Video produced by Minnesota Area Association of REALTORS
How well has the new Home Valuation Code of Conduct system been working? Not very well. In fact, it’s a disaster. We hear stories about Minneapolis area homes that are appraising for as much as 20% less than sale price. The HVCC disaster is affecting lives, ruining sales, and will ultimately affect Minneapolis real estate values if something is not done to stop it.
Causes for Concern
- Low appraisal numbers. Rapid changes in the market have always caused some appraisal problems. However, appraisers are fearful of increased liability for future values, and appraisals are coming under much more scrutiny. Also the prevalence of foreclosure and bank owned sales are causing problems for Minneapolis real estate values.
- Appraisers unfamiliar with local market. Sometimes appraisers are assigned to appraise Minneapolis properties in areas in which they have no competence. Appraisers are supposed to turn down appraisal work in markets that they are not familiar with, but many appraisers may feel compelled to take them. About one in four transactions are cancelled because of appraisal issues.
- Delayed closings or fallen sales. About one in four transactions are canceled because of appraisal issues.
What Can be Done?
- The National Association of Realtors is promoting an 18 month moratorium on the HVCC ruling. Michelle Bachman (R-MN6) is a co-sponsor of the moratorium bill (HR3044.)
- FHA not implementing HVCC. However, private banks are still operating under HVCC -many banks own the AMC’s (Appraisal management companies.)
- The Independent Valuation Protection Institute was supposed to be set up to receive complaints from appraisers and users. This has not happened yet.
You can ask your congressperson to be a cosponsor of HR3044, the 18 month moratorium on HVCC.