Where Is the Invoice?

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Mark Skapinetz

Certified Real Estate Appraiser at Whats It Worth Appraisal Services
Mark Skapinetz is a Real Estate Appraiser in Marietta GA with extensive knowledge in Residential Appraising.  He is Executive VP for the American Guild of Appraisers (AGA). Featured on Podcast such as Voice of Appraisal with Phil Crawford and The Appraisal Coach Dustin Harris as well as published interviews in Valuation Review. He is the creator of the 100% Real Estate Appraiser Group, The People's Appraisal Blog and co-creator of AppraiserFest.
Mark Skapinetz

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Where is the Invoice? AMCs Hiding Fees from Consumers & AppraisersTypically when you sell a service, you include an invoice to the buyer or consumer for the services you provided. This invoice lays out the products sold, the quantities, and services provided as well as the price or fee charged.

The invoice is a vital part of any business. It is an official document that businesses use to show the terms of the agreement, it specifies the buyer of the product or services, and it documents the terms of payment. An invoice allows businesses to keep track of payments made or outstanding payments due. Some business will even tack on fees if the invoice is not paid within a proper amount of time stated on the invoice.

As a Real Estate Appraiser and business owner, I always include an invoice to my clients for their records, and mine as well, and that invoice is always attached to the appraisal report—my product—when I deliver it to the client. When I say ALWAYS I mean my private clients. (“Private” means consumers hiring me directly or a direct lender who does not use an Appraisal Management Company or AMC).

You see, there is an issue with AMCs and the process of using invoices which we will get to in a bit.

For those unfamiliar with AMCs, they are the appraisal middleman companies put in place after the housing crash of 2008. Their intended purpose was to serve as a firewall between appraisers and lenders. They were to manage the appraisal ordering process by assigning orders to appraisers, doing some quality control before the report is delivered to the client (the client being the lender), and paying the appraiser for doing the appraisal report. While this sounds like a good idea, it has turned into a mess.

The mess I speak of is this: The AMCs make their money by tacking on a fee beyond the appraiser’s fee or they simply bill the lender and then take a portion of that stated appraisal fee.

For example: A lender is told the appraisal will cost $600. The lender agrees and the process begins. The AMC then does two things. First, they take the portion they claim for their services out of that total fee. Second, they set out to find an appraiser willing to accept the assignment for the lowest fee possible so that the AMC can make a larger profit. What they don’t tell the lender is how much of the “appraisal fee” the AMC keeps versus how much the appraiser is actually paid.

Some states like Georgia have laws requiring that the appraisal report specify both the AMC fee and the fee paid to the appraiser. While this is a good thing, without reading the entire report, the lender/borrower may not see where the fee actually went. It gives the impression that the AMC is the entity that developed the appraisal and wrote the report.

This brings me to the whole point of this post and one word: TRANSPARENCY. Where is the invoice that would break down the fees paid and to whom? Where is the invoice that states the terms of payments? It’s missing from the report. Why is that? I’ll tell you why. Most AMCs specify in their engagement letters that the appraiser is NOT to include an invoice within the report. Some will have the appraiser upload it separately and some will bypass an invoice altogether. Why is that?

It’s part of business right? You get an invoice for your lawn service, from your mechanic, from other businesses that you order products from online and so on. So why are appraisers not allowed to send an invoice attached to their appraisal product with the stated fees for their service? The answer is simple… AMCs don’t want to make it easy for you the lender or the borrower to know where the money went and for what. It makes it easier for the AMC to take more of the fee they quoted for the appraisal and pay the appraiser less. Imagine being charged $600 for an appraisal. The appraiser would normally charge, say $350, for that service. You’ve just paid $250 to a middleman to manage an order. Did you know that? As a lender or a borrower, are you being told the appraisal would be $600 or are you being told it will cost $350 with a $250 fee to the AMC for whatever they do? Are you aware of the breakdown of the costs? Probably Not.

