Important Changes in the Real Estate World on 5-1-09 – This Will Effect Everyone in the Industry

Inactive Realtors in Ontario have the option to join an Ontario real estate Brokerage that help you keep your license active during your inactive times.  Save on real estate board fees and all your other needless office expenses too.  Park your license with a reputable and successful license holding Brokerage and still earn high commissions on all your sales, if any and your referrals.  Commissions are paid to you ASAP!

AMC’s are taking over the Real Estate industry.

Where do I begin. On 5-1-09 all conventional appraisals will be required to be ordered through an unregulated middleman known as an Appraisal Management Company or AMC for short. This new Federal Government policy known as HVCC was brought to you in part by New York AG Andrew Cuomo and was well intentioned and designed to keep lenders from pressuring appraisers to “make the value”. But as they say, the devil is in details and this new policy now creates a greedy middleman aka AMC. The AMC has and will charge more for an appraisal and then give the appraiser about half. This policy will award the work to the lowest bidder and pass the increased fees on to you.

This policy will in effect punish and financially penalize all appraisers that stay in the lending practice. Kind of like punishing all policemen for high crime. Keep in mind appraisers never have and never will get rich in this business, we are amongst the lowest paid and in many peoples opinion the most scrutinized, highest education requirements, even requires a college degree and highest government license fees. This new program for better or worse will cause the most seasoned and best appraisers to leave this part of the business and be replaced by whoever will work for the lowest wage, the lowest bidder will now get the job and the Banking industry in my opinion will suffer and at the very time when the Banking industry and the Real Estate industry needs the best and most experienced people for a recovery, we will now settle for the lowest bidder.

Additionally, the extra middleman will add another layer when a customer wants an answer or the Lender needs a quick response they will need to contact the AMC (in another time zone), then the AMC will need to find the appraiser when they are in the field most of the day, then the AMC will then get back to the caller. Again the Lender is not allowed to talk to or communicate with the appraiser in any way now. You will have a layer to get through first and will add more time and more delays. Possible rate lock issues and lost deals. 

Who are these new AMC’s and are they qualified?

I know that my two best clients, who never pressured me in any way and had an excellent working relationship overnight sent all their work to an AMC. I called those AMC’s and found that my standard $375 fee would be cut to $195, I later heard that their new trainee appraisers were “a joke” and wished this never happened. I saw this first hand. Also, I have heard that in one case the CEO/crook of one of those infamous Sub-Prime lenders started their own AMC. In another case a banned appraiser who lost his license started his own AMC. I found out, there are Zero regulations. No one is minding this hen house and our industry and the recovery rests in these hands, yikes!

What will this mean to Lenders, Realtors and Buyers/Sellers?

No more “comp-checks” will be allowed, period. All appraisals will need to be officially ordered at the higher $500 fee paid directly to the AMC. Then the entry level appraiser (the lowest bidder) will be assigned the job. The only communication must be through the AMC, no status updates. The fees will increase but the quality and service will surely go down. Any long term relationship of trust and respect you have developed over the years is now gone, you will not know who the appraiser is or where they are from. It’s whoever is desperate enough will get your order.

Is there anything that can be done?

I for one will be contacting my Congressman. I am going to ask his help with the managing government agency known as the OREA if they can help regulate the AMC’s and guide their actions. I suggest everyone do the same.

In the meantime, I have heard of a Realtor writing into the Sale Contract that the lender Must assign an appraiser “from the area” that has sufficient experience in that local marketplace. I even would suggest maybe 10 years experience or verifiable evidence of 2-3 recent appraisals in that immediate area. Or that the appraiser must reside in the same County as the property. Seems fair to me and will help ensure an experienced, local and competent appraiser will be selected, you are going to be paying more for it, so why pay more and get less.

I would also suggest hiring an experienced appraiser in advance with knowledge and experience in your market area and provide that appraisal to The low-bid appraiser and use it if necessary as a rebuttal to the lender and to the buyer/seller to pre-establish market value. The additional support can go a long way in helping your case. 

Of course an independent appraisal is still needed and/or advisable for divorce work, legal issues, probate, tax dispute, estate matters and dealing with banks on short sales and bank REO’s.

Please look me up if I can be ever of any service.
Clifford Diamond, CREA
http://www.activerain.com/cdiamond

Article Source:

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Inactive Realtors in Ontario have the option to join an Ontario real estate Brokerage that help you keep your license active during your inactive times.  Save on real estate board fees and all your other needless office expenses too.  Park your license with a reputable and successful license holding Brokerage and still earn high commissions on all your sales, if any and your referrals.  Commissions are paid to you ASAP!

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