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Impact of the HVCC

HVCC statisticsIt isn’t hot-off-the-presses news anymore that the Home Valuation Code of Conduct (HVCC) has really affected real estate transactions. But NAR wanted to find out how serious the problem really is. Here are the results:

  • 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 reporting 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% of assignments from AMCs 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.
  • Time for an appraiser to submit an appraisal to the AMC decreased, as reported by 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.

Probably not real surprising to anyone who hasn’t been living under a rock for the last 2 months. At least now when we complain about the HVCC we have factual numbers to back up our statements.

photo credit

Written By

As the son of two music teachers, Ben spent his first 21 years trying to make a living with his slightly above average trumpet playing. After no return calls from Dizzy Gillespie and then a failed attempt at becoming a fly girl on "In Living Color," he switched gears and finally found his nichè in real estate. He's a Minnesota appraiser and also a Realtor with his better half, Stacia. Labeled “one to watch” from an anonymous source (thanks mom), Ben is smart, good looking, athletic and a rock star inside his own head. He also never passes up a chance to write his own bio. Find him online at twitter or selling Stillwater Real Estate.



  1. San Diego Luxury Homes

    July 10, 2009 at 2:43 am

    @LaJollaHomesPro The HVCC has negatively impacted the San Diego real estate market in exactly the ways you mention. Appraisals are coming out of left field. LA appraisers are frequently called to conduct appraisals in San Diego neighborhoods that they know nothing about. They pull comparables from the MLS and tax records without knowing anything about the relative value of location, much less the condition. They consistently undervalue properties even when there are a dozen offers over the asking price. What is market value if it is not the value that the market is willing to pay? Is there some conspiracy to further drive down real estate prices?

  2. Glenn in Naples

    July 10, 2009 at 7:29 am

    Ben – A good synopsis of the numbers and observations. I find it particularly interesting the percentage of out of area appraisers doing appraisers. This could be the major cause of the poor appraisals.

    What is interesting to read is the stand on this issue by the Appraisal Institute justifying this.

  3. Missy Caulk

    July 10, 2009 at 8:42 am

    The numbers are great,thanks for composing them. Yes, it has negatively effected my market in Ann Arbor, with so many out of area appraisers using a different MLS for their comps.

  4. Joe Loomer

    July 10, 2009 at 10:46 am

    Ben – thanks for this – it’s what I expected.

    Was the NAR survey done to support Charles McMillan’s trip to see the Assistant Attorney General and lawmakers three weeks ago? Understand the sole purpose of the trip was to address HVCC issues like these.

    Anyone know the results from his trip?

    Navy Chief, Navy Pride

  5. Ben Goheen

    July 10, 2009 at 7:52 pm

    Joe – NAR didn’t consult me before this survey, so unfortunately I can’t answer that question. 🙂 I also wasn’t in the “statistically representative” group of agents surveyed. I wonder how many agents were…?

  6. Jerry Bluhm

    July 10, 2009 at 11:54 pm

    The problem I have experienced on 30 day closings is banks say they have no control on the appraisal time and they can no longer have contact with the appraiser. Then after the appraisal is done, the appraiser who is selected from the “appraiser pool” takes about 2 weeks to submit the completed appraisal.
    My question is what has this appraisal pool accomplished?
    The appraiser has access to the MLS in Mass. Then they ask you to bring a copy of the Purchase & Sale Agreement to the appraisal appointment. Could they actually determine value without having access to the list and sale price?
    Have you ever done a CMA and the seller disagreed with you on the price and called in an independant appraiser and their value was way out of wack because they didn’t have a P&S to determine the value?
    Make sure you get the appraiser’s business card at appraisals. That way if they drag their feet I call them and ask what the delay is. Also bring comps to the appraisal appointment! Where so many appeaisers are now from outside the area and not familiar with the area market, don’t leave it to chance!

