Fannie Mae’s New Value Acceptance Program Exposes Realtors to Liability

Fannie Mae recently announced a new valuation product that exposes Realtors to potential liability and may damage your relationships with clients that you have worked so hard to develop,  while potentially costing your Buyers tens of thousands of dollars!

Their new program, Valuation Acceptance + Property Data Collection, bypasses the appraisal process and puts the responsibility of valuing the home solely on the real estate agent.   This program shifts the risk from appraisers and lenders, over to realtors and buyers.   

This program shifts the risk from appraisers and lenders, over to the realtors and buyers.   

By skipping the appraisal process the responsibility of valuing the property is left solely to the Realtor, the lender is free from liability as they are granted what they call rep and warrant relief from Fannie Mae, and the appraiser is free from liability as, well, there is no appraiser.  Which leaves only the agents.   Meaning realtors better be absolutely certain of the value of that property!  

But even if you are correct on the value, what if the market declines?   What if your client decides to refinance their home and now the lender orders an appraisal and tells them that the house is actually worth less than what they paid?  Who do you think they will blame?   Do you want to be taking that phone call, and answering those questions?  At best it may damage your relationship with that client and jeopardize future referrals, at worst they pursue damages!

So what can you do about it? 

First of all, I would recommend that if your buyers receive an appraisal waiver of any kind you advise them to hire their own appraiser, this way you shift that liability away from you and back to the appraiser.   If they decide they don’t want to have an appraisal done, no problem, have a disclosure ready for them to sign acknowledging they would like to waive an appraisal.   

And here is the good news, now you can choose your appraiser!   Think about that for a minute….for years buyers have had to rely on the lender’s appraiser, with no say so in whom they use or even the ability to speak with them, all while being the ones to pay for the appraisal.   Now you get to decide who is the best qualified, you get to choose who you want to work with.  Now you get to talk to the appraiser, ask questions, and put control of one of the most important items of a home sale back in the buyer’s hands.

Getting an appraisal along with valuation acceptance empowers you by giving you choices you haven’t had in the past.  Information is leverage, use it how you please, or don’t…   When you get a valuation acceptance from the lender and decide to get an appraisal it no longer impacts the loan.   So if it comes back lower than the purchase price it is now up to the BUYER, not the lender, to decide what to do.  They can choose to proceed with the loan, use the appraisal to negotiate a lower sales price, or both.   Either way, control is back where it should be, in the hands of the one purchasing the property.   Providing this kind of information and service for your clients is powerful and I believe will help you develop raving fans of your business.   

control is back where it should be, in the hands of the one purchasing the property.

Think about it this way, you are getting a home inspection to avoid a costly repair?  Why wouldn’t you hire a professional appraiser to make sure the biggest purchase of your life is actually worth what you are paying?   

If you have any questions about appraisals or Valuation Accept please let us know we, would love to help!   Click Here to check out our courses designed specifically to help Realtors grow their business by understanding Valuation, RealtorU!