Paying Too Much For Appraisals?

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Paying Too Much For Appraisals?

Why am I paying more than TWICE the amount paid to the appraiser?

I was recently charged/paid $750.00 to have the appraisal completed on the home I was purchasing. With the fees and costs associated with obtaining a mortgage, the appraisal fee was one of little to no concern to me BUT then I received a copy of my appraisal. In accordance with local regulations, the appraiser disclosed the amount he was paid to do the appraisal… $275.00 minus a $15.00 technology fee. I thought to myself why am I paying more than TWICE the amount paid to the person who drove to my presumed residence, took photos, measured my home, and put together an electronic report that was delivered to me by my lender.

My concern is where has this excess amount gone? I called a local appraisal firm and asked the fee to have an appraisal completed on my residence. They responded with a fee of $450.00. I told him that I was charged $750.00 by my lender but the appraiser was paid $275.00. The appraiser explained to me that his fee was reasonable and customary for the area based on the information I provided. I pressed a little harder and he asked me to note the NAME in the LENDER/CLIENT section of the signature section of the appraisal. It read “***”. I never heard of them; however, my lender was noted below. The appraiser uncomfortably chuckled in his response “That’s where the rest of your hard earned money went”.

I inquired with my lender representative who stated “they would look into why the fee was so high”. This in itself was almost an admission of guilt. I wish I had more time to pursue the issue but a ton of personal family matters left my hands tied.

Beware buyers and note your appraisal fees for there is a large amount of what YOU are paying for an APPRAISAL being sent to someone else other than the actual APPRAISER.

Regards,

Concerned Consumer

By Concerned Consumer – author requested to remain anonymous – The author’s real name is known only to the AppraisersBlogs Team.

Image credit flickr - Ben Tsai
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36 Responses

  1. Chris says:

    This should be reported as a CRIME to the American people !!!

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    • Baggins Baggins says:

      Chris, just the facts brother, just the facts. Appraisers are the free market force which should define consumer charges for appraisal services. Amc’s are not a free market force, since they rely on appraisers to fulfill the amc service promises to the lender. Every appraiser in the industry should get better educated on the principals of free market behavior and the legal mechanisms which require that. As well as getting better educated regarding their own individual power to drive market forces. Reliance on tech and focus on efficiency continues to erode our free market positions. All these rating systems are an illusion, the only stats that matter is how many times an amc needed to shop individual orders to get them assigned, and how close their fee was compared to the VA fee. If the amc has to shop each order more than once, they’re guilty of restraining free market forces for personal gain, violating junk fee rules, and should be getting their lender employers into hot water by now.

      Sherman Antitrust Act

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  2. Diana N. says:

    It’s been happening for years since we had to work through AMC’s.  I wish more consumers would speak out about it. And shame on the appraiser that did the assignment for $275 and paid a $15.00 “tech” fee on top it that.  Over the years, I’ve found out the borrower paid a hefty sum for the appraisal that netted the appraiser $300-350.  I quote me fee to the AMC, if they want to pay it fine, if not, get some chooch who will work for peanuts.

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  3. Chris says:

    Core logic is the worse, do NOT work for them !!!

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  4. Jack Of All Trades says:

    All AMC’s need to be branded and exiled.

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  5. SDMike says:

    A few years ago, the son of the founder of ala mode software had started a website (don’t remember the name) that allowed appraisers to enter their fees and some commentary of the AMC who was involved.  It was a great perspective on what was going on in the industry.  I think he was trying to put together a list for lenders, in their decision process of which AMC to use.  The concept was only around for a little while and then fizzled.  Guess lenders weren’t interested since the borrower was the one paying the exorbitant fees, not the lender.  I’m sure the AMCs didn’t like it either.

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    • Retired Appraiser Retired Appraiser says:

      I gave them the idea for that site.  It ran into trouble because they wanted to churn a profit from the site.  It should have been offered to appraisers free of charge by Alamode, God only knows they make enough money from appraisers already.  At any rate, that’s why it fizzled.  Appraisers didn’t have enough money left in their pockets after HVCC to feed another leech.

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      • Baggins Baggins says:

        Clearly alamode chose advocating on behalf of lenders over appraisers. The appraiser base was dwindling, but the amc base was expanding. Enter plug ins, lender focused rating systems, and really nothing of benefit for appraisers at first. Something like 5 years later Alamode finally ‘allows’ appraisers to manage which companies are on their client lists. Still though, they certainly don’t have the tools necessary for quality lenders to make informed decisions. No checkbox indicating if an appraiser uses assistants or not, no statistical detail indicating which appraisers have more robust reports and detail, no clear disclosure for amc’s regarding over all fee splits. Mercury was the big play, they built it sold it, and profited from that. Alamode could have been a force for good, and incorporated Appraisal Advisor into the operational costs. But how to go against the whole lending community, and still retain their customer loyalty. That’s a tough sell indeed. It’s up to us, the individual appraisers, to all do our part to drive free markets where we need them to be. These corporations on all sides of the appraisal servicing industry have shown without a doubt that advocating for detailed traditional appraisers is absolutely over, no exceptions. The brave new world includes complete automation, and a future without humans involved in value checks and balances systems. But hey, that’s a future I will not accept, and people like me and you keep this market open to manually orientated independents, at least for now.

