HVCC One Year Later:Are We Better Off?

Well, its been almost one year since HVCC has been in effect (come May 1, 2010 it will be 1 year).  The question everybody is asking is: Are we better off?  From my own experience as an appraiser I have to say “No”.  Since the HVCC was put into motion I have seen average appraisal fees slowly decreasing.  I constantly get notices from clients stating that in order for them to be more competitive with others they must lower the costs associated with appraisal reports.  We really do not have any choice; if we want to continue to receive work from these companies we must lower our fees.

In contrast, the fees being charged to homeowners has increased.  This “gap” between what the appraiser is being paid and what the homeowner is being charged is the fee that the AMC (Appraisal Management Company) is receiving for their services.  In addition to the lower fees, turnaround time requirements are being decreased.  With lower fees, and shorter periods of time to complete assignment, quality is suffering.  Increasingly AMC’s use fee as their only criteria for choosing their appraiser, even at the expense of appraiser/appraisal quality.  Many times the AMC will hire and “out of area” appraiser for a job just because their fee is the lowest, even if the appraiser is not familiar with the area.  This has created problems with geographic competency, which just means that appraisers are doing appraisals in areas they are not familiar with.

Appraisers are not the only ones suffering.  A recent survey sent to Realtors indicated that appraisal reports are taking longer to complete, which in turn extends the time needed to close the loan.  In some instance the delay has caused the sale to be cancelled.  The issue of geographic competence has also affected the appraisal values of some properties.  Appraisers who are not knowledgeable in certain areas are providing inaccurate appraisals which can cause sales transactions to be cancelled.

There are many more examples of how the HVCC is adversely affecting the various industries that rely on appraisal services.  Do you have an example that has not been mentioned?  Have you found the opposite to be true?  I would be interested in hearing from you.


  1. We agree completely. The HVCC has hurt our business and our industry. We’ve started blogging about it more recently, too, in the hopes that the more people that understand the (negative) aspects, the more likely we’ll find a better way to address the issues that led to this in the first place.

  2. Retired Appraiser says

    I couldn’t agree more. I found that the best way to beat HVCC was diversify myself out of the appraisal business. Took up trading stocks and specialized in shorting banks stocks (particularly those who owned AMCs). What better way to stick it to those responsible for HVCC and profit at the same time.

  3. Retired Appraiser says

    Excellent article.

    In my opinion HVCC is the ultimate sick joke considering it specifically states that it is designed to prevent extortion. The simple fact that by demanding appraisers to pay out up to 60% of their fees each month to bank owned AMCs it follows the EXTORTION BUSINESS MODEL exactly. If they don’t choose to pay they are simply forced out of business.

    Are Congressmen so stupid that they cannot see this? I can’t believe that a prominent law firm hasn’t jumped all over this to organized a class action lawsuit by now.

    • Well, I never thought of it from that perspective. You are pretty much on tarket in that if you do not decide to go with the AMC you could be forced out of business. We, as appraisers, sometimes have our little pity party but in the end that will not solve our problems. We have to take it upon ourselves to make changes in how we do business if we are to survive. A lot of appraisers are trying to use this as an opportunity to diversify our practices, including myself. My friend Ryan Lundquist, has an excellent post to his blog as well, which discusses how we can put a positive spin on a negative situation. As the saying goes: “You can’t keep a good man (or woman) down”.

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