PADS – Appraisers Running for Exits
We urge appraisers to review the PADS Model
Current economic trends suggest your appraisal practice will not survive beyond 2015.
Appraisers are running for the exits, with many moving into Ad Valorem, and some into cost estimating. Client accounts you thought were safe have been converted to ether and dispersed among a dark refinancing void.
You’ve gone from completing six appraisals per week to camping by your email, in hopes of an AMC broadcast assignment appearing. Where you once had time to think about accepting the assignment, you now have less than 2 seconds to accept, because like you, ninety five other appraisers are competing for the same assignment in this down period.
Before you can click on the email, the assignment has been snatched by an appraiser using a faster connection, and quick-draw keyboard. By the time you acknowledge that an email has arrived, the assignment has already been accepted, and the accepting appraiser is on his way back from looking at the property. OK, well maybe not on his way back, but you get the point.
Competition for AMC assignments can also be linked to a frantic act of survival, as the two largest title companies have trimmed, reduced, sold and restructured their AMC models.
Where you once had opportunity across several AMC lines, your chances have been reduced, due to economic restructuring. One mega title giant has their AMC up for sale, while its competing mega player has consolidated its assets.
The rules remain the same
The man holds you down, and at no point will you feel a sense of stability. Basically you will continue to eat it on every assignment.
Representative Maxine Waters of California is proposing change for Fannie Mae. FHFA Director Mel Watt is said to have an opinion on the Fannie Mae issue and you may have heard of the Crapo-Johnson proposal. Based on these proposals and ideas, Fannie Mae will be on the table in early 2015.
You don’t really think changes to Fannie Mae are going to help the appraiser do you?
What if appraisers had a plan? What if we had a model that worked with the winding down plans for Fannie Mae?
The National Blind Order System was developed in 2000. The system maintains the Professional Appraisal Delivery System (PADS). The model is the appraiser’s best hope of moving forward in this volatile industry.
When fully implemented the PADS model joins hands with the Appraisal Foundation, and ASC forming a triad operated and maintained by appraisers for appraisers.
The AMC Model has failed consumers
At no point does one AMC have full coverage of the United States. Mortgage lenders are forced into a box of varied results from these title company organizations.
The AMC business model was injected into an appraisal fee structure that had not seen a fee increase in forty years. The intrusive AMC model strips the profit portion from an appraisal fee, having been strained, due to an already complex “Hard-Cost” designation.
The PADS model allows the appraisal fee to finance into a given loan product. The ball and chain of the Hard-Cost designation will end. This action brings immediate relief to home owners, and propels an industry from the dark ages.
The aggressive AMC model claims 50-60% of an appraisal fee, paid by the consumer. Those appraisers working with AMC’s understand the AMC is but a collection agency, maintained by minimum wage workers, with an agenda.
The agenda centers on maximum profits, with an underlying Trojan Horse of control. Such action leaves an appraiser in a dark box being controlled by a business model that sees the appraiser as someone in the way, rather than a partner. The AMC calls you a partner however a partner generally shares in the process.
An appraiser’s signature feeds the families of everyone working at an AMC. People with insurance, vacation and sick time – while most appraisers don’t have health insurance. No health insurance because half of the appraisal fee has been seized by the AMC model.
The puzzle pieces are present and we need two mega title companies to cut the chains holding appraisers down. They made billions. They should release the hostages and move on.
An appraisal isn’t a commodity
Appraisals aren’t commodity to be bargained for with discounted dollars. If it were a commodity your individual business would be allowed to compete, in an open market where commodity abound.
The appraiser can’t directly sell an appraisal to any of the too-big-to-fail banks, and that defines the apparatus not allowing your business to compete. If the process is to aspire to this non commodity status, where the appraiser can’t communicate – the consumer deserves the PADS.
The current appraisal ordering and management systems in the U.S. have failed the consumer. At this point it’s the wild west with appraisal software companies believing somehow it’s their right to educate real estate appraisers. Yes a software guy that couldn’t carry your HP 12-C has more lobbying power in Washington D.C. than you.
