Lettuce and Tomato Cost More!

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Increased Cost of Appraisal Businesses... Lettuce and Tomato Cost More

…our health insurance is  more than then it was last year, and our auto insurance policy increased as well…

There is a burger place my wife and I frequent here in town. All they do are burgers and you can pretty much get them any way you want with your choice of rolls and topping. They offer a vegan burger as well as many organic toppings. We each get a burger and split an order of loaded nacho fries and the bill usually is $25 and some change. The other day we went for burgers. The bill was $31.58. When looking closely, guess what, there was an upcharge for some of the toppings, mainly lettuce, tomatoes and cheese. When we inquired about the new charges, the manager explained, his food costs have increased about 7% over the past few weeks and the food service company announced they would be adding a fuel surcharge starting April 15th. He explained, in order to keep prices reasonable they decided to add a surcharge to some items to give customers a choice rather than going up across the board. He stated he knew customers would notice the price increase.

During dinner, my wife and I discussed the increased cost and realized we have experienced this before, about 10 years ago to be exact. Gas prices have been rising, our health insurance is  more than then it was last year, and our auto insurance policy increased as well, even with no claims or tickets. The $20 oil change is now $23. There is now a $1.99 “network distribution fee” on our Verizon bundle for phone, internet and TV. Even more concerning, we have subprime mortgages and stated income loans again.

A while back Jeff Eisenshtadt, CEO and President of TSI Appraisal, now Amrock, made a public comment that consumers do not care about the cost of the lettuce and tomato that goes on a hamburger. This simply is not the case. As a consumer, I care; as a Real Estate Professional Appraiser, I care. Honestly, it is hard to believe anything this man states. His company was just found guilty of fraud and theft by a Texas Court.

After looking at my expenses to operate my business; fuel cost, insurance, internet service, cell phone, office supplies, etc. I realized it is time to re-evaluate the fees for my services. Maybe I will take a stepped approach and increase some of my fees for rural properties or maybe I will go up across the board. Regardless of which way I decide, or if at all, I encourage each of you to take a look at your business expenses and profit margins. It may be time for a change.

By Milton P, Certified Real Estate Appraiser

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22 Responses

  1. Scott R. says:

    Every person that reads this, appraiser and otherwise should forward a copy to every AMC company email we have in our database.

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  2. Ralph says:

    Your completely right, think how much more sales agents are making with price appreciation since 2012, and mortgage brokers make off the yield spread premium. The clown at Amrock says that, because he doesn’t want John Q Public to know that they are charging $650 to the borrower paying the appraiser $300, they have the best scam going for hitting upload!

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  3. Marty says:

    I agree, appraisal fees are way to low with the amount of work that has to go into completing them. When I first started our appraisals were not even expected in less than a week. Now they are expected in just a few days after the inspection. On another note,  Not sure if you all have heard, but in Maryland we just had a major legislation change for real estate appraisers. Now, in Maryland AMC’s are required to pay for completed assignments within 45 days down from 60 days. This is important because it not only helps us get paid faster but this new law also provide the commision the power to impose fines for any AMC who violates this new law whereas before nothing would happen to them. We ask all appraiser to closely monitor this to make sure you are being paid in 45 days and if not to file a complaint.

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    • Baggins Baggins says:

      Or you could market directly and provide a counter to the amc marketing machine… I don’t care how long it takes to pay me, take a damned year for all I care. The point is that I get paid the full fee and do not share it with anyone.

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  4. Fritz Vogel AGA,CRS,CEI,GRI NY Cert. Appraiser 27yr says:

    Thank You Ralph for bringing the Texas v. TSI to light for me. In NY “Texas” news is usually stuffed in the middle of the paper under the foreign exchange rates. 🙂  And to Marty with the Maryland update regarding fees, looks like  the midAtlantic states are taking action together, I know NC has a 30 day and I’m pretty sure VA has the same for AMC payments.

    But, back to the cost of living, it is common KNOWLEDGE that costs go up yearly, in the past 10-20 years, on average 3-6% per year, while the AMC group is running out of appraisers as they try to whittle the FEE down each year to make their profit forecast happen.

