Can’t blame it on the New Year because changes to established real estate practices have been happening at warp speed for some time now. Rules for just about anyone who touches a real estate transaction have changed or will change. Locally, mortgages and mortgage products seemed to have stabilized. Values are stabilizing as well. Overall, things are much improved. While change seems necessary, here’s hoping the law of unintended consequences elevates the standard of care for upcoming regulatory changes. After all, not all changes have been positive. Appraisers and the appraisal process seem in the current cross-hairs for change. Historically, appraisers considered sales within a target area that closed within a 6 month sales window. Appraisers are now asked to limit data to 3 months. Going out of the immediate area is now almost impossible to justify. Makes sense, right? Perhaps, but remember that Hawaii neighborhoods are not standard “cookie-cutter” developments. We experience a low turn-over rate so it’s often necessary to travel several miles to find recent sales of similar properties. Just because a sale is close geographically doesn’t insure it’s an appropriate choice in establishing value. Pacific Heights, for instance, would not be a good comp for Mohouli Subdivision , yet the two are contiguous neighborhoods. The establishment of a national clearing house for appraisal assignments seems poised to create certain potential for unintended consequences. The concept that appraisers register with on-line placement companies and receive random appraisal assignments seems to make good sense in light of evidence of collaborative mortgage fraud participation by some appraisers. Sounds like a reasonable corrective measure, right? Here’s the thing. Not all appraisers are created equal; there are work quality and experiential differences just as there are with Doctors, Attorneys, REALTORS® and other professional service providers. I doubt many of us would embrace the idea of having our Doctor, REALTOR® or attorney assigned randomly. Like other professionals, the best Appraisers spent years building their business and professional reputation and watch this, I use home warranty services who randomly assign service providers. Trouble is, their system doesn’t know the difference in Kailua, Oahu or Kailua, Hawaii Island. A huge part of establishing value is extensive and intimate local knowledge. The importance of local expertise could become diluted with clearing house assignments. Proposed rules would limit any interaction with REALTORS® and loan officers. Appraisers depend heavily on REALTORS® for property specific information when it comes to comparing apples to apples. After all, appraisers rarely go inside comparable properties. If important information is missed, the REALTOR® or loan officer is in the best position to correct a faulty report before it goes to underwriting. In addition, referral services will be entitled to part of the appraiser’s fee; costs are certain to rise in kind. Out of area or inter-island travel fees will be tacked on as well. So, if your agent tells you that times have changed, listen up….here’s hoping it’s a change that will do us good!