Residential property appraisers in Georgia have been explaining their positions to buyers, sellers and agents criticizing the results of their appraisals.
Some appraisers defended the new home appraisal rules; others criticized them and called for a revamp. Several brokers criticized appraisers for lost sales while some housing analysts defended them for their compliance to appraisal rules intended to prevent overvaluation.
Complaints regarding home valuations intensified after the Home Valuation Code of Conduct started to be implemented in May this year. The code has lots of provisions, but all of them were intended to prevent the overvaluation and overinflation during the boom that contributed to large numbers of foreclosures across the country.
Regulators contended that appraisers were influenced during the boom by real estate brokers and mortgage brokers to
increase their appraisals so borrowers can buy bigger homes. Now, banks use appraisal management companies that conduct home appraisals through their appraisers to comply with HVCC rules.
Among Georgia mortgage brokers complaining about new appraisal rules is Steven Alexander. He cited that one appraiser valued the Buckhead mansion he was handling $500,000 lower than the $2.1 million price he considered as the real market value of the mansion.
Alexander contended that the appraiser did not consider significant facts such as the location of the mansion in one of the best school districts, the design of the house by a prominent architect and the additional features of the house ? patio fireplace, basement entertainment center and copper gutters.
Alexander, who also heads the Georgia Association of Mortgage Brokers, said that the new appraisal code has caused a lot of erroneous valuations. He added that appraisers working for appraisal management companies at lower fees have been rushing from one assignment to another and sometimes traveling to places out of their territories to accomplish valuations.
Many home appraisers have also been complaining about the increased leverage of AMCs, which have been receiving most or all appraisal assignments from the big lenders and which have lowered fees for appraisers. Independent appraisers who were earning adequate income in the past are now struggling because of fewer assignments and many of them have gone back to work with AMCs even at lower fees.
However, Richard Martin, a real estate professor at the University of Georgia, and Daniel Fries, operator of an appraisal company, support the need for changes in how appraisers do their work. According to them, although there are unintended consequences, the new appraisal code has been preventing overvaluation and fraud.
