In most of the country, existing home sales were flat or below a year ago in the month of July and the average commitment rate for a 30-year, conventional, fixed-rate mortgage dropped. Tension between appraisers and real estate agents has been brewing for some time.
Appraisal Buzz staff asked Tom Salomone, NAR President to address these concerns and issues.
Buzz: Thank you for taking the time to answer some questions for our readers. Would you mind providing some background information about yourself? Why did you decide to become a licensed real estate agent and a member of NAR?
Salomone: I’m a second generation Realtor®, meaning I grew up in a real estate family. Both my Dad and Uncle were Realtors®. So for me, real estate has never really been a job, it’s been my life. Of course Realtors® serve clients in the buying and selling of homes, but they’re also the most involved professionals in their communities. No one helps build stronger cities and towns than Realtors®.
It’s certainly true for me, whether I’m working with the Boys & Girls Club, coaching local sports teams, or getting involved with the Chamber of Commerce. Helping to strengthen the ties that bring us together – including the American Dream of homeownership – is what it’s all about.
Buzz: Real estate professionals are complaining about appraisers seemingly more frequently. What do you attribute to this rise in complaints?
Salomone: The first thing I’d point out is that this isn’t an issue of one versus the other. Appraisers provide an independent and impartial analysis of local housing markets. Their credible opinion of the value of a house is critical to completing a transaction, and Realtors® know it first-hand.
But there are challenges in the marketplace right now for sure, and they need to be addressed. A lot of the conversation right now is focused on what some have referred to as a shortage of appraisers. It may be true in certain markets, and that’s absolutely a concern, but it isn’t the whole picture, either.
Appraisers have themselves reported challenges working with appraisal management companies, who are responsible for working with lenders and appraisers to oversee the appraisal process. Complaints range from the compensation appraisers receive to concerns over how quickly the AMC demands appraisal reports, all of which puts a lot of pressure on the individual appraiser.
Buzz: When did you start tracking, and have you seen any recent changes in this trend?
Salomone: NAR has been working on these issues for years, but one encouraging sign we’re seeing is a real willingness to engage in frank discussion and cooperation within the industry. When we held our Legislative Meeting and Trade Expo in Washington back in May, we had a great discussion with experts from across the industry about appraisals and ways to improve the system.
The fact that real estate professionals broadly have recognized the challenge we all face is a big step in the right direction.
Buzz: What do you see as possible solutions?
Salomone: Our Real Property Valuation Committee and Forum are both looking at this, and we’re working towards solutions that can help the industry both broadly and in some very specific scenarios.
As an example, the Federal Housing Administration (FHA) released its “Single Family Housing Policy Handbook” handbook earlier this year. The handbook included new appraiser duties that essentially require appraisers to play a home inspector-type role, including operating and physically observing each appliance on the property.
That’s far different than the appraiser duties in a conventional mortgage, and in some cases it’s among the factors that are driving up fees and generally causing confusion. It’s an area we’ve asked FHA to look at, and a good example of a problem we think can be addressed fairly easily.
Buzz: Are there any other comments or thoughts that you would like to share with our readers?
Salomone: I’d only underscore how important this issue is, and I’m seeing general agreement amongst my colleagues that we should work together to get it right. Everyone down the line, including agents, lenders, and consumers, has a stake in this.
At the end of the day, it’s our job as the “Voice for Real Estate” to help find a way through, and I’m eager to see us get there.
Buzz: Thank you again for providing this insight to our readers. We appreciate you taking the time out to speak with us today.
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