LSI Fees – Absolutely Criminal!

Michael Ford

Michael Ford

General Certified Real Estate Appraiser at Michael F. Ford Appraisal
Over 28 years appraising all property types and interests, in Southern California real estate. VP/Chairman National Appraiser Peer Review Committee, American Guild of Appraisers, #44OPEIU/AFL-CIO. - Michael Ford on e-AppraisersDirectory
Michael Ford

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LSI Fees - Absolutely Criminal - AGAWe used to do a lot of work for LSI back when they paid semi decent fees that were only about 10% below the competitive norm back around 1992. I think the norm was around $300 and they were paying $275+/-. In late 1992+/- they cut back to $235. We lost a few people but most stayed. Bear in mind the appraisers were being paid on a fee split. I think they got 50% of the firms fee. I was on salary for QC review and teaching work plus a split fee for field reviews. Back then it was much simpler to write up a report.

Our guys invariably worked from 12 to 16 hours a day and most did two appraisals a day. Their comps were pulled for them and given to them with their assignments back then; and the appointments were set up for them. Even so, these guys broke their backs. Reports all had boilerplate templates where all the appraiser had to do was delete a word here, or add one there to “localize” it with some degree of relevance. Highest and best use was almost always assumed to be existing; unless I caught it as something potentially different in the review process; or they brought up unusual conditions before the write up.

Once, the in house Chief Appraiser at LSI even came out to see us from Pennsylvania to thank us for saving their butts on a direct probable loss of $250,000 when a high powered dishonest seller tried to buffalo them into thinking his $500,000 house was in fact one of the nearby $750,000 models. Well, they said they came out to see us, but I think it was because they either wanted to see Disneyland, or because our owner always sent the cute receptionist with free tickets for everybody to go to Universal City. Back then, we were very high volume appraisal mill for them. I usually had to quick review 25 to 30 reports before 11:30 AM and then another 10 to 20+/- before 2:30 every day. Do the math. We billed them about a quarter of a million dollars every month. Our guys mostly worked seven days a week until they completely burned out and needed a few days.

Then LSI lowered the gross appraisal fee to $189.

My salary disappeared and I was offered a fee position (No, but thank you!). I had options. My former trainees and lower license level appraisers did not have the same options. Many had higher degrees, but English was not their native language and without help, it showed in their work. Bear in mind these guys were only getting $94.50 plus mileage per assignment. One went back to driving a taxi. One went back to his native country where he was a nuclear engineer.

When I next checked on them somewhere in the 2000 to 2010 era, I think I was told they were only earning gross appraisal fees of $175 and had 48 hour from inspection to turn reports in!

Today I asked a friend of mine to contact one of the older associates and was told he was still working for LSI, “Well it’s not LSI anymore but it’s the company that they turned into”, I was told. My friend couldn’t remember the name.

“How much are they paying these days, gross?” I asked.
“You won’t believe it” was the reply.
“Still $175?” I was only half heartedly joking.
“Less.”
“NO! That’s CRIMINAL!”
“Maybe, but they are only getting $165 per appraisal now”. But then he also has to pay some kind of processing or uploading fee too.

IF ANYONE that reads this in ANY state has first hand knowledge and confirmation of the appraisal fee being this low I would sincerely appreciate you emailing me the particulars. I think I may have just found the Guild’s newest “project”.

I’ve already FOUND their new name. As soon as I can provide proof that the fees are as low as I’ve related here, I’ll publish it for all to see, and to avoid. Anything I can do that starts a class action suit against them; including trying to get the Guild behind it, will be done. These may be THEIR ‘customary’ fees, but they are by no means ‘reasonable’.

They are one of those huge firms that offers all in one settlement and closing services. In fact you have to look fairly hard to even FIND appraisal services listed on their site…but they ARE listed.

Any first hand info (meaning you were offered these fees; and approximately when), please email to me at mike@mfford.com  .

Absolutely CRIMINAL, but only in the dishonest politician kind of criminal. Not the honest kind that goes up and just robs people without all the pretense.

I wonder if the name change was to reflect their more inclusive services; OR because they turned the reputation of the old one into a pile of steaming pony loaf?

