With builders around the nation continuing to grapple with faulty appraisals that jeopardize sales of their new homes, NAHB is adding an “Appraisal Primer” to its collection of resources aimed at helping association members strive for the best possible outcome from today’s less-than-perfect appraisal process.
The newly published primer from NAHB discusses in detail the appraiser’s role in the financing of new homes.
“There is a lot behind the scenes that affects the way appraisers must conduct their business,” writes Joan Trice, an appraiser and author of the primer; editor and publisher of Appraisal Buzz, an email publication; and the host of the Alterra Group’s Valuation Expo, which is the largest annual conference for the appraisal community.
Trice is also consulting with NAHB on the association's efforts to resolve appraisal problems.
“Understanding the regulations, methodologies and task of the real estate appraiser will provide home builders with the necessary knowledge to discuss valuation issues with appraisers before they become valuation problems,” Trice says.
Beginning in 2009, NAHB has held a series of four appraisal summits at the National Housing Center in Washington, D.C., attended by representatives of federal banking regulators, the appraisal industry, the housing finance industry, the real estate and housing sectors and others for discussions of deficiencies in the current system of evaluating homes and how to address them.
While much more needs to be done to reform the system — which is expected to be a long-term undertaking stretching far into the housing recovery now beginning to materialize in specific markets across the country — NAHB has made substantial headway on key appraisal issues.
Covered in detail in the Nov. 7, 2011, issue of Nation’s Building News — which was devoted to what NAHB has been doing to fix the broken new-home appraisal system — builders have seen progress on such key concerns as their ability to communicate with the appraiser and the right to have their homes appraised by individuals who are qualified to do the job.
In conjunction with the release of the “Appraisal Primer,” NAHB has updated its “Appraisal Guidance for Builders,” which summarizes information on:
- the selection of appropriate appraisers,
- the use of comparable sales in determining the value of new homes,
- what builders can and should do to ensure accurate appraisals and
- actions they should take if an appraisal was conducted improperly or contains errors.
In a FAQ section at the end of the new primer, Trice answers some specific concerns that builders have been voicing over appraisals.
Among the questions she addresses:
- What should an appraiser do to determine the value of a new home with options and upgrades that do not appear in other homes recently sold in the local area?
- Will the appraised value support the additional costs of expensive geothermal heating and other green options?
- What are some of the problems that builders can encounter when appraisers are selected by national appraisal management companies (AMCs), which may be looking for appraisers who charge the lowest fees so they realize the highest margin on the referral?
- Is it true that under the Dodd-Frank bill builders cannot communicate with appraisers?
For more information, email Steve Linville at NAHB, or call him at 800-368-5242 x8597.