HVCC Policies Undermine Home Buyers
I have written many articles pertaining to Home Valuation Code of Conduct. Since I am a certified appraiser, I have had a lot of experience with the program. I have seen both a good side and a bad side to the program and have been lobbying for change. Well, today I saw first hand the debacle HVCC has created in the Real Estate world.
Appraisal Companies Not in Tune with Local Market
My business partner and I have ready, willing and ABLE buyers. They have been pre-approved and have searched all over the Chicago land area to find their perfect “First” home. They finally narrowed their decision and decided to purchase a duplex-down on the north side of Chicago. Everything within the transaction went smoothly until . . . the appraisal was ordered. The appraiser, hired by an appraisal management company, lives in an outlying suburb.
The appraiser inspected the unit and went home to do the proper research required of an appraiser ? or so we thought. Unfortunately, the mortgage broker did not scrutinize the appraisal other than what the bottom line was on the report. The broker then sent the report to the underwriters. During the underwriting process, it was discovered that the unit was appraised as a one-bedroom unit with a basement. Therefore, no insurance company would issue Private Mortgage Insurance to the buyers because of a functional issue with the unit. In the city of Chicago, you typically find that duplex-down units have the master suite on the upper level and two bedrooms and a family room located on the bottom floor. The lower level often is submerged at a hip or chest level. These units have three bedrooms.
Lack of Knowledge Leads to Delays in Closing
The appraiser’s lack of market knowledge in the City of Chicago not only delayed the closing for over a month but he also made the appraisal profession look bad. An appraiser can accurately appraise in areas not within their territory so long as they conduct the proper research. But appraisers also have to balance the time-consuming task of conducting research and making every minute count ? especially when an appraiser is being underpaid. If the appraiser truly had market knowledge on this sale, another unit may have closed and further contributed to the economy. I wonder how many more procedural issues have derailed our efforts in stimulating the economy.