NAR appraisals study: The impact of HVCC

WASHINGTON – July 8, 2009 – “A preliminary analysis indicates that the implementation of the Home Valuation Code of Conduct (HVCC) appears to be having adverse impacts on the housing markets,” says Jed Smith, managing director, quantitative research, with the National Association of Realtors®. “Appraisal issues associated with the implementation of HVCC have recently been in the news. NAR Research has developed information on the subject through a statistically representative survey of the membership.”

A preliminary analysis of Realtor responses includes the following:

• Approximately 76 percent of Realtors representing buyers or sellers indicated that the time to obtain a completed appraisal increased after May 1; 69 percent of those indicating increased appraisal times reported an increase of over 8 days.

• Lost sales were reported by 37 percent of Realtors attempting to complete home sales, with 17 percent reporting one lost sale and 20 percent reporting more than one lost sale.

• Reports of lost sales will impact the fallout rate in Pending Home Sales, although some of the sales may ultimately be completed on a delayed basis.

• An increased use of out-of-area appraisers was reported by 70 percent of Realtors seeking to complete a sale.

• The number of NAR appraiser members reporting that they obtain over 50 percent of assignments from AMCs (Appraisal Management Company) increased from 14 percent to 39 percent after May 1.

• Approximately half of NAR appraiser members reported a reduction in fees received by them, and 70 percent of NAR appraiser members reported that consumers were paying higher fees.

• The time for an appraiser to submit an appraisal to the AMC decreased reported 71 percent of NAR appraiser members.

• Approximately 85 percent of NAR appraiser members reported a perceived reduction in appraisal quality.

• Among Realtor respondents obtaining an appraisal for a client, 55 percent reported a perceived decrease in appraisal quality.

• NAR appraiser members reported a significant number of assignments in unfamiliar geographic areas: for example, 16 percent reported that more than 11 percent of their assignments were in unfamiliar areas.

The above is preliminary results of the survey. An analysis of survey responses at the state level is projected in the near future.

Source: Jed Smith, managing director, quantitative research, National Association of Realtors®

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