes.
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