HVCC Creates Unaccountable Middleman and Higher Costs
Jun 7th, 2009 by kyle
In relation to my previous posts on the Home Valuation Code of Conduct, I found this post at Creative Real Estate Investing which highlights an important point about the issues facing this new legislation. What this legislation seeks to do is separate the people ordering appraisals from the people actually performing them.
The idea is that the separation will prevent excessive influence on the outcome of the real estate appraisal. The result being a more realistic, truthful representation of value. However, who is going to watch over the new middlemen, or Appraisal Management Companies as they are called? There is nothing to say that they AMCs will not put pressure on appraisers that same way mortgage brokers and loan officers may have been doing in the past.
One might argue that the AMCs have nothing to gain from the higher or lower appraisal, but that would be an inaccurate conclusion. The fact is that these newly created AMCs are businesses like any other and they will be competing for business from the mortgage brokers and loan officers. This could easily lead collusion between the parties, effectively eliminating the intended end result of better fair market evaluations.
This failure will add significantly more cost to appraisals, a cost which will ultimately be born by the new homeowner. A new homeowner that expects he is paying real fair market price for his home.
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