Panelists at NVAR Appraisal Summit Share Insights about The Importance of Cooperation in the Appraisal Process 

Realtors® and appraisers must work well together because their businesses are intertwined. NVAR Chief Executive Officer, Christine Todd, opened NVAR’s Ninth Annual Appraisal Summit in Herndon with this message on June 11. Panelists representing Realtor®, appraiser and lender interests emphasized the need to work as a community of professionals 

MARKET OVERVIEW
Offering a nationwide overview of the real estate market, Todd noted that sales have not been as strong as in 2013. There is still a lot of pent up demand, but there are also significant barriers that keep people out of the market:
• Affordability Issues. Incomes aren’t keeping pace with rising property values. If mortgage rates rise, affordability will be reduced even further.
• Tighter Credit. Lenders are more careful about whom they lend money to and are more diligent about ensuring that paperwork is complete. All-cash buyers are an increasingly large share of the market. If there is no lender to require an appraisal, buyers often don’t bother to have one. In the first quarter of 2014, 42.7 percent of sales were cash only, which is more than double the 2013 rate, when 19.1 percent of sales were cash. 
• Inclement Weather. A bad winter meant that fewer homes were shown resulting in fewer sales.
• Availability Issues. There is a lack of inventory due to a shortage of new construction over the past five years, combined with a decline in foreclosures and distressed property sales. New construction is at a 50-year low, which is causing a labor shortage in this industry. During the crash, workers moved away for other jobs and learned new skills. Also, small builders have difficulty obtaining construction loans with today’s stringent criteria. 

The market’s underperformance is significant because, in economic recoveries of the past, real estate has been the motor of the economy, Todd said. If the real estate market stalls; the economy also stalls. 
In the future, we can expect to see slow growth. “The good news,” Todd concluded, “is that consumer confidence is coming back.”

MRIS FEATURES
Kim Mingo of MRIS spoke about new features of MRIS that both Realtors® and appraisers will use. These include improved data mapping, the ability to edit maps and create overlays, and the ability to create photo comparison displays and group comps together on a page and share them via social media. 

MRIS’s new product, HomeSnap Pro, is an app that provides real-time information based on a picture of a home taken with a smartphone. Once the photo is snapped, HomeSnap Pro uses its GPS to pinpoint the property’s location and sales near the target house. Then, its database generates an on-the-spot Comparative Market Analysis (CMA) and provides Realtor® contact and MLS information, sale price, interior photos, property tax records and history, maps, school information and more. This app can automatically send out notifications when there is a change in price. 

THE REALTOR®, LENDER, APPRAISER RELATIONSHIP
Bob Adamson, associate broker/agent with McEnearney Associates, who has been a Realtor® since 1986, spoke about how Realtors® can ensure harmonious relationships with appraisers. Agents should:
1) Share reliable contact information with the appraiser
2) Be there when the appraiser arrives, or make sure the appraiser can gain entry into the house
3) Collect and deliver information that the appraiser needs to do the appraisal. The appraiser should ask for these documents about the property:
• Floor plan
• Property survey
• Information about improvements (including invoices).
4) Be on time
5) Bring comparables. 

A real estate agent is not legally allowed to tell the appraiser what the contract price is without specific, written authorization from the client. In this rapidly changing market, comps can quickly be outdated and this can create problems, Adamson said. He recommends that Realtors® add a “Disclosure of Sales Price to Appraiser” clause to their contracts. This clause, which can be found in the NVAR.com online Clause Library, allows both the listing and the selling agent to disclose the under-contract price to any appraiser who inquires. 

“The nature of our industry has changed,” Loizou said. “We no longer should be as reclusive as we have been in the past. We’re not one-man bands anymore, we are a community.”

From a lender’s perspective, the market has changed in “a very good way,” said Mike Eastman of 1st Portfolio Lending. Rules are good, he said, because they have helped to cleanse the lending industry of questionable people and practices. As a result of the Home Valuation Code of Conduct and Dodd Frank rules, the mortgage industry has developed a focus on providing financial services and advice.

Lenders are defensive right now, Eastman explained. As the industry becomes more accustomed to regulations, consumers may find that the loan process is less onerous. Real estate agents need to educate their clients so that they can have realistic expectations about how to obtain a loan. The winding down of Fannie and Freddie has caused lenders to create new loan products that are coming onto the market. This has also inspired lenders to loosen up credit. He noted that Wells Fargo, for example, lowered the FICO score on FHA loans to 620. 

To help create Dodd-Frank mandated independence, Eastman uses the web-based “Appraisal Firewall” system, which, according to the Appraisal Firewall website, appraisalfirewall.com, “provides a safe harbor for lenders by establishing a firewall between the appraisal function and loan production.”

Panelist Jamie Loizou of Suburban Appraisers & Consultants explained how the appraiser’s job has become more difficult. Along with the rise of Appraisal Management Companies (AMCs) and increased regulations, he said appraisers face “at least six levels of scrutiny before our reports make it to their final destination and are approved:”
These levels are:
1) Uniform Standards of Professional Appraisal Practice (USPAP) compliant
2) State Licensing Board
3) AMC checklists
4) Fannie and Freddie
5) Various lender requirements
6) HUD, VA and FHA.
“The current market,” he continued, “has been a turbulent ride. And that’s made it hard for appraisers. Something squirrelly happened last November – the market just stopped. The appraiser has to take a little extra time” to determine what is a significant change in value and what is just an inconsequential blip in the market.

Comps are more widely spread and because the market is tougher, appraisers benefit by coordinating with the Realtors®. “When they provide comps, I always accept them. Realtor® comments are very helpful. They do the frontline research while the appraiser’s research reflects the market. 

“The nature of our industry has changed,” Loizou said. “We no longer should be as reclusive as we have been in the past. We’re not one-man bands anymore, we are a community.”