YORBA LINDA, Calif., Sept. 12, 2011 – Federal regulators’ efforts to lessen the influence of banks in the real estate appraisal process have ended up making residential appraisals more costly while forcing experienced professionals out of the valuation business.
“Strangely, real estate agents have reported that consumers are paying higher appraisal fees, yet fees actually paid to appraisers have declined in some cases by more than 40 percent,” Sara W. Stephens, MAI, the 2011 president-elect of the Appraisal Institute, stated in recent testimony to Congress.
Stephens will elaborate on this problem on Oct. 14th when she joins real estate analyst Bruce Norris of The Norris Group and other nationally known real estate experts at the Nixon Presidential Library to discuss solutions to the nation’s continuing real estate crisis.
The event, dubbed “I Survived Real Estate 2011,” is organized each fall by The Norris Group and features some of the most respected voices in real estate. This year’s lineup also includes:
Norris, who has built a following in the real estate community and with news reporters after producing consistently accurate real estate forecasts, said the panelists should provide a clearer picture of what we can expect to happen in real estate markets in California and elsewhere in the coming months in addition to identifying potential solutions to the crisis as well as opportunities for real estate professionals and investors.
In a recent interview on Norris’s weekly radio program, Stephens said the problem in the appraisal industry is due to improper implementation of well-intended new policies – embodied in the Home Valuation Code of Conduct (HVCC) and the Dodd-Frank Wall Street Reform and Consumer Protection Act – that have prompted banks to obtain appraisals through appraisal management companies rather than working with appraisers directly.
While the new rules have effectively reduced “value pressure” on appraisers by creating a firewall between lenders and appraisers, they have also led to a situation where appraisal management companies are siphoning off a significant portion of the fees that were previously paid directly to the appraisers.
So instead of using the most experienced appraisers in each real estate market, who understandably command higher fees because of their local knowledge and expertise, some appraisal management companies often hire less experienced appraisers, sometimes including appraisers from out of the area who have little or no knowledge of local market conditions, in an effort to take a greater portion of the appraisal fees for themselves.
Stephens said this situation has been happening without the buyer’s knowledge and is leading to a devaluation or “commoditization” of appraisals, which ultimately hurts banks as well as consumers who count on an appraiser’s opinion of value to be as reliable and credible as possible.
Norris regularly interviews lenders, economists, builders and other housing experts on his weekly real estate radio talk show, which airs at 6 p.m. Saturdays on KTIE 590 AM in San Bernardino. Podcasts of Norris’s radio interviews can be accessed through his company website, www.thenorrisgroup.com.
100% of proceeds from the Oct. 14th event will be donated to the Orange County affiliate of Susan G. Komen for the Cure, the world’s largest grassroots organization dedicated to finding a cure for breast cancer.
The event has more than 25 sponsors, including ForeclosureRadar, HousingWire Magazine, Investors Workshops, InvestCLUB for Women, Frye Wiles Web and Branding, Real Wealth Network, the San Jose Real Estate Investors Club, and the San Diego Creative Investors Association.
For tickets and other information involving the Oct. 14th event, please visit www.isurvived2011.com. Reporters seeking advance interviews with Norris and panel participants before or after the event should contact Aaron Norris at (951) 780-5856.