What's All the Fuss About the New Appraisal Rules?

It seems like every day an agent is screaming about a low appraisal that has derailed a deal. Yet I wonder if we added up all of the settlements that have taken place since the new HVCC rules had come into play and then asked for the number of settlements that had appraisal issues, we would find the total percentage to be low.

Let’s face it in many areas our markets were highly over-valued. Yes I know a lot of homeowners are in a rough situation right now but weren’t home appraisals part of the issue? One day a home was selling for $400,000 and two weeks later the same house sells for $425,000 with no questions about the value? Weren’t appraisals part of the problem then as well? Certainly money was fast and cheap but if appraisals hadn’t been allowed to run up unchecked, would we be in the same spot with significantly lower values in some markets?

I’ve closed 16 transactions this year and not a single appraisal problem. As a listing agent I watch offers carefully and look for signs of an agent who is trying just to “win the deal” and then hope for a low appraisal. How many buyers have been surprised when they discover the home they only wanted to pay $200,000 will indeed cost them $215,000 because their agent told them “it will never appraise.”

Regulations that protect home buyers will always be a good thing. Let’s not blow the new HVCC rules out of perspective. Appraisal concerns were around before the new regulations and they will be around when this set of rules is replaced by another. It’s just the way it is!

This post originally appeared on my Active Rain and generated a good deal of comments. I’ve included a link so you can see what other agents had to say. They didn’t all agree with me and that is okay. Since this post I’ve had two more appraisals come back with no issues.

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