In May 2009, a new rule was passed in the mortgage industry; it’s called HVCC – the Home Valuation Code of Conduct. This ‘rule’ governs how appraisals are handled, ordered and executed. It was put into place due to Andrew Cuomo, Senator for New York State and, well, it has pretty much been one of the biggest downfalls to our industry since the crash in August, 2007.
It used to be the argument that appraisers were being pressured to value properties higher than their true market value, hence, contributing to over-inflated house values which in turn resulted in borrowers borrowing more money against their houses than was reasonable.
Now – partly because of HVCC – appraisers, loan officers and underwriters are forced to be as conservative as possible on values of homes so much so that, to this loan officer, we have completely swung to the other side of the pendulum – still achieving no balance or middle ground.
How this affects us and the market? Appraisers are appraising homes for a bit ‘less’ than they really should be valued at, they are using foreclosures in some cases to value homes that are not foreclosures and they are on the side of caution rather than supporting any possible growth and appreciation.
What can you do? Be prepared! If you are refinancing or selling your home – be ‘sure’ to provide the appraiser with recently sold comparable homes in your neighborhood or similar adjoining neighborhoods. You or your Realtor can provide this information to the appraiser when they come to appraise the home.
Prepare a list of all updated and remodeled items in your home from new windows, new bath fixtures to a new furnace. And be sure to point out attractive features such as backing up to a park or living on a low-traffic street.
With planned preparation, a well-kept house and a little luck – you can obtain the highest, and most fair, value for your home and contribute to growth in your neighborhood for the next sale!
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