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The rocky road between agents and appraisers came to a head, can now be synergistic

There is an ongoing revolution between appraisers, lenders, and agents – this is a comprehensive overview of how we’re finally in a positive place.



home sales

In the musical Oklahoma! there’s a happy moment when the cast dances and sings “The farmer and the cowman should be friends.”

Has the time come for the real estate agent and the appraiser to be friends?

Exaggerated valuations led to lawsuits

It’s been a lengthy estrangement that began in 2008 with an attempt to prevent abuses resulting from parties that had a vested interest in originating a mortgage but no risk — like real estate agents and mortgage brokers. They were allowed to select the real-estate appraiser needed for loan approval.

Because brokers only are paid when a loan closes, and the bigger the loan the bigger the payday, appraisers had an incentive to provide exaggerated valuations. The agreement settled a lawsuit brought by the New York State Attorney’s Office against the GSEs.

The compromise, called the Home Valuation Code of Conduct (HVCC), not surprisingly resulted in a rash of lower appraisals when it was enforced by Fannie Mae and Freddie Mac in 2009. A recent study by the Philadelphia Federal Reserve found that the HVCC led to a significant reduction in the probability of inflated valuations and an increased incidence of low appraisals: The odds of low appraisals among HVCC-covered transactions increased by 17.1 percent in the six months after the HVCC, while the odds of significantly high appraisals (5 percent or higher than contract prices) decreased by 15.3 percent.

Buyers, sellers, and real estate agents were unhappy

Among the people made unhappy by that development were home buyers whose lenders required larger down payments to cover the difference between appraisals and purchase contracts. Real estate agents and sellers also weren’t pleased when low appraisals started to tank deals that were five yards from the finish line. The most vocal opponents of the HVCC turned out to be traditional appraisers who were concerned the code encouraged lenders to use low cost appraisal management companies.

The passage of the comprehensive Dodd-Frank reforms in 2010 ended the HVCC but wrote into law the ban against broker and agent involvement with appraisers, who now report only to the lender that hired them. During the deepest depths of the housing crash, when values plummeted, appraisals still came in and brief periods of hope like short-lived boomlet caused by the 2009-2010 housing tax credit confused valuations even more.

Enter the recent turn around

Over the past two years, when national median prices have increased nearly 20 percent, complaints about low appraisals have actually decreased. In its February monthly survey of brokers, NAR found only 6.9 percent reported appraisal issues were major problems prior to settlement or contract termination. By contrast, in April 2011, 35 percent of brokers in the NAR survey had a contract cancelled or delayed as a result of a low appraisal, or had a contract negotiated to a lower sales price as a result of a low appraisal.

Quicken Loans tracks the relationship between contract prices and appraiser opinions and the results are remarkable. For the first time since August 2013, appraiser opinions fell below homeowner estimates in February by just 0.13 percent. Appraiser opinions remain higher than homeowner estimates in 18 of the 27 metro areas analyzed.

“While it’s significant that appraiser opinions are now lower than homeowners’ nationally, this minimal difference is unlikely to derail a refinance or cause headaches for the homeowner,” said Bob Walters, Quicken Loans Chief Economist.

So what has caused this dramatic turn around?

1. Transparency and Consumer Awareness. When their agents and mortgage brokers could “fix” low appraisals, buyers and sellers didn’t worry much about them. All that changed with the HVCC. Agents worked with sellers to counsel them on how to prepare for the appraiser and make sure he got documentation of improvements and good comps. An early outcome of the HVCC was the requirement that lenders send a copy of the appraisal when it was completed, or at least three business days before closing.

2. Appraiser Independence. Over the past three years, new laws, rules, and regulations have been implemented in an effort to protect the independence of the appraiser. Once an appraisal assignment is completed and sent to the client, appraisal industry standards prohibit an appraiser from discussing the results of the report to anyone but the client who ordered the appraisal, or parties designated by the client. In order to ask an appraiser to correct errors in the appraisal report, an agent must use the client, typically the lender, as an intermediary. The client may choose to provide additional data to the appraiser for consideration.

