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- NAHB Continues to Make Headway on Fixing Broken New-Home Appraisal System
- Appraiser Experience and Education Often Inadequate, Appraisal Summit Hears
- Builders Advised Not to Hold Back From Giving Relevant Information to Appraisers
- Green Remodeling Program Bringing in Higher Appraisals for Pre-1980 Homes
- Distressed Properties Don’t Compare With New Homes, Nielsen Tells Appraisers
- Major Overhaul of Appraisal System Long Overdue, White Paper Says
- NAHB Figures Prominently in Multi-Year Reform of Appraisal Process
The Official Online Newspaper of NAHB
On improving the residential appraisal process — an issue that continues to hold major implications for the nation’s housing markets -— NAHB has been working hard behind the scenes on several fronts and has been able to make significant headway.
Deficiencies in the current system for evaluating homes have become glaringly evident in the unprecedented housing downturn of the past few years.
Faced with declining home prices, rising foreclosures and plunging new-home sales, builders have had to contend with inaccurate appraisals that have further undermined the health of their businesses and the housing market.
Widely reported around the country, poor appraisals have reduced home sales, taken a vicious swipe at the profitability of builders and have made it difficult for them to project whether they will be able to attain the prices they need to cover the construction costs of their new homes. ... Read More
Shortcomings in the education, knowledge and experience of some in the current pool of appraisers are adding to the difficulties home builders are facing in the current marketplace in obtaining good valuations of their properties, according to participants at NAHB’s fourth appraisal summit.
Also discussed in-depth at the Oct. 19 meeting at the National Housing Center, NAHB’s headquarters in Washington, D.C., was the need to give top priority to addressing the complexity of property valuations in distressed markets and impediments to the flow of appropriate information on homes between appraisers and interested parties.
More than 40 individuals attended — including representatives of federal banking regulators, the appraisal industry, the housing finance industry, and the real estate and residential construction sectors. ...... Read More
NAHB has developed a set of guidelines to help builders communicate with appraisers and lenders to ensure that they receive an accurate valuation of the new homes they are selling.
The two-page document advises builders to meet with the appraiser on the site of where the home has been or will be built and provide direct support for the price with whatever relevant information they can.
For example, builders should provide the appraiser with all appropriate comps, market and absorption data, specifications of the property, materials in the property and why they were chosen, buyers’ reactions to products selected, and sales information. ...... Read More
Even as low appraisals are slowing home sales and undermining contracts, an innovative green remodeling program is bucking the trend and delivering solid results.
The G Home Program is a partnership between Lowe's Commercial Services, the NAHB Research Center and G Street, a green remodeling firm based in Scottsdale, Ariz.
Launched on Aug. 1, the program targets contractors, builders, Neighborhood Stabilization Program recipients and organizations that remodel at least 10 pre-1980 homes annually. ...... Read More
In an effort to improve a flawed housing appraisal system, NAHB has been reaching out to key stakeholders to find common ground on potential reforms.
As part of that effort, NAHB Chairman Bob Nielsen addressed the Appraisal Institute, the leading trade group for the appraisal industry, in August during the institute’s annual meeting in Las Vegas.
“The appraisal industry carries a heavy burden regarding the condition of the U.S. economy,” said Nielsen. ...... Read More
The nation’s home appraisal process is behind the times and needs a major, long-term overhaul, according to a white paper prepared by appraiser Joan Trice and members of the Collateral Risk Network, whose more than 300 members represent lenders, government agencies, Wall Street, vendor management companies and appraisers.
Trice, who is currently working as a consultant for NAHB in its ongoing efforts to address the appraisal issue, is preparing a primer geared to providing association members with information on the appraisal system and appraiser’s role that will help them head off problems with valuations of their homes.
The appraisal process has not been examined since the Great Depression, Trice notes in her paper, “Reengineering the Appraisal Process Redux,” an updated version of which was published last month. ...... Read More
In response to criticism that lax appraisals contributed to the financial crisis, tighter appraisal policies have been implemented by lenders, federal banking regulators, the Federal Housing Administration (FHA), Fannie Mae and Freddie Mac. These actions almost immediately triggered reports of homes failing to appraise at the sale price — or even to cover construction costs.
Lower appraised values for land also led some financial institutions to either cease lending to developers and home builders altogether or to demand that they contribute additional equity.
NAHB has been a leading advocate for correcting the valuation process and has undertaken a number of actions beginning in 2008, when appraisal problems first begin to surface, to raise awareness and address the toll inaccurate appraisals are taking on the housing industry. ...... Read More