    The consumer is not that stupid (at least in the Northeast) OK, bad Geo poke , but I have lived in CO, FL, NC, MA and NY, so I have some idea of reality. But, sadly How do we make it public that our fees are stagnant or going down to survive?

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  5. Jack Of All Trades says:

    I am convinced that the trick in succeeding as an appraiser today is leaving the business completely. After working with AMCs I knew there was no way in hell I would attempt to make a living as an appraiser slave. Name one other business that never gets fee increases ?

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  6. Retired Appraiser Retired Appraiser says:

    If you like the simple cost of inflation, you’ll LOVE the impact of the new tariffs and The Wall. You haven’t seen anything yet.

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  7. Look closely at my hand.

    See the shiny AMC bauble? Keep looking at the AMC bauble. Focus ALL your attention on the evils of the AMC.

    …and in the meantime the banks, MBA, ABA and ALL the other lending and funding sources will continue to price fix the fees that THEY are willing to allow the AMC to charge borrowers. The fees that are quoted by the loan officer at the time the application is taken. The fee that is ‘locked into’ TRID and that lenders AND AMCs are still telling borrowers  cannot be changed.

    Baggins recent post on another  thread is the perfect case on point. He WANTED to assure the appraiser was paid more and offered to add it to his own costs up front.

    I’m not defending AMCs by any stretch of imagination but lets not lose sight of the fact that there is another whole group of players equally responsible for price fixing. The lenders themselves.

    The solution is in Washington DC…not the individual fifty states.

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    • Advocate says:

      Washington does need to solve the problem. Unfortunately, they have been fed so much inaccurate, bias information, they think everything is perfectly fine. Just wait, the second something happens, they will be all over this acting as if they care and forcing testimony from all players. They will ask questions, get answers and then everyone will be on the way. Nothing will become of it.

      The only way things will change is for some jail time to occur.

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      • Baggins Baggins says:

        Step one; Stop playing nice with the traitors of this industry whom sold the rest of us down the river with outsourcing. If you’re concerned about the future of this industry, step one is to cut off the funds to those whom create unfair playing fields, the outsourcers and those whom service them.

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        • Concurthough now we need to define “outsourcing”. Follow me on this…

          Traditionally appraisers used a typist (pre computer). It was fully accepted. Indeed, it was expected since those reports could not have even one typo or visible type correction on them. A typing standard few appraisers could rise to on their own. Typists were usually hourly wage…though I also paid one as piece work when I first went out on my own and volume was very low. She was also my trainee so that the costs of training someone were also reduced.

          So, are we now saying that the use of any typist is wrong, or only if they are out of the office? The first option is cut and dry. Yes or no. I’d abide by it either way.

          The second becomes stickier. Can I have my employee or 1099 I/C typist do my report-typing at their home? Have I crossed the confidentiality-streams-bridge by failing to maintain direct control over all data including the mere fact that someone specific is borrowing money using their home as collateral?

          My personal belief is that contracting the work out falls short of maintaining both client confidentiality and borrower privacy (GLB disclosures anyone?). I choose not to do it.

          Many do use such arrangements. Hence ‘Virtual Assistants’ both in the USA and outside. Those whom rationalize VAs here in the USA don’t have far to leap in order to justify using overseas services that do the same things for less money. Though a separate argument can be made that overseas is far worse because the laws and cultural mores of right and wrong are so different. Bribes are a normal business practice in many parts of the world where outsourcing has been highlighted.

          I’m prepared and content to say ALL appraisal work must be performed ‘by in-house’ personnel directly employed by the appraiser. Preferably licensed appraisers, but at least Legal U.S. residents with a legal right to work that are also located in the same state as the appraiser, so that the SAME LAWS that govern the appraiser’s actions also cover those of his/her employees. IF those ‘in house’ staffers work from home I could be ok with that too…provided they are only working for that one assigning appraiser.

          I can see a LOT of possible alternative views and counter arguments.