If YOU have a similar situation, it is WAY past time to join the Appraisers Guild! Please contact AGA Jan Bellas at (301) 220-4100 or email to JanBellas@appraisersguild.org

Postscript

8/29/2015 – Correction time! I personally communicated with the discussed appraiser in my article. He said the fee he gets is $180 vs $165, though he didn’t say if that was before or after upload fees. He also said every time he tried to increase his fees above $200 the work just dried up and stopped.

FYI, I also received personal email from a Florida appraiser who declined to be identified. He said anyone making the claim my friend made is either a liar or is only worth that much. Said he’s worked for them (LSI) since ’86 and gets close to the normal fees he charges his non AMC customers. He said he gives them a “small discount.”

No specifics about how much he charges his non AMC clients OR LSI of course.

Folks, I’m not here to pick fights, or engage in them with individual appraisers. I AM generically on the side of all appraisers tired of crappy working conditions and fees. Like all of us here, I discuss what I believe to be true among my peers. If shown to be wrong, I correct it. So far re LSI, no correction is warranted. I KNOW from past personal experience how poorly LSI pays appraisers. The only issue is whether they have continued that terrible fee history into the post Dodd-Frank world.

The invitation still stands. ANY appraisers out there that are either receiving low fees; required to conform to unreasonable turn times, told they must not include invoices, or disclose fees actually received please let us (AGA) know. Same applies if pressures or prohibited threats are used to get you to change values or violate other aspects of USPAP.

IF you would be interested in participating in a class action with no fees to yourself, except attorneys split if/when we win please let us know. IF and only IF enough individual appraisers indicate a willingness to participate and that have at least one instance of being paid less than C&R fees (or other abuse), we’ll proceed based on the proof we can present in accordance with the advice of any of the attorneys involved.

You do NOT have to be an AGA member to participate in this; though we will obviously ask if you are interested in Guild membership at some point. At NO POINT is membership anticipated as a requirement to participate in the class action (unless some attorney tells us that is required-which does not seem probable at this stage). Each states laws are different. Federal issues may also have their own special requirements.

Until you specifically authorize any attorneys to act on your behalf, your name will only be disclosed outside AGA, & possibly OPEIU to those same attorneys so that they can contact you to dot the legal ‘i’s, and cross the ‘t’s. I’ll play lightening rod and take the heat for trying to organize this. I’m assuming my conventional lender work will dry up shortly. A note of caution to any lenders contemplating that. I DO get access to the blacklists. Think it through.

Unless and until then all I anticipate being needed is; Your name, email address, state, a phone number, AMC Name; Lender name and fee offered (or other abuse) so we know how many people are potentially involved. I honestly do not know what the numerical critical mass is.

The B of A / Landsafe case they involved 365 claimants in the class. The attorney I spoke with said obviously the more involved, the higher the final fees. Don’t sign on looking for a financial windfall. CAs rarely make anyone rich (beyond the law firms that advance all the costs), but they ARE helpful in ending abusive conditions. Isn’t that the end goal anyway?

OK, we have ALL seen enough complaining… heard enough stories of abuse…talked about boycotts…formed coalitions…and even had a few small but important legislative victories, but now, respectfully, it is time to get off the proverbial pot and do something meaningful.

“Why doesn’t ‘someone’ DO something….? Well, now that we ARE seriously trying to, who is going to tentatively commit to participating? Do we get 100 people? 1,000? or 80,000?

Email either janbellas@appraisersguild.org or myself at mike@mfford.com. IF interested in AGA membership let us know and we’ll get back to you right away. If not, we will still get back to you as soon as attorneys let us know what the next step is. Thank you all, and please wish us luck!

Michael Ford

Michael Ford

Over 28 years appraising all property types and interests, in Southern California real estate. VP/Chairman National Appraiser Peer Review Committee, American Guild of Appraisers, #44OPEIU/AFL-CIO. – Michael Ford on e-AppraisersDirectory

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15 Responses

  1. Retired Appraiser Retired Appraiser says:

    I can’t think of anything regarding the residential appraisal profession that isn’t criminal these days.  Forced turn around times, forced to wait on your fee after the AMC has used your money for a few months, an extortion style business plan for ordering, appraisal orders being farmed out to the lowest bidder, etc.

