HVCC Aftermath – What May Revealed about the Appraisal Industry

Over the past month, the residential appraisal market has been turned on its side from the Home Valuation Code of Conduct and the large proportion of appraisal orders that shifted from brokers directly to appraisal management companies. Aside from appraisers being swamped with refinance assignments, the appraisal industry has settled into the following:

Long Delivery Times – appraisal transactions are taking 4-5 days longer on average
This is the most significant aftermath as well as the most frustrating for lenders and homeowners. The extra layers of quality control, review, and administrative management, coupled with appraisers that are operating at full capacity, has increased the amount of time needed to secure a credible report.

Elimination of Comp Checks

Contacting appraisers directly for “unofficial” value opinions or sending an estimate of value with the appraisal order is not permitted under HVCC. Per the Uniform Standards of Professional Appraisal Practice (USPAP), appraisers can not communicate a value or range of values without sufficient documentation to support their conclusion. They are also not permitted to accept an appraisal assignment that was sent based on a pre-determined value. Communicating a value or range of values for an appraiser IS doing an appraisal. Now that most management companies are protecting appraisers from “comp checks”, appraisers are no longer inclined to satisfy these types of requests.

Appraisal costs have increased

While appraisers have absorbed some of the appraisal costs in a reduced management company fee, the additional costs are being passed on to borrowers. For example, the market fee for an appraisal in Chicago is $300 but will cost $350 through a management company. The borrowers can take some comfort in knowing that the $50 increase helps to protect appraisers from value pressure.

Of course, a handful of management companies, US Appraisal Group included, have taken the opportunity to set a new standard through a full-fee model for appraisers. Although appraisers are incredibly busy, it will always incentivize them to retain their full fee rather than work at a reduced rate. Order by order, we will dramatically increase public confidence in appraisal management.