These include:

  • Consider additional, appropriate property information, including the consideration of additional comparable properties to make or support and appraisal.
  • Provide further detail, substantiation, or explanation for the appraiser’s value conclusion.
  • Correct errors in the appraisal report.

3. Quality of Market Data. One of the problems during the downturn was use of distress sales as comps. The appraisal industry has made progress in adapting to market conditions, expanding education and making adjustments for distressed homes used as comparables. The quality and variety of market data available to appraisers has mushroomed in recent years. More MLSs are making current data available and “big data” companies are aggregating data from appraisals, public sales, lenders and MLSs.

Higher-Risk Mortgage Appraisal Documentation: This regulation establishes new appraisal requirements for higher-risk mortgage loans. Mortgage loans secured by a consumer’s home with interest rates above a certain threshold are considered higher-risk under the Dodd-Frank Act. Lenders making higher-risk loans must use a licensed or certified appraiser to conduct an inspection of the interior of the property and prepare a written report. The rule mandates additional valuations – at no cost to the consumer – if the seller acquired the property for a lower price during the previous six months.

4. Fannie Mae’s Collateral Underwriter. Fannie Mae has developed (and this year is using) a new risk assessment tool to help lenders manage appraisal quality. Called “Collateral Underwriter,” it’s not a substitute for an appraisal and does not give a “right” or “wrong” answer. Rather, it is a way to ensure that any appraisal submitted to Fannie Mae meets the GSEs high performance standards.

Appraisers will not have access to CU. The system will review an appraisal only after it is submitted to UCDP, which then triggers the model that includes appraisal data to perform an analysis. CU does not function as an independent property database that allows users to enter an address and receive associated data.

The takeaway

Better appraisals, better understanding of how to work with appraisers, and better consumer education when it comes to pricing, means that making offers should result in better deals where borrowers don’t get in over their heads and sellers get the price that their properties are worth.

Steve Cook is editor and co-publisher of Real Estate Economy Watch, which has been recognized as one of the two best real estate news sites in the nation by the National Association of Real Estate Editors. Before he co-founded REEW in 2007, Cook was vice president of public affairs for the National Association of Realtors.


5 ‘lies’ HGTV tells viewers that impact the housing market

(OPINION EDITORIAL) HGTV has long been a fan favorite for renovations and home searches, but is the information they portray accurate? What influence does this really have on consumers?



Man watching HGTV show on tablet device.

It’s no secret that reality television very often does not, in fact, depict reality. One of the most frequently viewed “reality” television networks is HGTV, which features a wide range of home renovation and DIY shows that cater to a variety of home improvement enthusiasts.

While HGTV wants you to get lost in the latest episode of House Hunters, you may be surprised to know that these episodes are in fact, at least partially scripted.

Although there is nothing wrong with enjoying a good home improvement show, especially those ever-addicting home flipping shows like Fixer Uppers, there are a few things HGTV portrays that are less than accurate. Here are five of those things you may want to consider, or have your clients consider before embarking in the home ownership process yourself (or with a client).

Consider the following…

1. Realtors work a lot harder/longer than people think

Unfortunately, HGTV often portrays real estate agents as people who do the bare minimum for their clients, when in fact most Realtors® go above and beyond for their clients.

According to CheatSheet, Sissy Lapin, author and co-founder of ListingDoor, stated shows like House Hunters “make the agent look like they’re just these lazy people who show two houses and negotiate $1,000 off the asking price,” rather than showing the whole host of duties a good agent performs for their clients.

Good agents tackle the whole home buying process; informing clients about what they should consider when selecting a home, negotiating a better deal, and making sure that they do their very best to ensure nothing goes wrong throughout the entire process from start to close.

This is not the impression a potential homebuyer would get from HGTV alone. Realtors are an amazing asset to have on your team when you’re considering buying or selling a home, and they do a lot more than HGTV portrays.