Do software companies aim realtors in desired directions, or does the NAR aim the software company? Just another example of how a represented group functions, as compared to the delusional façade of representation for the real estate appraiser.
Name one instance where the National Association of Independent Fee Appraisers or Appraisal Institute stood up against the NAR. You will not find a single instance of that event, and it further proves the point of appraisers being left in the cold – while the industry parades a false façade of representation. The PADS model solves this problem.
What you can do
We urge appraisers to review the PADS Model, and read through the pages of the website to see how it works. We also urge you to talk with your Congressional Representative about the PADS model and how it can link to proposals for change at Fannie Mae.
We build models and have no desire to have you join anything. There is no need to be organized. The PADS model deems you organized by virtue of your good standing within the ASC system.
Do you want to continue crawling like a baby? Or do you want to stand like a man, in control of your appraisal practice, providing for your family?
Without allowed change for the real estate appraiser, the valuation industry will emulate “an eerie trumpet call over a lost battlefield” Hunter S Thompson.
· PADS forms triad with Foundation and ASC (appraisers come home)
· System liberates 70,000 U.S. small businesses
· Appraisal fee finances into loan product. (consumer relief)
· 100% U.S. Coverage (relief for banks and consumers)
· No war on women (men and women appraisers equal)
· The system provides an answer to copyright disputes.
· System AVM’s will be maintained and appraisers will collect
Appraiser to provide two additional comparables bracketing the articles opinion.
The following are (current) examples of why a Triad between the Foundation, PADS and ASC matters. Read the headline and think of reasons why the condition shouldn’t matter. The sales pitch emails were sent to thousands of appraisers around the country.
1. Industry Affirms Direction (insert software name here) is Taking Appraisers. 04/08/2014
This headline is yet another example of what’s wrong with the appraisal industry. Where exactly does an IT guy get off taking appraisers anywhere? Hey, we appreciate your hard work on the software however you need to stand down Sir. You have no right to guide the industry. Direction of an industry shouldn’t be left up to a software guy, but there again it goes to show that he has more pull than you, when it comes to direction and flight of an industry. He should go ahead and give himself an award too, because an appraisers opposition can’t be heard from his/her darkened box of existence, and they all know it.
2. Become a Verified Appraiser. 04/16/2014
Yes, for $99 each year you too can be a “Verified Appraiser”. The verification is a business card inside a plastic cover, and everyone you come into contact with is relieved that you in fact have been “Verified”. How much more would it cost to be Martinized? This is a prime example of someone inventing rules and regulation fantasies that mean nothing – and the basis of the plan hinges on getting in your pocket. If you want to be verified, or check verification please feel free to utilize the ASC website. Have you ever thought of how much regulation and restrictions have been placed on appraisers because a business model required getting in your pocket?
If you want to take control, embrace the PADS concept.
By Joe Foster, Director of National Blind Order System, i…@blindorder.net
- Greed Takeover Coming Soon - July 18, 2016
- Why Would You Jeopardize Everything? - June 1, 2016
- Observations of a Review Appraiser - April 21, 2016
The ‘Pads Model’ and blind order is just one more (ok TWO more)useless parasitic grabs for my wallet. BTW-I do not need to pay you $99 a year to verify who I am. My state real estate appraisal board has already done that, when it renewed my certification!
Your scenario re fast grab orders is so out of date, I can only assume your business model is also.
BTW who the HELL are you to decide I should ‘finance’ my appraisal fee in the loan? If that is your solution, then you can also finance YOUR fee into the loans. Perhaps YOU should read USPAP and adhere to it! (HINT; read up on contingent fees!).
That’s the worst idea I have ever heard. Idiots. Just make the lenders and the AMCs responsible for the appraisals they accept. Game over.
It’s a great idea:
IF it were implemented on a nationwide scale by the government
IF it was a free service to appraisers (which it cannot be because a portion of state fees already goes towards listing appraisers in a national registry)
IF they would ship can the AMC extortion model at the same time.
Great in theory but another money grab in reality.
