‘Customary’ & ‘Reasonable’ Fees – Oxymorons
If WE don’t set ‘reasonable’ minimums for ourselves, then others will do it for us (or to us).
Please read this draft proposal for minimum national appraiser fees. I appreciate those who believe no one other than themselves should set fees, and I concur. Except, in the real world of today someone (lenders and AMCs) are ALREADY SETTING your fees. If not directly, then through ruinous less than customary OR reasonable fee competition.
I’m interested in your meaningful, constructive feedback as well as comment & discussion here.
For those that insist ONLY regional fees are practical, this same system works for the lowest to highest regions of America. Subtract 13% for low cost areas; add up to 9%+/- for higher cost areas.
Operating premises were:
- AMCs are here to stay. Liked or hated, they are part of the chain now.
- LENDERS want AMCs to offer one size fits all pricing. This MAY come close to doing so baring complex assignments. Even there, an inferred hourly equivalent is suggested.
- If WE don’t set “reasonable” minimums for ourselves, then others will do it for us (or to us).
- Framework allows for and includes inducements for trainees or less than certified appraisers-who have been largely excluded or ignored by AMCs in recent years.
In addition to posting here, PLEASE also email comments to JanBellas@appraisersguild.org.
We are going to start reaching out to state coalitions and other appraiser peers groups. We hope to incorporate helpful comments or views in that effort. In the meantime our parent union is already being contacted to see how we can best proceed.
Thank you for taking the time to read and respond.
Mike Ford, AGA; OPEIU/AFL-CIO
Presently there is no single standard that affected parties can point to in order to determine what a ‘customary fee’ is, and what is a reasonable fee. In all fifty states plus affected territories, each regulatory agency is left to make (or carefully side step) this determination themselves. The single common factor that does exist is that studies to determine ‘C& R fees must NOT include those below market fees introduced by appraisal management companies in the early days of HVCC; and that continue to the present.
The more proactive states have established rules by which these can be calculated. Unfortunately such states are few, and even their allowable methodologies do not produce uniform results. Enforcement is also (apparently) lax until a lawsuit is brought. The current preferred method appears to be so called unbiased university studies which when impartially applied attempt to quantify non AMC fees for various types of property. Their downfall is that they have very little or no consideration given to the complexities that can be found among ALL property types.
Additionally, such studies have (so far) failed to adequately measure the spill over impact of half a dozen years of near universal ‘less than C&R’ fees in the marketplace by AMCs and GSEs, into non GSE work. They have effectively created a below market competitive environment based on consumers reasonable belief that an AMC appraisal should not be any different than a non AMC appraisal. Consumers have been exerting downward pressure as a result of anti-competitive AMC prices.
Lastly, there is the influence of less than impartial studies where funding is provided by the AMC Industry and its advocates. Universities that produce unfavorable results simply see themselves eliminated from future studies. Read more…