Home appraisers are asked to get further information from real estate agents, builders and lenders so they are able to provide a fair home appraisal, according to the National Association of Home Builders, which held its second home appraisal summit in Washington, D.C. in the first week of November.
At the summit ? attended by major appraisal, housing and lending organizations and banking and housing regulators ? NAHB chairperson Joe Robson clarified how home builders and other parties can communicate with house appraisers without violating the provisions of the Home Valuation Code of Conduct.
According to NAHB leaders, home valuation is among the most crucial factors for the recovery of the home building sector, which was battered by the housing meltdown. They said that some house appraisers have been applying foreclosure sales and short sales as comparable sales in their computation of home values without considering the differences in condition and quality of construction.
NAHB leaders insisted that appraisers should consider the fact that distressed sales are sales of properties that have been damaged and neglected.
Home builders at the summit called on home appraisers to approach real estate agents and other parties for more information about distressed sales. NAHB chairman Robson explained that the Frequently Asked Questions documents released by Freddie Mac and Fannie Mae on HVCC had already made clarifications about communication between house appraisers and other parties.
According to Robson, real estate agents and other parties can communicate with house appraisers and provide them with information as long as they do not improperly influence the house appraiser. The Fannie and Freddie FAQs explained that providing information to appraisers to help them arrive at a more accurate home valuation is allowed under HVCC, Robson explained.
Sandy Dunn, past chairman of NAHB, also expressed concern about the use of out-of-town house appraisers. He said that these appraisers should first study the local housing market before making their appraisals.
Dunn also talked about the possible creation of a mechanism under which builders and other interested parties can submit appeals or complaints in cases where the initial appraisals are inaccurate. During the first summit, participants mentioned the mechanism used by the Veterans Affairs for low-appraisal cases.
According to Dunn, lenders should know that the HVCC rules do not prohibit them from asking home appraisers to recalculate if the first appraisals are too low because of some fundamental mistakes such as wrong square footage and number of bedrooms.