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          • Baggins Baggins says:

            FNMA CU system challenge; Identify copied language in multiple reports, cross check that with the appraiser. The instances of this have to be in the tens if not hundreds of millions by now. They’re not typing anything, they’re plagiarizing click and go redundant language. Appraisers whom use that service should understand the next guy was delivered a mirrored type up.

            Can an unlicensed person really provide meaningful contribution in terms of essential analysis and written reporting?

            No, you can’t provide effective oversight if the non appraiser is outside of your office. Only if dealing with a licensed appraiser could such remote operations be considered meaningful. If one touches the appraisal, through distribution, inspection, analysis, write up, or review, one should have an appraisers license or be under direct live and constant supervision of the appraiser.

            Otherwise, I want the amc to do my typing. Why not? Could I hire the lender to do that? Details…

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  8. Fritz Vogel AGA,CRS,CEI,GRI NY Cert. Appraiser 27yr says:

    Let’s face it, the LO’s are sales people, with a quota, and bonuses, promotions etc., they don’t want to loose “their” deal on a Appraisal fee. So push comes to shove they quote low to make sure the “deal” stays in place. They are mostly, today, young kids, 20 somethings, most of the old timers bailed out when the G’ment stepped on their game and they needed a License etc. So were looking at kids quoting 35-75 YO homeowners/buyers and are sooooo excited to get a prospect to listen to the Mortgage babble long enough to run a credit report, aren’t going to spew out, “that will be $600 up front”, or added to your cost.

    So, Mr. Ford is correct, the other players in the game start with a “Number” that is now a fixture in the applicants mind.

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    • Baggins Baggins says:

      Being an appraiser ain’t easy, it’s not for everyone. We are the only unbiased participator in the process. You just made an argument for salaried based lending, by the way.

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  9. Fritz Vogel AGA,CRS,CEI,GRI NY Cert. Appraiser 27yr says:

    Jail Time, your kidding, Right? Not for these guy’s, who would they set up as the fall guy? Well’s just laughs at the fines, passes it along and keeps going.

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    • Advocate says:

      That’s exactly the point. Nothing will change unless someone goes to jail to set the example.  As far as Wells Fargo is concerned. you have to blame consumers for continuing any relationship with them. It still amazes me how many think they are a good company and continue to do business with them.

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      • Baggins Baggins says:

        Separation of improperly co mingled appraiser fees would be a good place to start.

        Those jokers at the cfpb care more about protecting consumers from the cost of a single stamp to mail an additional appraisal, than they do about massive unrestrained fee skimming by management companies. ie:
        14(a)(3) Reimbursement
        Section 1002.14 Rules on Providing Copies of Appraisals and Other Written Valuations

        That’s where it gets complicated. What does it matter anyways?

        Enough appraisers engage in anti competitive practices, colluding to defraud consumers and monopolize work flow away from other licensed appraisers. Apparently they are simply going to continue to get away with it. You can bribe your way to the lions share of orders, but you’d better not charge the consumer for an extra stamp. Yes, that is what this has come down to.

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      • Advocate, it demonstrates yet again that many people get their definitive news from TV and radio sound bites.

        Need an investment  banker? Why not choose the ones with the pretty horsies pulling that cute ol’ stagecoach. Why they MUST be really good to keep that same business name for over a century!

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  10. Baggins Baggins says:

    O.k., let me help all of you out with the tool you need to assess inflation. The CPI. It’s arguably not entirely straight forward, but it’s an official tool, meant for you, the citizen consumer.

    CPI Inflation Calculator

    Go on then and make one of your nifty little excel charts with this one. Requesting standard fee w/ inflation, and a second overlay of lost revenue due to service charges and middle management charges, courtesy of improperly co mingled fees. Track the income loss of this industry from 10 years prior hvcc, to hvcc, to now. Then contrast that with the growth of amc companies. A nice clean 3 line chart tracked over 20 years. Go ahead, make a visual. There is no question what the results will be. It will be more like mere proofing and not analysis. The amc’s growth has a direct relationship to our loss. It’s been so profitable, all lenders have now included overhead costs in the appraisal fee itself.

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Lettuce and Tomato Cost More!

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