HVCC: Don’t Be Caught By Surprise

June 19, 2009 · 4 comments

A report from the front lines: make sure you know what HVCC is and how it may impact your appraisal of your home.

The Phoenix market is active – active to the point where many people are seeing that they are putting multiple bids on a home and they end up “bidding” on multiple homes before an offer gets accepted.

I try hard not to smile when I hear stories where agents are driving 100 miles 3, 4 or even more times before an offer is finally accepted in these bidding wars.

Although the driving 300 or 400 miles for a client seems to agitate agents, that isn’t the thing that they are complaining and worried about when they call me telling me they just got an offer accepted — they are worried about something else.

They are worried about the appraisal on the property.

Since HVCC rules were implemented in May, it seems to be a growing trend that many times a lender-owned appraisal is coming in lower than the contracted sales price and it results in “deal complications”. Read: if you want to buy the house, either the seller is going to have to come down in price or you are going to have to bring more money to close.

I could go on about HVCC and the technical aspects of why the appraisals seem to be “coming in low”, but I won’t bore you with those details because the truth is that many homeowners don’t pay that much attention to industry arguments like that.

But if you are thinking about buying a home, here is what you need to be aware of regarding HVCC.

If you are planning on financing your home with a conventional loan, your loan officer cannot speak with the appraiser and this can result in problems such as a “surprise” low appraisal that comes in 2 weeks late. It doesn’t always happen like that (low and late) but it has happened enough recently for me to write this post about it.

If you are planning on financing your home with a FHA loan, most lenders are allowing those appraisals to be ordered by the loan officer and I see fewer appraisal complications (low and late).

This does not mean that you should finance your home with an FHA loan “just so you don’t have appraisal issues” nor does it mean that you are going to run into “appraisal complications” if you finance your home with a conventional loan…

It is just something to be aware of and ask your Realtor and your loan officer about it.

The most helpful person in working with the appraisers today is your Realtor — there is no rules regarding them speaking with the appraisers and I am finding that the good Realtors are actually having some success when speaking with appraisers about a property.

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Posts about Real Estate Market Reports as of June 19, 2009 | Real Estate Market Reports
June 19, 2009 at 10:56 am


1 Josh Ferris June 19, 2009 at 8:26 am

Justin — This has to be by far the most annoying change in real estate history. The number of buyer and seller clients I have had flipping out over their not yet set closings because of HVCC is staggering. Great post, look forward to reading more!

2 Nikki June 19, 2009 at 11:34 am

Low appraisals don’t seem like such a bad for consumers, because it means that prices have to lowered, which is what is needed in this tough economy.

3 Richard Stabile Bergen County Real Estate June 30, 2009 at 9:58 pm

I always ask the buyers to pass my phone number to the Mortgage orginator to call to get in the property. this gives me the opportunity to speak to the appraiser and review the comps and conditions. It has always worked for me. I know however that the appraisers are not happy with thei 40% pay cut to the distributor of their work orders. This is a problem.

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