There goes the last of the good AMCs

By
Real Estate Appraiser with Ashcroft & Associates

This morning I received the following letter from the only AMC with a marginally real estate educated staff and near full fee appraisals that I accept appraisals from.

                                              

- 0 -

In an effort to reduce overall costs, [E] Services has began an initiative to lower vendor fees for all single family, multi-family, drive-by, review, and FHA reports. This fee reduction will lower your current fees by 10% and will go into effect 2/18/2010.  This reduction in prices will place our fees more in line with competitive prices in the current market place.

If you do not wish to comply, please email Fee_reduction@eservices.com by 2/12/2010.  If we receive no response, then it will be assumed that you have found the changes acceptable. 

We value your partnership and we understand that there are concerns with our current billing process.  In an effort to expedite your payments you will now be able to receive payments Bi-weekly.  Starting 2/18/2010 you will be able to invoice once a completed report is removed from your work in progress.  The preferred method of billing would be logging onto the website and clicking "E Invoice" as this is the fastest method of payment.

Thank you for your cooperation and we look forward to your continued partnership with [E] Services.

                                                 - 0 -                    

Although the letter above indicates that they will be cutting their fees by 10% (something I could accept and live with), I received a call this week from the same company asking if I would cut my fees over 50% 'in order to be competitive' with other appraisers in the area I cannot.  Whether it be due to pride for myself and other appraisers or simple logistics of expenses vs time vs value, I cannot.                         

 Now I wonder... how long can I keep up the 'cannots'?  When the savings are used up, and there are no other options, I'm going to have to determine whether to stay in this industry that I love or move on. 

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Rainmaker
173,450
Richard Glesser
North Country Appraisal Services - Gaylord, MI

Sara - Contact STARS.  They've been my favorite for some time paying full fee with prompt payment.

Donne - There are several "new" AMC's which have sprung up to sidestep the loss of client relationships.  I have been solicited by them where they also ask for present clients (lenders) to solicit their services with the intent of matching lenders with preferred appraisers when orders are placed.

Feb 01, 2010 05:39 AM #2
Rainmaker
90,411
Craig Chapman
Call Realty / Access Appraisals - Mesa, AZ
The Value Guy

Didn't FHA pass a rule about having to pay appraisers a typical appraisal fee, someting about what was considered customary in the area?  I know in my area there has been people complaining because the AMCs have raised their fees about $100.  These guys are raking it in off our work & experience.  Maybe we should start our own AMC for these lenders that can no longer use their appraisers & add those appraisers to our list, so they can still use them.  Just a thought. I think a small local AMC could offer advantages to lenders that the large national ones could not. 

Feb 01, 2010 05:45 AM #3
Rainmaker
173,450
Richard Glesser
North Country Appraisal Services - Gaylord, MI

Craig - That was done by the Appraisal Co-op which struggled through formation over the past year plus and has, not to my knowledge, had any positive results.  Yes, FHA and other entities have stated that appraiser fees should not be reduced due to HVCC compliance.  But what is the base fee?  Is it the fee charged by the AMC to the lender or the fee accepted by the cut-rate appraiser working for the AMC?  I know when I have been presented with competitive fee scales per geographical area by AMC's and lenders, they're no where near what my standard fees or those of others in my market are charging.

Feb 01, 2010 06:18 AM #4
Rainmaker
120,300
Sara Goodwin
Ashcroft & Associates - Portland, OR
Portland, Oregon Appraiser

Donne - I often wonder if LOs can take their own 'appraiser approved' list to their AMC and so that the AMC is only allowed to choose the appraisers that you specifically are comfortable with.

Richard - I'll have to look up STARS ~ Thanks!

Craig and Richard - I had hopes of base fees for FHA (or any) appraisal.  My hope is fading.

Feb 01, 2010 06:38 AM #5
Rainmaker
601,537
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Sara - To the best of my knowledge, neither I nor my processor or anyone at Cobalt for that matter are allowed to have any contact with the appraiser.  Starting with all FHA case numbers assigned on or after Feb 15th, I must order all my appraisals through an AMC.

My fave appraisers refuse to work for AMC's because the AMC's around here (Los Angeles & Ventura counties) only pay around $200 per appraisal and the standard FHA appraisal is around $400.  A good appraiser won't work for those terms for the exact same reasons you stated in your post.

