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Appraisals, for all their importance in getting a mortgage and buying a home, seem to be rather nebulous. This past weekend, The New York Times ran an article pointing out several gray areas in the art of appraising. First of all, a change in the Home Valuation Code of Conduct that took effect back in May gave banks exclusive power over the appraisal process. The plus side, and intent of the change, is that brokers, builders, and buyers cannot influence the appraisal as much; the down side, according to some appraisers in New York, is that banks are using national appraisal firms that assign appraisers who charge lower fees—i.e., less experienced appraisers who are likely unfamiliar with the local market, something which is essential in New York City’s market of microscopic subclimates. It is common, of course, in a down market for appraisals to come in low, but the combination of inexperienced appraisers and fewer data points due to lower volume might result in inaccurately low valuations. Buffalo News made a similar report about the appraisal industry upstate, and CNN Money reported that the housing industry met with New York Attorney General Andrew Cuomo last week to protest the current Code of Conduct, and the attorney general’s office agreed to consider the matter further. The primary sources for these articles are brokers and local appraisers. We’d like to hear from other players in the game, as well. Any bankers, buyers, or national appraisers out there who want to throw their hat into the ring?
New York Appraisals Get Shortchanged [NY Times]
Tougher Appraisals Make Home Sales Harder [Buffalo News]
Housing Industry to Cuomo: Let’s Work Together [CNN Money]
Photo by Richard Wanderman


What's Your Take? Leave a Comment

  1. Mopar- Your appraisal was spot on because it was FHA and I ordered it through an appraiser that I know and that works in the area HMS associates. FHA loans don’t require HVCC appraisals.

    I posted about HVCC months agao when it came out. I’m glad that everyone is starting to get around to seeing what problems it’s causing people. Wow it only took the NY times 6 months to write an article about something I commented on back in April. Where is my interview?????

  2. @ springs who wrote:
    how were the comps’- Location, Sqft, bedroom and bath count, age, quality of construction, condition—

    As far as outdoor space, what proof do you have? Can you show the math, name the data sources, verify it with secondary sources and back it up in the court of law if need be? I am sure that if the appraiser had the proof that you claim as truth, he/she would have no problem putting that into the report. An appraiser by definition is a ” disinterested 3rd party “.

    As far as outdoor space in NYC, yes it is a highly coveted AMENITY, but not necessary to support habitable living arrangements , nor does it provide necessary shelter. Therefore, the only comps to use are ones with similar outdoor spaces vs. ones without. It is very difficult to verify info in Brooklyn due to lack of a reliable MLS system.

    My response—-
    The comps used were 2 apartments with no outdoor space at all and one with a very small balcony (50 sq ft) and the one with a balcony was only a one bed while ours was a 2 bedroom. Our terrace is over 250 sq ft. so I don’t think these 3 comps were very useful and something an experience appraiser would use.

    As for as proof and math, I actually sent all of my research data to the appraiser with all the calculations I performed, so yes, I had done the leg work to back up my argument. I didn’t grab these stats from the air. You seem to think the appraiser would have no problem putting this information in their report, but people don’t like it when you point out they have made a mistake. As I said, I never had my emails returned with all of this information and when I did speak to someone live on the phone and layed out my case, they gave the the run around and said they needed to reveiw my file and never got back to me.

  3. Our appraisal was spot-on. Our area (Bed Stuy) is wildly divergent with comps all over the place because of foreclosures, renovated properties, unrenovated ones. They picked three very similar properties that all recently sold for $100,000 more than our price.

    Oh wait — they did choose bricks and ours is a wood frame.