Appraisal Fees 'Reasonable' ?

By
Real Estate Appraiser with AmcAppraisalsinc.com
http://actvra.in/bHx

I read an interesting blog article today (http://bit.ly/mMlEUq) which talked about the impact of the Dodd-Frank act.

 

One paragraph which stood out to me was :
There is an implied pressure on any provider (in any industry) whenever that field is dominated by so few players. Witness the LSI's and CoreLogic's Valuation Services of the world choosing to maintain their pricing model to appraisers in the face of Dodd-Frank's bright line. They operate on the 'law of large numbers'. The amount of money they can make in the time it takes any regulatory agency to find them at fault will vastly exceed any potential fine they may incur. One could argue that HVCC was created to protect appraisers from bank pressure when, in my opinion, it was a vehicle to enhance capture rate for lenders and seed control over the appraisal process - a goal of large lenders for decades.

Case in point, CoreLogic's "standard' single family appraisal fee is $200 to the appraiser.  A "moderately complex" assignment gets a whopping $25 more!  But what is "moderately complex"?  Something over 4,000 sf, a mansion on a 3 acre lake front parcel?

It should not be the case that some appraisers have adopted the "you'll get what you pay for" view on new assignments.  But I DO understand the frustrations!  In a time where many appraisers were hoping to put an end to the constant battle for regular fees, the tide only swept back out underneath their feet again!

I remember back in 2004 during the housing BOOM - there was a huge need for appraisers.  There was an abundance of new loans, and not enough appraisers to do them.  So supply and demand created scenarios where appraisers were booked up 2 weeks out, and fees climbed to around $450 for a single family home.

My real question is this.  Do the management companies and lenders show the actual fee to the homeowner?  Does the homeowner still get charged $450 for an appraisal and how would they feel if they knew the man or woman who spent an hour at their home was only getting $200?  Or maybe the appraiser, fed up with all the tensions, didn't even measure the home, snapped a few photos, zipped in and out in 10 minutes because they felt, "the lender is getting what they are paying for".

I have heard many of the latter from homeowners who told me "the last guy was only here for 10 minutes!!" while I explain that I plan to measure the home's interior and exterior, do a full floor plan, photograph, interview them for updates, etc.   In the end, the homeowner's express to me that now THEY feel they are getting what THEY are paying for.

It's an ugly climate out there.  The tensions and negative attitudes are only growing.  Appraisers are electing to retire rather than put up with the new requirements, low fees, and increased pressure for fee and turn time.  And few are entering the profession.

Perhaps in a few years, we will see another upswing of need for appraisals and then very few appraisers left standing to provide the services.  Who will determine what is 'customary and reasonable' then?

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Rainmaker
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Richard Glesser
North Country Appraisal Services - Gaylord, MI

USPAP does not allow appraisers to cut corners because the fee is low.  They must "suck it up" and refuse the request.  Had an AMC email me everyday last week (Clear Capital, by the way) with an order for $225.  Each time they requested a counter which I provided - starting at $400 and increasing $25 with each subsequent request.  Finally they stated that my turn of a week was too long after they wasted that week trying to badger me down on fee.  Don't know who is doing it but I blocked them on my email.  Another reason I'm done this month!

The simple solution to the problem would be a requirement that The HUD closing statement break down the appraisal charges.  This change is blocked politically by AMCs and lenders who own AMCs and are "back-dooring" additional loan profits.  All politicians seem to preach transparency but it gets fogged in the application.

Jun 03, 2011 12:40 AM #1
Rainmaker
68,543
Richard D. Ferris
AmcAppraisalsinc.com - Clermont, FL
Florida State Certified (FHA) Appraiser

Richard - agreed!   If there was a way to actually measure if an appraiser did the work required, I would guess that those who cut corners would also start refusing the orders as well!  When one can see that a $225 fee actually takes 15 yhours to complete rather than 5 hours - those who can do the math would begin to reject those low fees and quick turn time requests!!

Jun 06, 2011 02:23 AM #2
Rainmaker
90,411
Craig Chapman
Call Realty / Access Appraisals - Mesa, AZ
The Value Guy

I recently talked with an appraiser in Utah who says they got a requirement through that requires each appraisal to show the entire appraisal fee & the breakout to the appraiser & the amount going to the AMC.  I think this should be required as a truth in lending practice nationwide.  The fees should also be separated on the HUD-1.  People should know where there money is going. And if their lender owns part of the AMC & is getting part of that AMC fee due to their part ownership in the AMC, that should be disclosed too.

And as to what is reasonable, ask yourself what jobs that require at least a 2 year degree or equal education, state lic. & at least 1.5 years of trainee work experience, typically pay.  There are jobs out there that have similar amounts of requirements that pay $40k or more to start, or at least there were before the resession, & without all the overhead we wind up paying for. Given the responsibility & liability involved with what we do these days added to all this, it seems that anything below $50k a year would be an insult.  So there you have an opinion. Given all the extra busywork we get added to us these days, it seems more and more difficult to meet a minimum reasonable income at split fees. Even normal full fees have remained about the same for about 15 years. What industry out there works for 1996 wages? 

As long as appraisers will work for low fees, we will continue to have this problem. WE can complain about the lenders & AMCs all we want. But until appraisers decide to say, I can't make a living on that, sorry. I don't think we will be getting any big raises.  

Jun 16, 2011 01:11 PM #3
Rainmaker
68,543
Richard D. Ferris
AmcAppraisalsinc.com - Clermont, FL
Florida State Certified (FHA) Appraiser

Craig - your statement is SO true "Even normal full fees have remained about the same for about 15 years. What industry out there works for 1996 wages?"

I know that the fees I see offered from AMCs now are LOWER than those offered in 1996 when I 1t was certified!  And think of the cost of gas now too?!  Granted some expenses I have eliminated such as photo processing, printing, etc - all with the advent of a paperless office.  But for the most part, data cost, licensing and educaiton expenses have remained the same or increased.

I just had a friend ask me today if I thought getting into the appraisal business from the timeshare sales business might be a good move.  I advised her - wait about 6 months and ask me again.  Right now, as of today, my answer is wholly NO.

Jun 27, 2011 06:32 AM #4
Anonymous
Retired Appraiser

Fed up with low appraisal fees?

Fed up with waiting 90 to 365 days for payment?

Fed up with providing 9 comparable listings & sales, a 1004MC, & the UAD for the same fee you received 20 years ago?

Tired of being forced to work with AMCs period?

Visit www.BankRape.com and take a stand against the rape of the appraisal profession.

Dec 05, 2011 07:39 PM #5
Anonymous
Retired Appraiser

Keep in mind that truth in lending laws mean you should tell the truth about everything except for the appraisal fee.  Feel free to hose the consumer as much as you want on that line of the HUD-1 if you are a bank.

www.BankRape.com

 

Dec 28, 2011 08:56 PM #6
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Rainmaker
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Richard D. Ferris

Florida State Certified (FHA) Appraiser
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