Another aspect of the problem is the bid request. Are you aware that many AMCs broadcast bid requests to many appraisers at once? Specifically to find the cheapest so that they can retain more of the total fee? Probably not. The AMC sends out requests for bids on a job, although they’ve already charged you $600. If they look long enough, they’ll find an appraiser who will do the appraisal for $250, and the AMC has a minimum fee of $100 per order. They charged you $600 for the Appraisal. That leaves $250 left over. Shouldn’t the borrower be given a refund for that $250.00? I would think so, however it’s my guess that $250 will go into the pockets of the AMC. Are you okay with this? I know I wouldn’t be.

This is where transparency comes into play and the invoice breakdown will show just that. To be fair, not all AMCs practice this behavior. Some actually only take a set fee for their service, pay the appraiser customary and reasonable fees, and they disclose to the appraiser the fee breakdown. But there are very few of these reputable AMCs out there. Ask any appraiser.

This practice of not including an invoice needs to stop. Consumers have the right to know where their money has gone and for what.

A recent House bill has been introduced and assigned to the Financial House Committee, which is a positive step in the right direction. In short:

HR 3619 The Appraisal Fee Transparency Act of 2019

The bill states that all fees SHALL be stated on the settlement statement and broken down into appraiser fee and AMC fee. Now lets take this one step further and start allowing appraisal business owners to include an invoice with the fee breakdown in ALL reports. While the AMC may not be able to hide this from the consumer, they are still hiding it from the appraiser. Why?

It’s time for another change. It’s time to allow all parties involved in the process to know who is charging what fees and for what. Is there some big secret the AMCs are hiding from appraisers? Will allowing the appraiser to know what the AMC is making be an issue?

The solution is simple: Separate the fees paid to the AMC and the appraiser. Allow appraisers to include an invoice on every report that breaks down the fees for services. If this practice of AMCs charging a fee then paying a separate fee to the appraiser is to continue, then it’s only right that it be disclosed on an invoice for all parties to be in the know. Then again, AMCs need not take money off the top of the appraiser’s fee or add money to it to make a profit. This fee should be paid to them separately. If lenders want to use an AMC ( which they are NOT required to do) then the AMC and the lender should have an agreement in place regarding the AMC fee to be paid per order. The Appraiser fee should be what the lender/appraiser deems acceptable in their market for the scope of work and service provided, and should be paid directly to the appraiser from the borrower or from the lender, NOT THE AMC. AMCs should never have to touch any money owed to an appraiser and if the reason is unclear, please see these two previous blog posts: Planet of Deadbeat AMCs! and Outraged Appraisers Owed Money by AMCs!

Mark Skapinetz

Mark Skapinetz

Mark Skapinetz is a Real Estate Appraiser in Marietta GA with extensive knowledge in Residential Appraising.  He is Executive VP for the American Guild of Appraisers (AGA). Featured on Podcast such as Voice of Appraisal with Phil Crawford and The Appraisal Coach Dustin Harris as well as published interviews in Valuation Review. He is the creator of the 100% Real Estate Appraiser Group, The People's Appraisal Blog and co-creator of AppraiserFest.

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26 Responses

  1. Avatar Pat says:

    You can’t expect them to be fair, honest, and open about how they cheat everyone, do you?

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  2. Avatar IMJSAYN says:

    One of the many reasons why I no longer do AMC work. I didn’t want to help them cheat consumers.

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  3. Avatar SB says:

    Newly formed AMCs love to use the tactic of offering higher fees to attract appraisers..then as their user base grows…they start to lower fees by taking a higher and higher percentage away from the appraiser.

    Antiquated (non email/text) communication methods then force the appraiser to constantly log into the AMC website to check for appraisal conditions. Outstanding appraisal conditions that are not addressed in a timely manner then stop future orders from arriving. Then the appraiser’s “score” drops. Constant website logins are intended to bolster the AMCs SEO ranking. Higher SEO ranking makes their website becomes more valuable. When the appraiser user base is high enough they then SELL OUT their operations to some sucker acquirer.

