March 09, 2010Free To Choose by Lamarr Banks
Since May 1st 2009, a law was put in place in regards to appraiser, lender, Broker and Realtor relationships. The idea was to sever the appraisers ties primarily with Brokers and lenders in order to help stop the possibility of coercion. It is the Home Valuation Code of Conduct (HVCC).
Since then, appraisal management companies have become the source of work for appraisers. The amc’s control how an appraiser is paid, when an appraiser is paid, how much an appraiser is paid, where an appraiser will work (yes, they can turn down an assignment, but when you do not receive a lot of work?) and in some cases the appraiser is charged to use the amc’s “portal”. Since then, many Brokers have complained about the accuracy and the efficiency of appraisal reports.
One has to ask, “Has the task that HVCC set out to accomplish been achieved?”
If a homeowner cannot select their own appraiser, in a way to protect themselves,
If a broker cannot select their own appraiser who they have used for years,
If the appraiser is forced to work for a reduced fee and a shorter time to complete the appraisal,
One would tend to believe it is not working.
Let’s look at another scenario:
You own an automobile. You have taken your car to your trusted independent mechanic of many years to repair it. Your mechanic has always been truthful to you, even charging you less than the quote when a repair was deemed doable for a lower cost. Your mechanic has even assisted in you acquiring a loaner car when needed. The loaner car company has a relationship with your mechanic and they work together to give you a fair price for your loaner car. You have never felt that either one would “rip you off”.
A large nationwide automotive management company is found to have been ripping off customers with false repairs, and often charging customers for repairs not done. So an Attorney General decides to step in “on behalf of the entire nation” to offer a remedy. The Attorney General makes all independent mechanics across the nation join an AMC (automotive management company) in order to continue working in their trade.
What you say? Was it not a large nationwide automotive management company that caused the fiasco? Not an independent mechanic? What gives?
Now we move forward. Your air conditioning breaks down. You go to your trusted independent mechanic. Your mechanic tells you he can no longer work directly with you, and that you have to call up an AMC (automotive management company) and submit your repair request. You call, fill out the paperwork. And you wait. And you wait. And you wait. You finally have to call an automotive broker (AB) to get a loaner car so you can drive to work, etc. Five wonderful days later you finally hear from the automotive management company! They tell you your selected mechanic will be getting in touch with you!! So you wait. And wait. And wait. Finally one week later, a mechanic calls you up and you set up an appointment for the repair.
You ask what your estimated repair cost will be, they tell you that it will be a flat fee! You panic when you hear the new flat fee, as it is extremely higher than your trusted independent mechanic was. But you have no choice!!
One week later, you finally get to turn back in your loaner car to your AB (automotive broker). When you see the bill from your AB, you ask them can they not include it in the repair fee? They say no, because they do not have a relationship with the mechanic.
Once you pay the bill, you get in your car, and test the air conditioning, only to find that it does not work right. It is then that you find out that they only use “reconditioned” parts (to help cut costs), and that your mechanic (fresh out of trade school) was the most available mechanic for this type of repair. And if you wanted “new parts” you should have stated so. They also tell you they sent you the most seasoned available mechanic at the time you submitted your request, but if you are not satisfied, you are free to reapply and start the whole wonderful process all over again!
I use this scenario to hopefully hit home to what has happened to the appraisal industry, under the guise of “protecting the consumer”.
The independent appraiser will always need to exist. We are independent so we can be the other option for the consumer. This also allows Brokers and Realtors a chance to work in a free market, protecting their client base, and to service them promptly and efficiently. I am not in favor of eliminating AMC’s, but they should not be the only option regarding the appraisal of real property for banks, lenders, Brokers and Realtors……….a true free market is truly that…..free to chose!
Sincerely,
Lamarr C. Banks
Lamarr is an alumni of the Delta Chi Fraternity of Cal State Fullerton, President of the Black Business Network of Orange County, a member of the City of Orange Chamber of Commerce, a former Ambassador for the Chamber of Orange, former President of the Orange Chamber Ambassadors, Ambassador of the year for the Chamber of Orange 2007 and a member of the Orange Chamber of Commerce Executive Board. Lamarr has been in the Real Estate Appraisal business since June of 2001. During the Real Estate boom years, Lamarr covered most of the greater southern California area. Lamarr is currently licensed at the Certification level and is approved to do FHA appraisals. Lamarr may be reached at lamarr@getimpact.net.
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