Home Appraisers Fall Under Scrutiny

In an effort to prevent another housing market crash, every aspect of the home sales industry is being peered into with a magnifying glass. Most recently, home appraisers have been under scrutiny due to their inaccurate reporting, and misrepresentation of a homes’ true value.

Nationally some of the largest lenders are implementing stricter regulations when it comes to their contracted appraisers. In the past, lenders were able to apply undocumented pressure on appraisers to increase the value of one of their properties. This behavior has caused inflated and inaccurate property values. Regulatory systems are in place on a state to state basis, but these “watch dogs” must have been taking a nap for the past decade. It is the hope that national regulations will be implemented in an effort to force states that have lacking appraisal regulatory guidelines to close any loop holes that have previously allowed bogus appraisal ratings.

Because appraisers are independent contractors one might think that their reports would be unbiased, and include a true and accurate value for the home. In many cases the appraiser is not paid until the end of the sale. If the appraisers reporting value is considerably less than what was agreed upon by the seller and the buyer, the deal may stall causing a delay in receiving the appraiser’s fee.

One concern was the certification process required to become a licensed appraiser. Many inaccurate reports were due to an individual’s inexperience. If an appraiser failed to do a complete inspection, or did not take the time to properly compile data from recent homes that were sold in the area; these types of critical errors would cause ineffective reports.

Currently, appraisers are required to complete 150 hours of state approved education, and 2000 hours of on the job experience with a licensed appraiser; these requirements vary from state to state. They are also required to subject themselves to a background screening.

Each state is beginning to reassess their guidelines for licensed appraisers. Many states have already seen appraiser fees reduced from $500, down to $250. This is due in part to the attention that is being placed upon appraisers, and their part in the housing market crash and because more than one appraisal on a home is now almost the norm.

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