    Remember the old Ford slogan: Quality Is Job 1?

    Try using that type of slogan with regard to the appraisal business and lenders will laugh you out of the room.

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  2. Hugh Jaihnus says:

    I lost the best years of my life (right out of college in 2000) to this job.  Its not a profession, its a joke.  Derivatives and Hedge Funds should have been the move.  I LOATHE appraising.  SIHTTIEST jobby-job in the world.  Expertise and quality are not rewarded, yet churn and burn boilerplate products are Grade A, Lenders’ preferance.  AMC’s are unnecessary, crooked middle-men.  This industry continues to slide, nothing positive has happened post DF, and it Im sick of eating lender or amc fed siht-sandwiches everyday.

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  3. Correction time! I personally communicated with the discussed appraiser in my article. He said the fee he gets is $180 vs $165, though he didn’t say if that was before or after upload fees. He also said every time he tried to increase his fees above $200 the work just dried up and stopped.

    FYI, I also received personal email from a Florida appraiser who declined to be identified. He said anyone making the claim my friend made is either a liar or is only worth that much. Said he’s worked for them (LSI) since ’86 and gets close to the normal fees he charges his non AMC customers. He said he gives them a “small discount.”

    No specifics about how much he charges his non AMC clients OR LSI of course.

    Folks, I’m not here to pick fights, or engage in them with individual appraisers. I AM generically on the side of all appraisers tired of crappy working conditions and fees. Like all of us here, I discuss what I believe to be true among my peers. If shown to be wrong, I correct it. So far re LSI, no correction is warranted. I KNOW from past personal experience how poorly LSI pays appraisers. The only issue is whether they have continued that terrible fee history into the post Dodd-Frank world.

    The invitation still stands. ANY appraisers out there that are either receiving low fees; required to conform to unreasonable turn times, told they must not include invoices, or disclose fees actually received please let us (AGA) know. Same applies if pressures or prohibited threats are used to get you to change values or violate other aspects of USPAP.

    IF you would be interested in participating in a class action with no fees to yourself, except attorneys split if/when we win please let us know. IF and only IF enough individual appraisers indicate a willingness to participate and that have at least one instance of being paid less than C&R fees (or other abuse), we’ll proceed based on the proof we can present in accordance with the advice of any of the attorneys involved.

    You do NOT have to be an AGA member to participate in this; though we will obviously ask if you are interested in Guild membership at some point. At NO POINT is membership anticipated as a requirement to participate in the class action (unless some attorney tells us that is required-which does not seem probable at this stage). Each states laws are different. Federal issues may also have their own special requirements.

    Until you specifically authorize any attorneys to act on your behalf, your name will only be disclosed outside AGA, & possibly OPEIU to those same attorneys so that they can contact you to dot the legal ‘i’s, and cross the ‘t’s. I’ll play lightening rod and take the heat for trying to organize this. I’m assuming my conventional lender work will dry up shortly. A note of caution to any lenders contemplating that. I DO get access to the blacklists. Think it through.

    Unless and until then all I anticipate being needed is; Your name; email address, state, a phone number, AMC Name; Lender name and fee offered (orother abuse) so we know how many people are potentially involved. I honestly do not know what the numerical critical mass is.

    The B of A / Landsafe case they involved 365 claimants in the class. The attorney I spoke with said obviously the more involved, the higher the final fees. Don’t sign on looking for a financial windfall. CAs rarely make anyone rich (beyond the law firms that advance all the costs), but they ARE helpful in ending abusive conditions. Isn’t that the end goal anyway?

    OK, we have ALL seen enough complaining… heard enough stories of abuse…talked about boycotts…formed coalitions…and even had a few small but important legislative victories, but now, respectfully, it is time to get off the proverbial pot and do something meaningful.

    “Why doesn’t ‘someone’ DO something….? Well, now that we ARE seriously trying to. Who is going to tentatively commit to participating? Do we get 100 people? 1,000? or 80,000?

    Email either janbellas@appraisersguild.org or myself at mike@mfford.com . IF interested in AGA membership let us know and we’ll get back to you right away. If not, we will still get back to you as soon as attorneys let us know what the next step is. Thank you all, and please wish us luck!

