Appraisers struggle to judge home values

With federal regulations changing how housing appraisers are selected for an area, many appraisers have struggled to accurately judge the value of different homes, according to a St. George appraiser participating in a housing-industry teleconference Wednesday.

A new code of conduct went into place May 1, placing a wall between mortgage brokers and appraisers. It prohibits brokers from choosing appraisers — requiring lenders or their third parties to select them — and prohibits lenders and third parties from influencing the home's listed value in an appraisal report.

"Many of the people now selecting the appraisers don't select them on competency or quality of work but based on who will do it for the lowest fee and fastest turnaround time," said Craig Morley, a real estate appraiser and associate member of Morley & McConkie in St. George. "It presupposes that every appraiser can do every job."

Morley and a few Colorado and Utah builders and appraisers discussed issues affecting the housing market and their hopes that Congress will act to spur a housing and economic recovery, including an extension and expansion of the home-buyer tax-credit program.

To counteract the problems associated with hiring appraisers from outside areas who are supposedly ill-equipped to appraise certain homes, a group of appraisers in southern Utah has started screening complaints to verify valid problems and report them to the Utah Division of Real Estate.

"I have a realtor who told me about an appraiser from Salt Lake appraising a Sun River community that is south of Bloomington in St. George," Morley said. "He has an appraiser who has never done an assignment or appraised a home in that area. You need to be geographically competent to do work on that area."

In several cases, houses were appraised low because of the appraiser having too little information, and consequently, the seller, as well as the market, suffer, teleconference participants said.

"It costs the builder money and cuts into their profit when they're forced to sell properties at a loss," said Bernard Markstein, senior economist for the National Association of Home Builders. "The loan does not get negative. We're talking about moving a property out of the market. We're seeing what happens in that."

Skip Howes, president of Scott Homes Ltd. of Colorado, discussed a situation where a Colorado woman's house was appraised at $3,000 below value, and she was forced to accept the appraisal or take her home off the market.

"Instead of having $3,000 to put to work in the basement of the house she bought, she ended up doing work herself," he said. "Bad appraisals can be very dramatic or very simple."

e-mail: lgroves@desnews.com