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    • B says:

      CoreLogic now owns that little bitty company they bought Mercury Network and are raising their fees and going to the bid system of giving out orders

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  6. Now we have a state Agency to lame for the screwed up appraisal field. Thank, the US Congress Dodd-Frank.

    All you crybabbies ought to grow a pair and just say NO!

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  7. tomm says:

    Please remove senders photo and name.
    confidential

    This trying to cut the appraisers fees is done in every section of the appraisal business.  I do not work for AMC”s and cannot reduce my fees to their level.  I work for attorneys and many of them feel that it is their obligation to haggle for a fee reduction.  The attorneys who have a tendency to haggle for their client get higher bids of 15%-20% higher to do the work.  When they start haggling I might cut the fee 10% but I am still 5%-10% higher than the fee I wanted.  When I send them the bill they could show the client I gave a discount as I mark on the bill Courtesy Discount -10%.  The attorney is happy and calls me again, the client is happy as they received a discount and many times I will hear from the client or they recommend me to a friend or family member who needs an appraiser, this also helps the brokerage side of my business pick-up listings.

    Sometimes a new attorney-client really starts to hammer me on the fees and at that point, I will ask them what is their hourly fee, it is usually $400 per hour or up, and they are haggling with me for 15 minutes of billable time,  I will point out that negotiating for a $50 discount just cost the client $100 in attorneys fees.  I let it sink in, then I ask them for the client’s phone number to set-up an appointment, check and mate.

    Be creative make sure everyone is happy at the end of the day.

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    • Baggins - Fire the amc negotiators! Baggins - Fire the amc negotiators! says:

      Tom I love this model, very inspiring. But is there any way to run that in mortgage lending and not have to deal with attorneys? LOL!  Can you run an amc please? I’d love it if you applied those principals to appraisal management and negotiating with lenders. Amc’s apparently have some of the most god awful negotiators on the planet, their ‘partner appraisers’ never get a good deal! Ha!

      Funny story, I tell amc’s ‘if you’re not getting a good deal, fire your negotiator’. Even funnier is that the higher level person I say that to, is probably the one who negotiated the deals with lenders! ROFLROFL. I’m telling the guy who botched the negotiation he should have checked the market first, but he just does not understand what I’m talking about. You can’t make this up I swear to god.  If amc’s can not advocate for appraisers, they should step aside because many of us are master negotiators in the first place.  It takes a master of sales to successfully judge the other salesmens positions. If appraisers can’t negotiate with an amc, there is no hope for them and they should step aside as well.

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  8. Retired Appraiser Retired Appraiser says:

    I would advise consumers who pretend to be bothered with excessive appraisal fees to read the recent article named: Bend Over And Ask For More”.  In short, appraisers don’t have the balls to say no to AMCs and they don’t have the intelligence to boycott AMC orders.  Case closed.  Appraisers are being reamed (because they appear to love it) and consumers are merely the collateral damage from this abuse.

    Actually consumers could boycott banks that use AMCs just as appraisers could, BUT…they are just as lazy as appraisers.

    Be sure to thank the banking lobby and Andrew Cuomo the next time you pay $750 for an appraisal.

    I didn’t retire…I ran like L from this pathetic industry

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    • Baggins Baggins says:

      But it’s not that simple Mr Retired. My credit union, clearly offering superior rates and terms, they use street links. Imagine my shock when I pursued an in house 15 successfully, but had to deal with a SL appraiser to acquire that.  Wow!  So I had to take off appraiser hat, put on smart consumer hat, and somehow get through it. At least he got 375, my fee was 550. Although I put up the resistance front very firmly, days of stalling out asking for appraiser fee disclosure ahead of time simply did not happen. The CU was willing to let me go as a customer, rather than answer my detailed questions about appraiser billing distribution. Confirming my opinion the consumer is powerless to effect the market for appraiser service fees. And confirming my opinion the appraiser themselves are the primary free market force for valuation service fees.

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    • Gary Tang, CCIM, LEED Ap says:

      Mr. Retired Appraiser, I know many appraisers do not work for AMC. When the AMC contacted me, I got my regular fee. They all started with $250, but ended up paying over $500.

      My way or the highway when they need me.