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  4. Concerned Appraiser says:

    You do realize that your company’s appraiser mill process was a large part of the problem, right? Having someone pulling comparables before inspection, appraisers working unreasonable number of hours using only boilerplate templates. You “reviewing” up to 50 reports a day. I can only imagine all the ignored appraisal issues that passed from the inspection process all the way thru to submission.

    If you can blame LSI for their low fees then I can blame the appraisal mill companies, like you describe, to a stronger degree. Today’s national appraisal mill companies are to blame for accepting bulk assignments for ridiculous fees and burning thru appraisers like sweat shop workers. Are you an advocate for competency or for a continued “churn and burn” approach?  Appraisal Mills – Absolutely Criminal!

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    • CA Absolutely! In my own defense when I went there in 1992 the position was specifically created for me to provide ‘enhanced quality control’ to a bunch of trainees. Back then I also taught a CA approved CE USPAP course (before the State and Fed rules changed). You are right to scoff at anyone doing a three minute “review”. Then again most experienced appraisers can pick out a LOT of errors in the first minute or two. NONE of these usually required more than saying HEY George! Fix This! We KNEW a lot was passing through. The client requirement (and frankly even USPAP back then) was not as burdensome as it is now. No excuses. It WAS an appraisal mill, and for me it was a great learning experience about how a particular AMC worked; and so called high efficiency offices!

      You may have seen my comments elsewhere where I ‘question’ how good all the current ‘time savers’ are. My cynicism arises from my experiences  noted above. IF you have ever read my comments you will find I LEARNED well from that experience and am NOT an advocate of assembly line appraisals. SOME efficiencies can be gleaned, but there is the constant inherent risk of unacceptable short cuts too. My personal belief is that ‘few’ can do more than three (3) full SFR / URAR properly completed appraisals and reports in a week and do them right “start to finish”-100% by themselves. (Includes calls & interviews to involved parties; looking at zoning maps, and doing real H&BU analysis, and meaningful 1004MC analysis-not just filling out the form). MY personal belief is that the small full service appraisal shop is the best learning and training model. One experienced senior owner operator; one or two AGs; an AR or licensee and a trainee. Variations too. The downside is that even before HVCC, income work load irregularity was always a concern. I always allowed a LITTLE outside work by appraisers as long as OUR work was a priority; and they didn’t poach my clients. Never had a real problem with that.

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  5. Wayne says:

    I did read most of the above but honestly I could not stand to read it all. Really, I wish that LSI and other companies such as this would pay $1.00 per appraisal and require the appraiser to pay a user fee of $1.50 per appraisal. Whatever it takes to STOP the damn stupid appraisers from doing this type of crap! NO, I do not feel sorry for them at all. I do not feel sorry for any appraiser who works for a crapo AMC for chump change and then wants to Boo Hoo! If you are a certified appraiser working for companies such as this….your fellow appraisers just laugh! Someone earlier said that the lender would NOT pay more than XXX for an appraisal. I remember years ago I was on my way to visit my sister in Houston. She asked me to stop and pick up some dog food. Well, as a younger brother, I bought the wrong dog food. She told me “her dog would not eat that” I said “he may not the first day or two, but in a week or so, he will eat that”. I still stand by that statement! Best of luck to all!

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  6. Mike Ford Mike Ford says:

    Wayne, maybe you SHOULD have read the whole article, so your post would have some relevance. Speaking from a position of ignorance is rarely convincing. The point is that there are many AMCs out there that are still paying less than C&R fees, and THAT is a violation of Dodd Frank. Something that affects us ALL, whether we work for those AMCs or not.

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    • Wayne says:

      Mike,

      Actually, I did read the article. I just have never agreed that anyone should be able to set the fees for an independent businessman. The part of my post that I hope has some relevance is that each of us have the absolute RIGHT to accept or decline any appraisal fee.

      If C&R for a SFR appraisal were set for all 50 states at a fee of $100. each would it be a position of ignorance when I refused to accept said fee? Oh well, I wish everyone the best!

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      • Wayne, I stand corrected.