Feb 01, 2010 06:51 AM #6
Rainer
241,053
Jesse Skolkin
Independent New York State Certified Real Estate Appraiser - Fresh Meadows, NY

Sara:

My guess is that after the AMC gets a few weeks or months of "50% off" appraisals, you'll start getting orders again.  They'll quickly realize that the low priced appraisals end up costing them a lot more in terms of poor quality to their customers, extensive overtime for their review staff and long turn times for multiple addendum requests.

The "upfront" cost of a quality appraisal is actually a lot lower than the "backend" cost of a poor appraisal.

Feb 02, 2010 04:00 AM #7
Rainmaker
601,537
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Sara - AMEN to Jesse!  Every HVCC appraisal I have received, I have ended up appealing because of poor, sloppy inadequate work.  I'm sure those appeals and the appraisal reworks costed something and that is a cost that definitely needs to be factored in with the cost of the appraisal. 

Mind you, those HVCC appraisals that I appealed were all from AMC's that supposedly "reviewed" the appraisal before giving them to the lender and the buyer.  Good grief, one of them didn't even have the correct address for the subject property.  How much reveiw do you think went into that "appraisal review"?

Feb 02, 2010 04:17 AM #8
Rainmaker
173,450
Richard Glesser
North Country Appraisal Services - Gaylord, MI

Unfortunately, one of the pitfalls on the AMC's is that the appraisals are reviewed by an automated system which does not read addenda and commentary which is essential to comprehension of the report.  Then they request additional commentary which is already present.  At this point, perhaps a breathing reviewer will read the report and request verbage be added specific to each lender since they don't want to ruffle any feathers with their clients as to items being stated in a different fashion than they prefer.    If all goes well, the report is then forwarded to the client who has their underwriter (typically a person working at the job until they can find an opening at Burger King) with absolutely no appraisal experience or local knowledge, reviews the report and requests better comparables and additional commentary which was already included in the report, only done so with multi-syllable words beyond their comprehension.  This request is then channelled back through the AMC to the appraiser with the appraiser expected to "properly complete" the report for no additional fee while the AMC adds another handling fee.  Finally the report is completed with the appraiser working for peanuts, the AMC getting wealthy, the underwriter flexing the full strength of their power over something they know nothing about, and hopefully the rate lock hasn't expired or the buyer walked. 

Feb 02, 2010 07:14 AM #9
Rainmaker
90,411
Craig Chapman
Call Realty / Access Appraisals - Mesa, AZ
The Value Guy

Look at my post about competing with BPOs, what will an appraiser be able to do.  Check out this new product & post what you find out & what you think.  It's an alternative product that I don't think will be under the umbrella of HVCC.  Maybe it will be a good way to increase some of our income losses?  They say these are going for $100 - $175 & take about 1 hr to do.  That's not bad money per hr.  They do take a $30 fee for the service which provides all the data etc. to do them with.  You can find out about it by going to the Appraisal World site.

Feb 03, 2010 07:38 AM #10
Rainmaker
90,411
Craig Chapman
Call Realty / Access Appraisals - Mesa, AZ
The Value Guy

The HVCC does not mandate that a lender use a AMC from what I understand.  If a lender wanted to have a person, other than a LO or loan processor do ordering, I've heard that would be OK.  I think many lenders switch to AMCs because of the AMCs sales pitch of no cost to the lender, easy etc.  etc. Maybe some will get fed up with the AMCs and start their own ordering system that is HVCC compliant.  Could they even charge a small $25 appraisal ordering & processing fee, under HVCC?  It would be cheaper to the borrower than the high AMC fees.  I think a lot of lenders think they have to use a AMC to be compliant.  Maybe we should be informing them, they have a choice, if they do.

Feb 05, 2010 02:29 AM #11
Rainmaker
601,537
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Sara - Craig above is absolutely correct.  No where in conventional and/or FHA guidelines does it state that a lender must use an AMC for appraisal ordering.  As a matter of fact, AMC's are not mentioned anywhere in any guidelines except for particular lender overlay guidelines. 

Lenders are free to do their own appraisal ordering and some lenders actually do.  I just wish more of them did because I assure you, not would my clients gladly pay a small (key word being small) fee to have a much more pleasant and less stressful appraisal experience than the nightmares their getting now having to work with AMC's.  I'm sure appraisers would be happier too because then they would be paid fairly.

Feb 05, 2010 02:55 AM #12
Anonymous
Jim

 

Saw a comment that the AMC's are using automated review systems, possibly - I do know that PCV Murcor, located in CA, uses ill trained childbots, labels them `reviewers' and then pressures these `bots' into a production mode, as well - They don't read the reports any better that automated systems and I've spent less of my time doing long distance `training' by simply requesting an `override code'

This truly is a sad state our livelihood has turned. I'm dumbfounded we've not found a way to band together and address this mess ...