“Great in theory but another money grab in reality”
Yea, that’s why it’s the worst idea I have ever heard.
LIke I said, make the AMCs and lenders responsible for the appraisals they accept and things would change literally overnight. It’s so simple.
The “sky is falling” scenarios the author highlights are very old news, mixed with the downright foolish.
Anyone know of ONE appraiser that moved “into ad valorem” (“At Value” sure sounds like appraising to me); or cost accounting?
“Quick draw” assignments are less frequent now, as are ‘blast’ assignments, because even the AMCs have learned most of the good appraisers simply wont play that game. Period. They harm their own interests by using that style.
Any that used to do 6 a week are not now doing only 2 or 3 [assuming only 8 hour days] purely due to AMCs. The UAD format, and 1004MC have also slowed the process horribly.
ANYTHING that Maxine Waters says is either (1) a lie, or (2) ignorant or (3) intended to help the banking industry. Remember it was she that browbeat the hell out of Bush’s representative back when he tried to WARN them that risky lending was getting out of hand two years before the collapse.
The ONLY way Waters ever got to Congress in the first place was by taking advantage of racial tensions then running strong in South L.A. in the first place, after the 1990’s O.J. verdict riots.
Citing her as anything but pure evil is deceptive. Using the same rhetoric SHE would use (“The Man holds you down.”) is a complete turn off to me.
I don’t care that FNMA is going to fold. It will be replaced by something else-probably a purely privately owned enterprise since bankers KNOW they need to keep lending and properly run, there are huge profits to be made.
The ONL fear I have on the residential 1-4 side is that these same idiots that created 2% neg-am ARMS will raise the spurious argument that AVMs give a ‘close enough’ value in relation to risk so that they can be used in lieu of appraisals. THAT canard has been around for 20 years, but has gained ground in the last five years. It is the EXACT same underlying mentality that allowed bad appraisals to be ignored by so many. After all, what were the chances that a bad appraisal would actually be tied to a defaulted loan? Next to negligible, right Countrywide and WAMU?
FNMA will not fold; it will however undergo an overhaul. The media only encourages this kill FNMA speil because Congress wants it out there. Why? Keep in mind that Congress is allowed to engage in insider trading and it’s legal for them to do so. This is the only group in America that is allowed to do so. Their kill FNMA jibberish holds the price down below $5 so they can scoop up shares. Once they are ready they (and the hedge funds that keep them in office) will switch the story to overhaul FNMA. At that point shares will soar to $40+. You can count on it to happen within the next 1-2 years. The wise appraiser would have understood this and scooped up shares while they were below $2.
With many other service fees being successfully rolled into the loan packages (soft costs), it’s only obvious that the appraisal fee experiences much more downward pressure, because it’s not able to be financed in (hard costs). Nothing wrong with appraisers being able to enjoy the same fee competition climate that others do. It’s a hard cost soft cost issue and it’s nothing to get upset over. A wise mortgage lending consumer pays cash out of pocket for all of those fees, instead of paying a much heftier cash equivalent fee after 30 years of amortization. That’s not the world we live in, for the most common lending scenarios. Various appraisers have looked into these issues, and state that appraiser fees should be around $700+ currently for average orders, if we were to enjoy the same comparative earnings latitude to brokers, as we did 20 years ago. That is the direct result of the appraisal fee being held in the hard cost category, while other representative service fees have not. Plus if it was financed in, the amc middle men would not be able to control fees the same way, and dip into the cookie jar like they do currently. / I’m still making it in this business, and I never work with companies that participate in broadcast ordering methods, or playing appraisers fees against each other. So corny. How could appraisers continue on if they build their business around a question mark? Demand more. Get more.
Baggins, if you ‘roll’ the appraisal fee into the mortgage it assumes the mortgage has to fund and escrow close before I get paid. That makes it a contingent fee which is prohibited.
I repeat, this whole concept is NOT designed with ‘benefits’ to the appraiser in mind. Who pays me if the deal does NOT close? If such a source is available, then let them pay ME up front, and THEY can wait for escrow to close for their reimbursement.