  7. Joe Loomer

    July 11, 2009 at 8:17 am

    Dangit Ben! They didn’t consult me either – nor was I a Static Rep! Guess us folks down heah in the sticks jus doun matta to them high-falutin folks at NAR!

    Oh well, I’m sure we’ll hear more on the HVCC issues before it gets any better. As always – I enjoy your extremely informative and relevant posts…..

    Navy Chief, Navy Pride

  8. Ken Montville - MD Suburbs of DC

    July 11, 2009 at 4:50 pm

    Well, it seems that the consensus is building – at least here on AG – that it really isn’t “the market” as so many appraisers want to claim. It is appraisers unfamiliar with “the market” establishing artificially low valuations and affecting “the market”. It’s a vicious cycle. I wonder at what point will it become obvious to even the most clueless of appraisers that the valuation/contract price/comparables are really valid?

  9. Paul Mausteller

    July 12, 2009 at 8:03 am

    My 2 cents about HVCC has actually shed some light on how fudged the appraisal and mortgage business was in the past. No more LO sleeping with appraisar theory.
    I think the mindset was to continue to bring in appraisals to match or exceed purchase prices, the appraisar would get additional work from that LO. The pressures for appraisers was make it happen since your my buddy, I’ll give you more work.
    Funny how everyone wants to point the finger at HVCC is a problem.
    WAKE UP people we are in a declining market, almost half if not more of all homeowners are upside down in their mortgages. HVCC is called regulation. The truth is hard to swallow, being transparent will set you free.
    The reason our economy is in a mess is this very reason, lies, fudging make it happen no matter what.
    When the true value of homes has been inflated for years because of lack of regulation, now we are paying for it.

  10. Jim Duncan

    July 12, 2009 at 6:32 pm

    Paul –

    My beef with the HVCC is not the regulation per se, but with inaccurate appraisals using comps that aren’t comps …

    Accuracy and competency are all I want – for my business and my clients.

  11. Joe Sheehan

    July 26, 2009 at 9:56 am

    The FHFA says that the HVCC rules were inplemeted due to past abuses in the appraisal process and potential conflicts of interest between mortgage brokers, realtors, and appraisers.

    The sad irony of HVCC is the homebuyers who allegedly overpaid for their homes due to “hyped-up” appraisals 5-7 years ago are now getting dinged on the sell side for decling home values and “hyped-down” appraisals.

    It’s the consumer who is the ultimate victim of these misguided rules.

  12. Arlington condos Jay

    August 25, 2009 at 10:12 am

    FHA says no to HVCC rules–breaking newz!

  13. Debbie

    October 13, 2009 at 7:48 pm

    We are selling our home. It took forever to get an appraiser. They had to be requested a second time. The female appraiser scheduled a day to come out. Eight days later she was sitting in our driveway unannounced, thinking the home was empty. Needless to say, she had to call the bank and our realtor let me know she was sitting in my driveway. She let no one know she never showed the week before as scheduled. She thought we would sneak in when she did and no one would be any wiser. Better than that, she fraudulently commented on line that the appraisal would be in soon( this is the original week she was scheduled) when she hadn’t even shown up. She tells me she will have it in the next day and of course she didn’t. It was the following Tuesday evening she had it in and it was 5, 000 under the listed price. The listing was within range of area houses in similar size, shape and condition. We have 1/2 acre of land which the others didn’t with numerous upgrades. I wish we hadn’t spent one dime to update this house. The county taxes we are being charged are on a house selling for more than 60,000 more than what this stupid woman appraised it for. How can either of them get away with that? The government is sick, be it county, state OR government. We are being ripped off big time and who is going to help us recoup our losses? At this point, I am ready to leave the house, not make any more payments and just let the bank take it. Then see who else loses in all of this realty mess. I hope Attorney General Cuomo rots! This is all his fault! We didn’t even have a local appraiser! Screw all of the government. I wondered why my father never trusted the government. Now I feel the same way!

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