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  9. derek says:

    please remind me to stop reading these articles, that the author wants to remain anonymous says it all; whatever outcry falls on deaf ears- many consumers/borrowers, especially first timers, go through the lending process like deer in headlights, and getting jerked around from all angles- I don’t understand why state boards don’t enact real life reasonable fees for any lender/amc doing business in their state, like Virginia for one

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    • The author contacted us via Facebook last week and requested that we do not disclose any personal info:

      I’ve been following your blog for quite a while as a consumer; however, I recently purchased a home and the appraisal fee was a major concern to me. I’ve prepared an article that I would like to share with the proper entity regarding the appraisal fee charged to me and the fee paid to the appraiser. I wish to remain anonymous and not disclose any personal info including the lender/client (obviously you can see my name but I request you keep it private). If you are interested, please let me know.

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    • Baggins Baggins says:

      Derek;  Why state boards do not purse action against amc’s;

      1. The lender and/or amc can easily bury them in paperwork and litigation costs, draining the AG’s budget.
      2. The amc’s are legitimized by their company licensing, but no individual person is accountable under this group licensing structure.
      3. The appraisers are their own worst enemy and perpetuate the cycle of expanding amc service models.

      The appraisers are the free market force that has allowed what is likely a billion dollars which would otherwise have gone to appraisers, and allowed over half of that to go to amc’s instead. What’s 50% of 3/4’s of all deals moving through the lending pipeline over 10 years, for 100k appraisers? That’s how much money has built up the amc structure. Each individual appraisers choice to allow restrained market engagements is both the cause and effect. The government can not save us from ourselves. Typical amc service costs range from 50 to 150 dollars per order. I don’t feel bad for consumers getting loans though, if they knew how dangerous it is to be in debt, they’d only refinance to better rate and shorter time terms. Consumers are going cash out and up rate, and they’re their own worst enemies. Lenders are merely giving them what they asked for; risky financial positions. These lenders run the fed, the fed is a private consortium of these same lenders. We don’t actually own our homes, until the final mortgage bill is paid and the title is in our hands. I tell consumers not to worry about these issues like amc’s. The consumer is not the free market force for amc billing, the appraiser is. In the bigger picture, consumers need to pay better attention to in house servicing or not, best rates by the sliver, terms of repayment, mers, clouded title, etc. Surely enough challenges that a few hundred on the appraisal does not matter. In CO, many appraisers charge the full 750, or slightly below that. Funny how amc’s use price increases in one location to pump prices to lenders nationally, but don’t pass that to appraisers nationally. Another clear example of a restrained market setting.

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      • Baggins-My friend, respectfully you are incorrect regarding no one being responsible under AMC state licensing structure. Each state has a managing or corporate officer that is responsible. In many cases two are listed. Now in the huge ones like CoreLogic it may be nothing more than the law firm or an in house attorney, but someone is held accountable for performance.

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        • Baggins Baggins says:

          Having tried to contact those persons, I’ve found the numbers redirect or some senior person handles that instead.  Only with a rare few have I observed the noted licensed individual as being the man in charge so to speak.  Some have dico’d numbers and it appears the data is not continually validated as current by the state.  But anyways, no, the chief guy is too far up there to justify penalties when the jr guys do something cheap like lie through their teeth, hang up the phone on you, or something ameture like turn in the wrong report, alter data, abuse assignment system privileges, call you relentlessly like a telemarketer, etc.  Individual licensing is lacking, it’s illogical to presume the ethics of one qualified person extend all the way down the ladder.  The one qualified person completes a tiny portion of the required duties, their licensing is basically irrelevant to the company at large.  I wonder how many of those ancillary workers could pass similar background tests.  My crystal ball is glowing, the amc industry will shed half of it’s employees overnight if they were required to be individually licensed.

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    • Baggins Baggins says:

      Derek, the Jefferson quote that lenders are more dangerous than standing armies is one mighty consideration with detailed substance behind it.  Know your history, or be condemned to repeat it.

      Thomas Jefferson to John Taylor, 28 May 1816

      that the mass of the citizens is the safest depository of their own rights, & especially that the evils flowing from the duperies of the people are less injurious than those from the egoism of their agents, I am a friend to that composition of government which has in it the most of this ingredient. And I sincerely believe with you, that banking establishments are more dangerous than standing armies; & that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale

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  10. Tom Molinari says:

    There is one solution to this mess. Don’t accept ridiculously low AMC fees. If everyone lived by that rule then fees would increase to meet the market.