2. Over-emphasizing the importance of new features

HGTV shows make a production out of showing homeowners frantically searching for the “perfect home” with all the “must have” features. In all fairness, sponsorship from the latest and greatest in home innovations is how they make some of their money. While it’s certainly understandable that most homeowners have a list of things they want in a new home, worrying sellers into thinking they won’t be able to sell their home unless they have these highly coveted features is an entirely different thing.

Lapin commented, “I can’t tell you how many times that I go into a house and they’re like, do you think it would add more value, or do you think it would sell faster if I put in granite countertops?” In fact, like many other trends in homes, consumers are moving away from granite to other sustainable materials. But you would never guess this if you believe everything HGTV is promoting on their shows. Again, the key is to do your own research. Consult a professional and inquire as to what would increase your home’s value.

3. Downplaying the expense of renovations

If you took what HGTV shows to heart, you’d be inclined to believe that major home renovations can be completed in mere hours for a few hundred dollars. If you’ve ever seen Property Brothers, you know the brothers function on extremely fast renovations schedules and very low budgets. This is likely not the situation you’ll encounter if you decide to renovate your own home (or a project home). Even contractors have complained that these types of shows are giving people an inaccurate picture about renovation expectations.

“Remodelers say that shows such as Love It or List It and Property Brothers, which often cram whole-house remodeling projects into too-small budgets, give clients the wrong impression regarding pricing and time constraints,” notes Tim Regan, writer for Also, according to CheatSheet, some renovations may not even be up to code.

One couple who appeared on Love It or List It are suing the show’s production company stating their home was “irreparably damaged” and a that a licensed architect was not hired.

To ensure your next project goes smoothly the best thing you can do is consult with a licensed, bonded, and insured contractor. They will be able to give you a time table and price range that is more realistic than what you see on HGTV.

4. Location, location, location

While not as important as the other factors on this list, in my opinion, it is certainly something to be considered. HGTV shows like House Hunters very rarely focus on the importance of location with the home buyer.

Lapin stated in one episode, she watched as a couple chose a home because of its stylish features even though it meant they would have to make a 45 minute commute to work. While everyone is entitled to make their own choices, Lapin makes a good point in stating that she would have “made [her] client make that drive to work three days in a row” to see if they would still enjoy the location of their new home.

This is one of the many benefits to having a Realtor® on your side: they know the ins and outs of home values, location, and more. Getting your information from a Realtor® will take you a lot further (and very likely save you money) than the information you can get from HGTV programming.

5. Buyers know more than some think

Contrary to what HGTV would like you to believe, buyers are not naïve. For the most part, buyers are real-world savvy and have a good idea about what they need and the price range they can afford. This is the age of digital technology, and most buyers are putting that technology to use, researching before they set out to buy something.

Sites like Zillow give buyers an idea of what’s available for how much, and they can even see what the home looks like without getting out and driving to the location. HGTV tends to show buyers that don’t know what they want or how much they can spend.

This is likely done to make their professionals seem more knowledgeable, but in reality, as Lapin states, “the buyer, the consumer, is very savvy and I feel like that’s not portrayed. Buyers have a lot of confidence now.” This isn’t to say most buyers don’t still welcome guidance from a professional, but they do have a general idea of what they want and what they can spend, by and large.

Instead of viewing HGTV as an example to follow, or representative of the market as a whole, it should be treated as entertainment.

While there are some aspects of the show that may be useful to some viewers, such as window replacement and selecting new flooring, it definitely shouldn’t be held as the gold standard for service or the home buying experience.

Consumers’ best bet is to consult an industry professional who can give you a more realistic picture of cost and time.

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Career breaks can close doors, but may open a new window

(EDITORIAL) A job pause can be maddeningly frustrating, but they can also open new opportunities to grow or start anew.



Career change

What’s worse than stand-still traffic?

The start-stop traffic.

In a standstill, you know where you stand… still. In stop n’ go n’ stop again traffic, you have no clue. You go from 5 to 50 again for all of three feet, then back to 5. Eventually, you don’t even care about getting to your destination anymore, just so long as the tedium ceases.

My jobs went almost exactly the same way.

