Have you heard about PAVE? Most people haven’t. It stands for Property Appraisal and Valuation Equity.
When it comes to homeownership, fair appraisals are not just a matter of numbers—they’re a cornerstone of equity and financial prosperity. Enter PAVE. This initiative, championed by the White House, is more than just an acronym; it’s a pivotal step towards addressing long-standing biases in home valuations that disproportionately affect Black and Brown communities. While many are still unaware of PAVE, its impact could reshape the landscape of real estate fairness. Two years since its introduction by the Interagency Task Force, it’s crucial to examine the progress and understand why fair home appraisals are not just beneficial but essential for a more equitable society.
Why? We believe fair home appraisals can help promote good selling and buying experiences for more people. In short, PAVE is good for deed holders, good for title transactions, and helpful for ensuring fairness when deeds change hands.
After Tropical Storm Hilary blasted the Baja and San Diego regions in mid-August, the Federal Trade Commission urged people to watch for a surge in rip-offs.
Opportunists may say they’re performing appraisals, but unless they are licensed appraisers, they lack professional accountability. If they’re improperly doing the work of adjusters, they might be violating state insurance law, too.
Their goal? To fleece people and then walk away from them in their time of need. Today’s climate realities offer schemers plenty of chances to rip people off.
The hybrid appraisal is now allowed for real estate transactions and financing. It’s a form of real estate appraisal that’s completed from the appraiser’s desk, using information from the home that came remotely, from a data collector. This is also known as the “bifurcation” of the appraisal work.
Both Fannie Mae and Freddie Mac consider these bifurcated appraisals legit. Maybe that’s a good thing. Hybrid appraisals relieve appraisers from data collection tasks. Their acceptance can mean new opportunities for real estate professionals to earn money in data collection.
On second thought, maybe it’s not so great to outsource the appraiser’s traditional in-person property visit. Stories are already emerging about data collectors who are vetted just once, and have exploited their temporary access to homes.
So, should hybrid appraisals be welcomed, watched, or challenged? Let’s take a look.
Your financial leverage hinges on your home’s appraised value. Whether you’re buying, selling, borrowing against your home equity, or refinancing, the lender may call on a licensed appraiser to determine how much credit to extend to you.
When you’re counting on a good appraisal, is there anything you can do to make sure your home gets the valuation it deserves? This Q&A will shed light on the process — and your influence.
Diversity, inclusion and fairness are key goals for today’s real estate industry. Biased appraisals thwart these goals. To help remediate the problem, California enacted Assembly Bill 948 on Sep. 28, 2021. Under the new law, bias in appraisals is against the appraisers’ licensing law as well as state’s Fair Employment and Housing Act. This is big news for home appraisal professionals.
Black-owned homes are regularly low-balled in appraisals.
It’s been happening for generations. Now, the Biden administration is confronting
On June 1, 2021, the president said a new task force will deal
with race-associated disparities in home appraisals. Housing and Urban
Development (HUD) Secretary Marcia Fudge will lead the team as it embarks on a
thorough review of current appraisal methods and outcomes, and as potential
remedies are considered.
The task force will consist of a large group of agencies and
financial groups, encompassing the Federal Reserve, Freddie Mac and Fannie Mae,
the Consumer Financial Protection Bureau, and a host of financial groups. It
will seek information and guidance, too, from civil rights nonprofits as well
as the appraisal industry and its state-based regulators.
You’ve put in your bid for the home you want. Now you await
the appraiser’s report. What’s going on behind the scenes?
How the Appraisal Works in Most Cases
The typical home appraisal relies mainly on local sales
comparisons, or comps. What will other buyers pay now for a house like
the one you’re buying? Whatever price others will pay for similar homes is
roughly the value of your new home.
What’s a similar home? The appraiser considers homes within
a certain radius of the one you’re buying, with comparable bedroom and bathroom
counts, the same or similar size and construction type. Comparable homes have
the same school district or a similarly ranked school district, and similar
amenities nearby. The appraiser studies and compares sales information and
recorded documents for the homes. Homes sold in the last three months are
considered the most relevant comparisons.
Even similar properties are unique homes, of course. Therefore,
the appraiser will find enough variety in the data to come up with a range of reasonable
valuations. Some comparable properties might have been sold for more than the
market value, others at below-normal prices, and so forth. Once the outliers
are understood for what they are, an appraiser needs to figure out where your
desired house fits among slightly more and slightly less costly properties.
The expert’s professional discretion explains why, many
times, the appraisal will come back with a valuation very close to the price
you offered and the seller has accepted. As long as your agreed-upon purchase
price falls within the data-supported range of value calculated by the
appraiser, a buyer usually gets an appraisal that matches what the buyer and
seller think the home is worth.