We’ve gotta love the HVCC. Right?
The one with the least interest controls the relationship.
In any negotiation, I have found that remembering this simple rule helps me not only remember which side of the motivational fence I am sitting on during the negotiation, but also to understand the other parties actions.
There is a show playing all across the valley right now and it is produced in large part by the new HVCC (Home Valuation Code of Conduct) rules. Depending on your perspective, it could be classified as a horror, drama, comedy, suspense, thriller or documentary. But no matter what genre you put it in, one thing is certain…
The appraisal management companies have the least interest and they are in control.
While the above may sound like a good idea from the outside looking in, consider a couple of my random thoughts on Twitter this week as I was watching the show:
One of the best things that I can say about the new HVCC laws is that it has taken me the loan officer out of the line of fire. Trust me, when an appraisal doesn’t come in at the sales contract price, people start asking questions. People whose livelihood is on the line.
What is the definition of a “market”? I always thought it was when you had a seller who is willing to sell something at a given price and a buyer who is willing to buy something at said price. That might be true for most things, but in today’s Real Estate world, you get to make sure that an appraiser “feels” like the seller should sell at that price and buyer should buy at that price.
So before HVCC when an appraisal would come in lower than contract price (I can’t tell you how rare this was), I became the punching bag guy who was supposed to “fix” it.
Now that we have HVCC, when an appraisal comes in low for <insert reason>, I have multiple people calling me asking me what I think they should do… because they know that as a loan officer, I really can’t even talk to the appraiser anymore.
So I offer up my best advice… Give them a pep talk and send them into the ring to negotiate/justify/fight for what they think is a fair market value.
And more often than not, they generally get bludgeoned by an appraiser – or even worse, some kind of “appeals committee” at the appraisal management company who doesn’t really care.
But if you stop and think about the appraisers perspective for a moment, any logical business person would tell you that they really have no incentive to care.
Heck, if you put yourself in a typical appraiser’s shoes, as a result of HVCC:
- Their income has been significantly reduced as a result of the appraisal management company agreements (note: this does not mean it is cheaper for the consumer – just the opposite)
- Many of their clients can’t talk to them anymore
- Now rather than having multiple clients, there really is only one decision maker (the appraisal management company) who decides who gets what work.
- Great work will not necessarily result in more work.
Can you really blame them? HVCC handed almost every appraiser in America a pay cut and a boss. A boss that doesn’t make any sense and has his hand in their pocket.
And unfortunately for us all – there is only one group of people who currently are less interested than appraisers…
The people who made the HVCC laws.
About the Author: Justin McHood is a mortgage broker with VanDyk Mortgage Corporation. You can find him at Arizona Mortgage Team, on the Zillow’s Mortgages Unzipped Blog, and at most East Valley Friday Nights gatherings. He’s the one in the blue shirt.