    If you call the Mercury Network and ask them if they are working on a Direct Deposit ACH feature to get appraisers paid faster…..THEY WILL ALL BUT LAUGH AT YOU.
    Funny how they found a way to directly pay themselves an appraisal portal fee INSTANTLY.

    If you work with any AMC that does not allow you to attach and invoice.

    FIRE THEM NOW….they do not give a flying F about you.

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  4. Avatar Scott says:

    To the author. Writing this in your article actually helps none of us (appraisers). “Imagine being charged $600 for an appraisal. The appraiser would normally charge, say $350, for that service. You’ve just paid $250 to a middleman to manage an order.”

    $350 is what most of us were charging in 1995 to 2000. With all due respect, I won’t do any full appraisals for $350 in 2019.
    When people read this, they gather data in their mind that an appraisal report should cost $350 today.

    At least use what the VA pays in your local area as a base fee.

    BTW….I am NO fan of AMC’s….not a one of them.

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    • Avatar Mark Skapinetz says:

      Thanks for the feedback. I will keep this in mind in further writings. This was just a hypothetical example and not what everyone accepts in their markets. All appraisers accept and charge different fees as we know based upon location, scope of work and more.

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    • Avatar chris says:

      VA now pays $525 in PA !!!

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  5. Avatar James says:

    Yikes. Now hear me out. I have worked for an AMC, and I can relay why we’ve asked for the invoice to be removed.

    1) The invoice being included in the appraisal can cause billing errors between the AMC (who is paying the appraiser) and the lender (who is paying the AMC). For example – appraisal is delivered. Processor uploads the appraisal with appraiser’s invoice to the AMC to the lender platform. Doc drawer reviews appraisal, sees invoice. Appraiser’s invoice goes on borrower’s docs. In parallel, the invoice is also sent to the AMC accounting department for payment to the appraiser. That creates a double payment to the appraiser and reconciliation difficulties.

    2) The AMC I work for discloses both the appraiser’s fee AND the AMC fee on the invoice to the lender that the consumer sees, for all states, even if it is not required. In thousands of transactions, I’ve not had one, single borrower question the AMC fee. They don’t care. (I know there is a perception in the appraiser community that they will if this practice is widespread, but that is not my experience.)

    I do realize that many in the AMC community have poor practices and act as bad agents in the industry. However, in this case, consider that there may be reasonable alternate motivations that are practical other than the AMC (which are not ALL terrible) acting in bad faith.

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    • Avatar Realrose says:

      you people know nothing about our profession and you are like blood suckers taking our professional fees. I hope you know we all hate you and I call you pimps!

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    • Baggins Baggins says:

      The only reasonable alternative is to never work for amc’s, and avoid lenders whom do insist on working with amc’s. Half of the 80,000 appraisers in this country now outright refuse to work with mortgage lenders, largely due to amc imposition and the subsequent difficulty in finding mortgage lending work outside of the amc pay to play environment. Of the 40,000 left whom do work with mortgage lenders, roughly half of them refuse to work with amc’s.

      The amc industry has driven somewhere around 75% of all of the available licensed appraiser workforce away. Now according to these self proclaimed leaders of the valuation industry, whom provide nothing of value themselves…

      Disclosure is not the primary objection. The issue is pay to play. Reluctance to disclose honest billing practices absent of governmental mandate is yet another proof positive point the amc management industry is not concerned about ethics.

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    • Avatar IMJSAYN says:

      James, do these amcs disclose their fee to appraisers? If not, why not? What are they hiding? The fact that they may be making more than the appraiser?

      Also, please explain why they don’t want appraisers discussing fees with borrowers/homeowners? If the consumers see amcs invoices with breakdown of fees and they are aware of the fact that appraisers are only paid a portion of what was collected for the APPRAISAL FEE, then why aren’t appraisers allowed to discuss fees?

