Good Intentions, Bad Results: Part Two

Last year, Congress enacted legislation called the Home Valuation Code of Contact designed to create distance between appraisers and lenders.  New companies emerged as intermediaries between lenders and appraisers, called Appraisal Management Companies.  The result? Higher costs to consumers (the appraisal is paid for by the Buyer), and often a reduction in quality (many AMCs put the appraisal orders out to bid, awarding the work to the lowest priced bidder and keeping the rest of the fee). 

Today's SF Chronicle highlights how badly broken the appraisal system is and asserts that it is harming the housing market.  It is frustrating for buyers to find an amazing house, negotiate with the Seller to get the property only to find that the appraisal will not come in at value.  Or even worse, in some cases, the appraiser has not even entered a home, but merely uses a computer-based valuation model.  Many experienced professionals have left the industry as they have watched their income drop and newer appraisers step in for lower fees, while appraisal prices remain the same or are higher.  Inexperienced appraisers are hurting the market, and buyers are frustrated.