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    • Baggins Baggins says:

      Also, audit them. Audit the fed, audit the amc’s. Simple amc auditing for C&R compliance in both fee distribution and scope of work demands would put an end to all of this. Another reason why lenders lobbied so fiercely to have the new HUD1 consumer disclosure form NOT include an individual line item for amc service billing. Appraisal management and appraiser valuation services are two distinctly different services and their co mingled disclosure on HUD1 forms continues to defy logic. The SOW request to not disclose your fee to consumers is an unethical request. States like CO have rules that appraisers must at least disclose their fees within reports, if the order is sourced from an amc. Still though, one step but not two.  Without an audit to back that up, the rule is merely window dressing with no substance. If appraisers want corrections and want them now, they need merely call for auditing C&R compliance with specific approach rules that safe harbor rules will not apply and the RegZ rules will be interpreted literally. What say you?

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  11. Wow! That’s criminal! I will certainly remember this post when my son begins looking for a home.

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  12. Baggins Baggins says:

    It’s sad, but most mortgage people are simply hands off when it comes to appraisal assignment methods their company uses. The best focus for borrowers is cash equivalency over term, and trying if possible to be at 80% ltv or less to rake in a 15 while the rates are still acceptably low. The article is sort of misleading, because if the appraisal industry was not held down by external influence, the standard appraisal fee would easily be 750 or more by now. The 400 or so standard fee scale hails from 15 years ago when appraisers had a third of the requirements. As long as your son does not choose to be an appraiser, he’ll probably make out o.k.

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  13. Ralph says:

    That’s what AMC’s charge to click SEND!  (or as they prefer to call it, Quality Control)

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  14. Gary Tang, CCIM, LEED Ap says:

    I feel sorry for the appraiser. We were paid $250 in 1986, and we paid about $30/mo. for data, our type writer, and our car. No E&O, no software renewal, no middle man, and no smart phone.

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  15. I would love to be able to contact the party involved and to have the name of the AMC and lender (origination or correspondent  lender-not so much the funding lender).

    I would be more than willing to work with the home owner to file a complaint with the proper authorities. Most likely CFPB, but it could be one of the GSE regulators. At a bare minimum the States Real Estate Board regarding the misleading disclosure, and the AMC participation in the fraud.

    It also makes me wonder how much of the fee went for the kickback to the lenders AMC selection manageror staff?

    Even among bad AMCs a 275 cut MINUS upload fees on a 650 gross fee is horribly egregious! $375 to the AMC (plus the upload fee) is outright fraud against the borrower. One could make an argument that some surplus above the actual fee in the TRID might be reasonable for normal admin or review related to an appraisal but more than half the fee?! I contend that at 50%+ a “Lenders Administrative Management or AMC fee is the correct charge that should be listed in the TRID-NOT an appraisal fee.

    Come on  folks. Where is the sense of outrage on behalf of the consumer?

    AB please feel free to give my phone number direct. Heck she can call me on her own if she reads this. (714) 366 9404 . Background is at http://www.mfford.com or she can click the AGA link tied to my name in the post.

     

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    • Baggins Baggins says:

      As a consumer of mortgage services a few years ago, I can tell you the consumer is often unable to effect this.  Even knowing my CU used SL amc, I was unable to demand any standards like minimum fee, alternate assignment, etc.  I offered more money to assure C&R to appraiser but was denied.  I quizzed about appraisers fee but was unable to learn that until I met the appraiser himself.  I like your line of reasoning though.  What gets me is many of the amc’s operate efficiently on a cost plus model, standard fees ranging from 60 to 150 based on my steady amc runs several years ago.  Defining if the amc has fixed cost vs variable rake is what defines the friendly amc’s from the dangerous ones whom play appraisers against each other.

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      • Concur.

        I truly would not mind paying 10% of any of the fees I charge to not have to do my own marketing;. To have a competent second look at my work so I don’t accidentally embarrass myself professionally wouldn’t offend me.

        USPAP recognizes perfection is not attainable or expected-despite nationwide state regulatory agencies ‘gotcha’ leanings. AMCs that operate ethically could have been a benefit to the profession and the overall industry.

        Sadly, they are not in the majority.

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        • Baggins Baggins says:

          The amc’s who operate in a fair and ethical manner are often at a disadvantage to the one’s w/ variable fees who pad expenses and income at the expense of others. I know of only a handful of amc’s w/ fixed fees but they are typically better to work with. At least one of them have already gone under and others lost clients to the sharks. Not withstanding though, hardly any of them pay consistent C&R compared to lender direct as a standard principal that I’m aware of. How could they when the value added service sales approach was only acceptable when placed on the appraisers back. I’ve given up on amc engagement so long as direct is available. At this point several years later most have the ‘advanced’ review tools available so the little proprietary we got more services jig is up. It’s like a flashback to old fashioned appraiser office games, they’re borrowing and copying data, poaching customers and relying on others data bases. One might almost guess they have no practical experience in actual normal residential scale appraisers offices, to run straight back to mistakes from the past.

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Paying Too Much For Appraisals?

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