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      • Baggins Baggins says:

        An important follow up note IMJSAYN-san, is that disclosure guidelines in SOW are policy, not law. Nobody ever took away my first amendment right and back when I was performing amc work, I always disclosed my fee up front. Order stapled on a manila folder, address, name, and fee highlighted. It’s one of the appraisers standard introduction pieces in many scenarios, validation that you are the person the lender or lenders agent sent to their private property and personal space.

        It is shocking that a full two decades later, appraisers are still subservient to ancillary appraisal industry persons whom continue to break actual laws.

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    • Avatar Pat says:

      James, no offense but you would never hear such a complaint.

      At least once a month borrowers ask me where did the other $$$$ go?

      Call your LO who’s looking out for you.

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  6. Avatar Dreamer says:

    Additionally, the appraiser is charged a “technology fee” to upload a report, varying from $10-$40 per report. The lender is likely charged to download the report also. Why don’t the lawmakers & consumer protection bureau require all fees to be itemized on the HUD-1 for true transparency?

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  7. Avatar marion says:

    Slow down,

    PAY ATTENTION.

    The bill updates the law 12 US CODE 2603 SECTION C.

    read it here, as it stands today:
    https://www.law.cornell.edu/uscode/text/12/2603

    See that it says;
    (c) Disclosure of feesThe standard form described in subsection (a) may include, in the case of an appraisal coordinated by an appraisal management company (as such term is defined in section 3350(11) of this title), a clear disclosure of—
    (1) the fee paid directly to the appraiser by such company; and
    (2) the administration fee charged by such company.

    One more time;
    the fee paid directly to the appraiser.

    You are TOO BE PAID THE FEE DIRECTLY, BEFORE THE CLOSING CAN HAPPEN, AND ANY STATEMENT THAT YOU HAVE BEEN DIRECTLY PAID $X FEE IS FALSE, IF YOU HAVE NOT YET RECEIVED YOUR FEE.

    Just thought some precise reading was in order.

    ’cause it don’t say;
    the fee the appraiser “will be” paid.

    pay attention.

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  8. Avatar marion says:

    Not to correct anyone.

    To point out that the appraiser IS to be PAID before the CLOSING docs are issued, saying the appraiser was paid $X

    To point out that there will no longer be a 30-60-90 day billing cycle and decide if you will be paid, after they decide if they are going BK or not first.

    The requirement to disclose what you have been paid, does not remove the good advice for invoicing, but makes receipt of the payment now an important issue to show that, yes, you HAVE BEEN PAID prior to the closing.

    And of course, billing and invoicing are important, payment net 10 days offer a discount if you like, but, still have to be paid for the loan to be closed, with this new disclosure mandate.

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    • Avatar Mark Skapinetz says:

      While the new bill was part of my blog the main point was about the missing invoices or the ones they tell you not to send and I appreciate the clarity on the bill. Thanks.

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  9. Your spot on Mark. We can quibble with inferences, etc., but the bottom line is transparency and honesty. The hypotheticals you cited assumed the process was working openly and honestly. It is not.

    Your old nemesis Coester VMS advertised on their old website that they invented the one price national appraisal fee. That particular price-fixing model was followed by virtually all AMCs and lenders ever since.

    This is critical. BEFORE any specific property is identified or a specific consumer goes to the lender or mortgage broker, the appraisal fee has been set between the lender and the AMC. To hell with C&R and an open, fair, competitive market. Flat out price-fixing took place before the appraiser was ever consulted. The consumer was quoted a fee for an appraisal that only the bank and the AMC had negotiated…in advance.

    Dodd-Frank required that appraisal fees be reasonable. Prior to TRID, we could (in theory) go back to the AMC or lender and say “Guys, you goofed. The subject is a highly complex 5,000sf SFR, on the waterfront, with potential easement issues that have to be analyzed. The $650/$450 split is not reasonable. I require a $1,500 net to me fee as an appraiser for this assignment.” Pre TRID the bank went back to the borrower and explained the above. Often the borrower said, “I thought that sounded low compared to what we paid last time for our property tax appeal.”

