Skewed “Customary” Fee Perceptions
I no longer care about “customary”.
“Customary” in Dodd-Frank’s customary and reasonable is a negatively biased fee before state studies begin!
We all know that the “C” part of C & R is supposed to represent the normal fee charged by most appraisers for similar work and conditions. Some AMC appraisers even know the “R” part is supposed to be an amount that is reasonable based upon ALL factors necessary for completion of the assignment in a USPAP compliant and professional manner.
Unfortunately HVCC and the AMC havoc it wreaked has existed far too long for there to be a ‘reasonable customary’ fee anywhere in the United States. Even when very low AMC fees are excluded.
Consumers have now been told too many times by bank loan officers, AMC customer service, and clerical support staff, that appraisers will work for $200, $300 and even still low $350 AMC fees. They think the overage THEY pay goes for “review” costs.
Three hundred dollar full SFR appraisal fees have not been customary or reasonable in Los Angeles since fifteen years ago!
Last week, I almost lost a great client. I told them a week before they ordered the two SFR appraisals, that the fees would be $1,500 and $500 respectively due to complexity and increased liability due to the amounts involved, and that was after I discounted the high end fee by over $1,000 for my best client.
The property owner’s representative was told the same thing and arrangements were completed for our next day appointments and collection of the fees.
About 9 PM I received a terse, rudely worded dictate from the property owner. He cut a pasted an unknown online website excerpt stating:
“…appraisals typically range from $300 to $750.”
He told me he would only pay $300 for the lower appraisal and $750 for the higher one. That I was only charging so much due to the amount involved and all I had to do was the same amount of work for both, as I would for any other house.
I declined his fee offer and cancelled the assignment via email. I restated the specific reasons why I believed this to be a complex assignment. He then cancelled the whole loan, sending a CC of the cancellation he had sent to my best client to me.
My clients ‘loss’ would be measured in tens of thousands of dollars.
I do NOT mind losing an appraisal due to a fee quote. I KNOW what my time is worth to me.
What I DO mind is losing a client AND assignment because some low information property owner reads headlines about AMC fees and thinks THOSE represent real or reasonable fees.
Oddly enough, after a chilly new relationship with my best client for a week, WITH that client’s consent, the new appraiser called to ask me specifically how I had managed to find similar sized multi parcel (potential) comparable sales? I did mention this was VERY complex, did I not?
Like I said it was my BEST client, and the appraiser sincerely seemed very conscientious, and had spent a lot of time searching. It was not a time to gloat or be selfishly narrow minded. I helped the other appraiser to the best of my ability via phone, though I expected and wanted no compensation for this one. This is the kind of owner that will forward complaints to the state over technicalities if he does not like the results. I don’t need or want the headaches now that I know the owners mindset.
The point of all this is that “customary” fee perceptions have been skewed downward from HVCC onward. Not only in the AMC side of the business, but in the spill over to non AMC work. Considerations of complexity appear to have all but disappeared.
Any “university study” would necessarily include whatever low fee the other appraiser had agreed to, rather than a truly reasonable fee. Certainly, ‘reasonable & $300’ should not even appear in the same conversation for either of these two properties.
I no longer care about “customary”. ALL of my quotes are now based on “reasonable” fees based on the complexity of the assignment. ONLY I get to make that determination.
We are fighting for customary and reasonable fees for all, right now!