In the Appraisal World, The Expertise Only Gets Ten Percent of Fee
An Indiana state certified appraiser based in Indiana who is also certified in other states including Georgia did an evaluation of a number of properties in Georgia. The “appraisal fee” was $250 but the AMC (Clear Capital) got $225, and this appraiser got $25 for each evaluation. I’ve blocked out the specifics of one of the orders except for the fee – in this disclosure form required in Georgia.
In other words, the administrative fees for Quality Assurance, Broker/CMA fee, Home Data Index Fee (whatever that is) and of course, the all-important “Data entry fee” is many multiples more important than actual valuation expertise.
- The administrator (Clear Capital) gets 10x more to do administrative work than the valuation expert.
- The valuation expert is not a valuation expert because real local market experts can’t afford to accept evaluation requests. These evaluation assignments are built on a fraudulent premise that credible experts will do them*.
- The public perception of an appraiser gets lumped in with evaluation producers, doing significant harm to the appraisal industry’s reputation and violates the premise that these assignments are effective in protecting the public trust.
*Note: You can’t become an actual market expert working for a $25 evaluation fee, especially from thousands of miles away – it requires shortcuts to do so.
“Maintaining the public trust” is ignored with the evaluation product which is why the Appraisal Institute was booted from TAFAC (the non-profit side of The Appraisal Foundation) – I’ve mentioned this before – AI National refused to sign off on the mission statement of TAF that refers to protecting the public trust.
TAF Vision Statement To ensure public trust in the valuation profession.
TAF Mission Statement: The Appraisal Foundation is dedicated to promoting professionalism and ensuring public trust in the valuation profession. This is accomplished through the promulgation of standards, appraiser qualifications, and guidance regarding valuation methods and techniques.
Please absorb the ramifications of this situation to the boots-on-the-ground appraisal professional:
- Someone based in Indiana, arguably not “just over the line” was hired to do a number of evaluations in Georgia for $25 each, presumably very quickly.
- Borrowers relied on this “market expertise” for a $250 fee and used this expertise (from someone who only got 10% of the fee) to make decisions that could damage their interests (bring in the lawsuits!).
- The Appraisal Institute has continued to hard-sell Congress and state legislatures on giving the ability of certified appraisers to flip the “on/off” switch of their license to do these $25 evaluations even though most of the AI residential membership – aside from AI Institute blind loyalists – would tell you that the three “key points” above will happen. In fact, top executives at AI National give the impression that their own residential members are desperately clamoring to do $25 evaluations yet, in reality, AI National never actually sought real input from their own residential membership other than from wanna-be insiders.
- A living breathing human certified appraiser actually accepted this assignment and was able to sleep at night.
- Clear Capital got 10x the fee the actual valuation expert did and was clearly super talented at data entry – presumably demonstrating a skill more vital than the valuation.
Why are evaluations being allowed to normalize in the industry? Their reality is defrauding the public of expertise they think they are paying for and tarnishing the contribution and risk management the qualified appraiser provides to the mortgage process. It’s not a difficult concept to grasp – even ten percent of it. Read more »
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