    Pre TRID they’d remit the balance OR tell the AMC to keep shopping. Post TRID that could no longer happen. No lender was/is willing to go back to the borrower who is already ‘shopping’ them with competitors and admit they failed to allocate a reasonable amount for the appraisal and ask that borrower to sign a ‘new’ good faith estimate.

    The AMC by choice or obligation to the lender-client was forced to find an appraiser to fit the fee, rather than one that was competent for the specific assignment. Worse than the above ‘honest’ scenario, the AMCs see finding appraisers to fit their desired profit by ridiculous low fees as their prevailing business model.

    THAT is exactly why they hide the fees paid by consumers. MARION’s time point for payment is also significant. No closing document can be reported to be accurate while it shows an appraisal fee ‘paid’ where the appraiser has not in fact already been paid. It is a FALSE and misleading settlement disclosure.

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  10. Baggins Baggins says:

    Cost savings from reduced costs of appraisers services will not be returned to the borrowing consumer. Rather, all costs savings will be held by the amc as variable additional non disclosed income which functions as a financial incentive to select lower priced appraisers in violation of FDIC appraiser selection guidelines. It’s pay to play. That’s what working for amc’s whom do not have fixed billing practices in place represents, a pay to play working environment. This is in violation of the ethics rule that appraisers should not provide a thing of value in order to be the preferred selectee. Also a violation of appraisers ethics on billing, to provide fair and equivalent billing regardless of client selection for similar work.

    Who cares about ethics? One could not name a single amc who uses consistent cost plus billing on a long term schedule, because there are none. Amc’s are merely a vessel to re establish junk fees in lending. The fact many amc’s are owned directly or round about by title and/or lending companies, and share their unearned fees back to them, is only further validation of these facts.

    It’s good to talk about non transparency in appraisal billing. It’s true that consumers really don’t understand and don’t care about appraisal fees. That is because they don’t save a dime when the appraiser discounts their own services. That is what makes it pay to play and not a mere business decision regarding personal fee schedules.

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    • Avatar marion says:

      Watch how fast consumers understand and care about appraisal fees when, the appraiser does not get paid and files a mechanic’s lien against the property.

      But, our closing docs say the appraiser was paid $X and we have title insurance.

      Yup, you’ll quick find out how much they know and care.

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      • Baggins Baggins says:

        Soon if not already, the appraisers fee will be the last hard cost. Everything else is financed or somehow rolled in.

        Lien capability varies state by state. I think our fees should be able to be financed at this point, there is unreasonable permanent downward fee pressure on mortgage lending appraisers.

        Because lenders generally prohibit appraisal shopping, consumers are powerless to save a dollar. Otherwise they would care. And that care may be better balanced, some seeking quality, others seeking discount.

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  11. David Samnick on Facebook David Samnick on Facebook says:

    Of course they are.

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  12. Avatar Ralph says:

    Appraisers need to grow a backbone!! I won’t work for anything less than what VA pays in my state which is $525. The person who said the article makes it look like $350 is a typical fee is spot on! Those were 20 year ago fees. Any time an AMC calls me I quote them the VA minimum, they will pay when they are desperate, but I had some clown as Tri Mavin once tell me if we pay you that we don’t make any $$, not my problem I said you are making more than enough off the back of your other appraisers. Stand up for yourself and stop accepting 1999 fees!

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    • I like that as a personal MINIMUM fee guideline. We should be seeking more, but that’s certainly an acceptable non-complex fee in many areas (including mine). I tried to regularly get $650 on non-complex and simply cant do it (though I relatively routinely get $1,500-$3,500 for complex). $550 non-complex seems to be the sweet spot in my market area…but I always look for opportunities to press it.

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    • Avatar chris says:

      Same here !!! I never get any, but I don’t and won’t work for leeches anyway !

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Where Is the Invoice?

by Mark Skapinetz time to read: 5 min