Retail work, career work. Retail work, career work. Retail work, career work. And each time I had to take a pause, I didn’t have enough time, money, or interest to keep up with the rising trend of ‘content creators’ who can film, edit, script, photograph, edit THOSE, AND do blogs and emails replacing copywriter positions. So I just stayed scrambling until I could ‘relax’ into a career gig that ended shortly for one reason or another.

Even though I left each advertising job under different circumstances, in late 2019, I realized, ‘Okay, maybe it’s ME. Maybe if I’m this frustrated with the traffic, I need to pull off the road.’

The last shift saw me go from copywriter, to house cleaner, to heavy metal head shop gal, to moderating freight brokerage in the span of two months. Hell of a detour…

Of course now that I’m out of full-time work in the field I sold my credit score to break into, the guilt of having left a career I soured on to break into a field I didn’t need to go to college at all for is… crushing. And new beginnings, with wages to match, are hard no matter who you are.

However, this shame and heaviness is all coming from the inside. My parents are proud, my friends are happy for me, and I have yet to hear anyone actively dumping on my decision to purposely exit the salaried copywriting field. And even if everyone sucked about my choice, it wouldn’t change the fact that so far it’s the best one. At some point, you gotta shake yourself by the shoulders, borrow from Mrs. Knowles-Carter, and scream: Suck on my job cause, I’ve had enough.

Why deal with a stigma when you could deal with stigmata, right? Those are way cooler. And I’m pretty done with wounding myself either way.

Multiple small, panicked hiatuses taught me something. Some things. First thing: truly powerful screaming comes from the belly, not the throat. Most relevant thing: I don’t want to write for other people, nor for brands that can’t use some variant of my own voice.

I thought I was a copywriting mimic octopus who could change colors, shapes, and textures to suit an environment, but this whole time I’ve been a chameleon— always keeping my funky fresh shape, and only changing colors to suit how I feel, or to attract mates.

I’m not going to act like career pauses are some great thing in which to discover yourself and do some eat, pray, love BS. I quite literally almost died of a bad infection during a time I was on a pause with no heath insurance. The pauses were financially and mentally draining, and if it weren’t for extreme strokes of good fortune in several places, I wouldn’t be in a position to write this piece.

What I will say is that I was able to bid the misshapen phoenix cycle that I was on a frantic farewell, at least I think so. Anything’s liable to change, such is life.

For now, there is only to bag up the ashes and try to use them in fertilizing my next steps.

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Love can turn your passion into a successful business

[EDITORIAL] You don’t always have to turn your passion into a business, but if you do, love can improve your chances of success.



love heart light

When it comes to finding your career path (whether you are a business owner, FTE, or budding entrepreneur), recent and current generations have been beat over the head with the advice to follow their passion. The idea of this is great – it makes sense that you want your work to be aligned with what you are interested in.

The challenge is that we are typically passionate about our hobbies and while sometimes those perfectly line up with a career (cake decorating leads to owning a bakery, horseback riding leads to teaching lessons to kids with disabilities, reading leads to being a librarian), there are times that it is OK to separate your interests and hobbies from work. The real question is how to identify where you are in life and how this lines up with your professional pursuits.

You may be in a place where you need to absorb all you can from formal education. You may need to work at a job on a product that you have no interest in, but are able to see how that company thrives and excels. You may launch a new product that you felt was needed in the world, only to learn that consumers didn’t feel the same.

Money makes the world go round… but love? Love makes it all worth it.

Once we accept that we are all on a human journey, we can assess where we are in that moment, and figure out how our work and personal lives collide. I think that is when we find our purpose, and are able to accept that we don’t always know how to turn our passion into a sustainable paycheck. If you can love your family, friends, and yourself… your work can lend to providing a life for you and them that feels like a full-circle.

I do think it matters that whomever you are working for has true love for their business; you need to find true love in your role or in what you are promoting if you are a business owner. If not, I think there’s a shelf life to what you’re doing that will show itself eventually. And that’s actually OK – every step is progress towards a life full of love and business.

Resource that can be helpful: Designing Your Life Workbook: A Framework for Building a Life You Can Thrive In

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