We got ourselves out of the S&L crisis, some of us anyway - some, deservedly, went down in flames

 

 

Feb 09, 2010 04:37 PM #13
Rainer
71,990
Connie Hall
All Brokers Real Estate - Portland, OR

When the government and these companies get so many complaints about their cut rate appraisers, I think they will see the error in their ways and those discounters will leave the business and professionals like your self will be fine.

Feb 10, 2010 11:25 AM #14
Rainer
17,515
Myrtle "Mert" Lemon
Nomel Real Estate, Eagle One Appraisal - Hagerstown, MD
Certified Appraiser & Real Estate Broker

it will take time but I agree these things will pass, but lets hope the good appraisers have not retired or moved on to other careers by them. I'm considering the move thing!!

Mar 01, 2010 03:55 AM #15
Rainmaker
120,300
Sara Goodwin
Ashcroft & Associates - Portland, OR
Portland, Oregon Appraiser

Craig - It almost seems to be working in reverse.  Some of the decent AMCs that I was working with have reduced appraiser's fees.  Who's creating these monsters, anyway?

Donne - I hope that tactic works for your appraisers.  If every appraiser (or even most of us) didn't cave, I know things would have to change.   

Jesse - I don't know.  I've been courted with 50% less fees since May... enough appraisers out there must be taking these fee reductions to keep these AMCs afloat.

Jim - I know the system that your talking about and 'override' is my preferred option every time.

Myrtle - Month #9 w/HVCC.  I believe it's up for review in May.  Cross your fingers...

Mar 10, 2010 03:18 AM #16
Rainmaker
40,384
Tom Horn
Thomas Horn, Real Estate Appraiser - Alabaster, AL
Appraising The American Dream

I think in the long run the low fee AMC's will fade because no appraiser will work for them and they will probably be providing the sloppiest appraisals (because the good appraisers will not be using them-leaving only the sleeze bag whores in the biz to use them (sorry for profanity, as you can see this touches a nerve)).  In the end I think the middle of the road AMC's that pay decent (although still lower than we would like) and turn out a good product will survice.  The big question is-how long will this take?  Thanks for the post Sara!

Apr 03, 2010 06:36 AM #17
Rainmaker
120,300
Sara Goodwin
Ashcroft & Associates - Portland, OR
Portland, Oregon Appraiser

Hi Tom -

I really hoped that all the dust would settle by now and the bad (and even mediocre) AMCs would have collapsed.  That doesn't appear to be the case.  If only it was mandatory to leave the appraiser's invoice in the report so that the lender could see the AMC cut.

Apr 05, 2010 02:49 AM #18
Rainmaker
1,996,791
Andrew Mooers | 207.532.6573
MOOERS REALTY - Houlton, ME
Northern Maine Real Estate-Aroostook County Broker

I love the BPO requests from eighteen countries away where they want a drive by in the next twenty minutes two hours away and for a whopping $40. Wooo Hooo Nooooo. BPO's are dangerous valuations at 55 mph.

Apr 18, 2010 05:50 AM #19
Rainmaker
120,300
Sara Goodwin
Ashcroft & Associates - Portland, OR
Portland, Oregon Appraiser

Andrew ~ I must say, BPOs seem as effective as a desktop appraisal from someone that lives 5 states away. 

Apr 25, 2010 08:07 AM #20
Anonymous
Retired Appraiser

Tom

I disagree with you.  I believe the line of appraisers who are willing to work for $150 rather than the older fees of $300 to $400 would stretch to a nearby galaxy.  We've had two years to review the results and appraisers never came close to organizing much less striking.

I've sat out the past 2 years waiting patiently for HVCC to go away and to see a return to appraiser driven fees rather than AMC driven fees.  It never happened.  I swore I would never do this after watching 18 years of appraisal clients get flushed down the drain here goes.  If you can't beat them...join them.  This is one appraiser (and avid AMC hater) who has decided to go where the easy money is.  I can make ten times more money by running an AMC than I made in appraising and put in 1/4 of the effort.

Homeowners and borrowers were screwed royally by this whole thing.  It's obvious though that there will be no reversal at this point however.  Banks are now making billions off of appraisers and they have no intention of giving it up. 

Dec 30, 2010 07:00 AM #21
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Rainmaker
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Sara Goodwin

Portland, Oregon Appraiser
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