In a nutshell, when this new FEDERAL law takes effect, Mortgage Brokers, Realtors Buyers and Sellers will have NO control over the appraisal process. None of the above can call an appraiser and get an appraisal done and then bring it to the lender or bank for a loan. Banks must order the report directly from the appraiser or a third party will do the ordering hired by the Banks. These third parties are what we call Appraisal Management Companies (AMC's). The banks are hiring these companies to puts a layer in between the banks and the appraiser for more independence and less lender pressure on the appraisers to "make the value".
**Any of the above individuals CAN order an appraisal directly from the appraiser if their reason for the report is not for a LOAN, IE; to determine a listing or sales price, to obtain current value, a divorce, estate, tax rebuttal appraisal, PMI removal, etc. That is NOT prohibited and is actually encouraged in this ever changing market ***
Note: Realtors, buyers and sellers will not be able to call the appraiser or email them to tell them that they do not agree with our values. That is undue pressure and it NOT allowed. As an appraiser I am happy about that, because to be honest, most of the "comparable properties" that are provided by Realtors, buyers and sellers are not comparable, but that is another whole post all together. I am here to help you today! READ ON.......
Here is where REALTORS, buyer and sellers DO have control. Just the other day I was appraising a Lake Lanier property (our specialty) and I was surprised and very HAPPY to see that in the sales contract under the special stips page was the following statement:
" Buyer shall have all the rights and provisions manifested by the Appraisal Contingency provided that the appraiser the buyers lender selects has COMPETENCY to perform an accurate Lake Front Property appraisal and has completed at least 10 appraisals on Lake Sidney Lanier waterfront properties within the past 3 years" Said qualifications of any and all appraisers hired shall be provided to the Listing Agents in writing upon request."
That is awesome! I would suggest SELLERS rights are also protected in the contract, by stating that if the buyer signs an appraisal contingency in the contract, they should also REQUIRE an experienced appraiser in the property be it Lake, Golf Course, even a particular neighborhood. I would also suggest that in the case of a special property like Lakefront that the experience be even greater at least 10% of their work is completion of this type of appraisal over the past 1 year, not 3 years as things have changed over the last year as you well know. Many lenders are requiring that the property appraised by the appraiser is no more than 30 miles from the appraiser's office. I would suggest that you narrow that down and state that the appraiser must live in the SAME COUNTY as the property being appraised.
I can't tell you how many times a lender sends someone from ATLANTA to Lake Lanier to appraise that property and unless they have considerable experience on this lake, which most do not as their primary work is closer to the city of Atlanta (45 miles from Lake Lanier) you have a disaster waiting to happen when it comes to the appraisal!
So you DO have control and you need to start adding this type of language to every sales contract. Trust me when I tell you that BANKS and especially the Appraisal Management Companies (see my previous post on AMC's) DO not care about competency of the appraiser. They select the one that can do it the quickest and the cheapest and if that happens your DEALS will fall apart on a regular basis.
Please pass this along to every Realtor you know, repost it, blog about it NOW. If you do then you can take control back on this HVCC law when it comes to appraisals on your sales deals.
If you have any questions about this new law, let me know it is just around the corner.
Mary Thompson
www.marytappraisals.com