        I also agree philosophically that no one should be able to set my fee other than myself. When I was first trained, my old mentor was always about 10% higher than his competition. His explanation to me was that it was always less crowed in the deeper end of  the pool than the hallow end. we always preferred the more complex assignments. I try to follow that premise to this day.

        Having said that, you and I both know that appraisers do NOT set their own fees anymore. Not really. We still retain the right to refuse work, but that’s not the same as ‘setting our  own fees’. AMC influence has spilled over to non AMC work (in my state anyway).

        With the new TURD; a loan broker will be citing our fees up front. This ‘broker’ may or may not even be licensed. While required to be, past practice was that the majority of loan “officers” merely worked for a licensed broker. I have no reason to believe that practice has stopped. A person like this has no clue as to why a fee commensurate with the complexity of the assignment is required. Yet within three days of the initial interview people like this will be quoting appraisal fees for the TRID which may or may not be able to be changed.

        I still want to swim in the deep end of the pool, but in order to do that the ‘shallow’ end needs to be repaired. Banks want to pay a one size fits all fee NATIONALLY for complex and non complex appraisals. Currently that national fee is around $495 to $499 that they pay the AMCs for ‘all appraisal related costs’.

        ALL I am saying is that IF a perceived minimum national fee is allowed to exist at all, it is one that WE as appraisers should develop. It wont prevent any from charging more, but it could set a national minimum definition for what is deemed “reasonable”.

        I finished a draft proposal yesterday that is being reviewed. Once that’s done I’ll post it for appraisers input and suggestions. Its not perfect but it is a damn sight better than what currently exists in all states!

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  7. Wayne says:

    Mike,
    I have the greatest respect for you and acknowledge the very sincere effort that you make to elevate this profession. Each of us face different situations in our business world and our lives. This weekend I took my lady friend to see the movie “Captive”. Using our senior citizen discount, one medium popcorn and two small cokes I received some pocket change from $40.00. Really? Some appraisers are still preparing full appraisals for $350 to $400? How can that be? A regular can of Campbell’s chicken noodle soup at Wal Mart is $1.00.

    It seems to me that there is no point in trying to explain to some of our fellow appraisers what is wrong with this picture. It is just not worth the effort. They are going to either starve out of the business or catch on. Sink or swim, seems to be the way it works. Those of us that do not give a damn about C&R, AMC’s, what FHA wants, etc. seem to be happier than most.

    I do appreciate your efforts to promote the union, promote the appraisal profession but my opinion is that your wasting some of your valuable time. Why not just let these “highly trained” professionals do their own thing (they will anyway) and come join us old folks on a cruise? We have a 7 day cruise booked from Galveston leaving weekend after Thanksgiving and another in February leaving from New Orleans. Any appraisers are most welcome. We can eat steak, lobster and discuss this pitiful profession! (LOL) I wish everyone the best!

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    • Wayne thank you for the kind thoughts.

      I guess the best answer to your last question about the cruise, is that I can no longer afford such luxuries. Taking myself; the other half and our 9 year old daughter to a movie is closer to $60, and change is rare.

      Cruise? As in a VACATION? My last ‘vacation’ was a business trip to Pennsylvania in February. High point of the  trip? George Washington and I apparently used the same “rest” room along the Delaware. The enclosed one wasn’t built when he was there; and was locked when I was. I’m fairly certain we found the same tree though.

      Anyway, I just finished the draft proposal for higher fees and my trusty squire Sancho & I have more windmills to tilt with.

      Bon Voyage to you and yours though! (real lobster or langostino?)

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  8. Mike Ford, CA AG, SCREA, AGA, GAA, RAA Mike Ford, CA AG, SCREA, AGA, GAA, RAA says:

    Retirement? Is that the one where you lay down in a box and a bunch of people come visit you all teary eyed, except for the ones that REALLY know you and just poke to see if you are faking or not? Nope, not ready yet.

    While I have your attention…please visit link and let me have your feedback (on topic-not necessarily my lack of skill as a webmaster)

    C & R Fees

    I have to double check the AGA site to see if that one posted. Thanks!

     

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LSI Fees – Absolutely Criminal!

by Michael Ford time to read: 6 min
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