‘Customary’ & ‘Reasonable’ Fees – Oxymorons

Customary & Reasonable Fees Exclusive Oxymorons

If WE don’t set ‘reasonable’ minimums for ourselves, then others will do it for us (or to us).

Fellow appraisers,

Please read this draft proposal for minimum national appraiser fees. I appreciate those who believe no one other than themselves should set fees, and I concur. Except, in the real world of today someone (lenders and AMCs) are ALREADY SETTING your fees. If not directly, then through ruinous less than customary OR reasonable fee competition.

I’m interested in your meaningful, constructive feedback as well as comment & discussion here.

For those that insist ONLY regional fees are practical, this same system works for the lowest to highest regions of America. Subtract 13% for low cost areas; add up to 9%+/- for higher cost areas.

Operating premises were:

  1. AMCs are here to stay. Liked or hated, they are part of the chain now.
  2. LENDERS want AMCs to offer one size fits all pricing. This MAY come close to doing so baring complex assignments. Even there, an inferred hourly equivalent is suggested.
  3. If WE don’t set “reasonable” minimums for ourselves, then others will do it for us (or to us).
  4. Framework allows for and includes inducements for trainees or less than certified appraisers-who have been largely excluded or ignored by AMCs in recent years.

In addition to posting here, PLEASE also email comments to JanBellas@appraisersguild.org.

We are going to start reaching out to state coalitions and other appraiser peers groups. We hope to incorporate helpful comments or views in that effort. In the meantime our parent union is already being contacted to see how we can best proceed.

Thank you for taking the time to read and respond.



Presently there is no single standard that affected parties can point to in order to determine what a ‘customary fee’ is, and what is a reasonable fee. In all fifty states plus affected territories, each regulatory agency is left to make (or carefully side step) this determination themselves. The single common factor that does exist is that studies to determine ‘C& R fees must NOT include those below market fees introduced by appraisal management companies in the early days of HVCC; and that continue to the present.

The more proactive states have established rules by which these can be calculated. Unfortunately such states are few, and even their allowable methodologies do not produce uniform results. Enforcement is also (apparently) lax until a lawsuit is brought. The current preferred method appears to be so called unbiased university studies which when impartially applied attempt to quantify non AMC fees for various types of property. Their downfall is that they have very little or no consideration given to the complexities that can be found among ALL property types.

Additionally, such studies have (so far) failed to adequately measure the spill over impact of half a dozen years of near universal ‘less than C&R’ fees in the marketplace by AMCs and GSEs, into non GSE work. They have effectively created a below market competitive environment based on consumers reasonable belief that an AMC appraisal should not be any different than a non AMC appraisal. Consumers have been exerting downward pressure as a result of anti-competitive AMC prices.

Lastly, there is the influence of less than impartial studies where funding is provided by the AMC Industry and its advocates. Universities that produce unfavorable results simply see themselves eliminated from future studies. Read more…

Michael Ford
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photo credit flickr - Oh-Berlin.com
Michael Ford

Michael Ford

Over 28 years appraising all property types and interests, in Southern California real estate. VP/Chairman National Appraiser Peer Review Committee, American Guild of Appraisers, #44OPEIU/AFL-CIO. - Michael Ford on e-AppraisersDirectory

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10 Responses

  1. Lynette Cook Jones on Facebook Lynette Cook Jones on Facebook says:

    Very interesting analysis!

  2. Avatar Dan Williams says:

    Outstanding work Mike!  While some of the numbers can obviously be debated, the premise that either private appraisers are underpaid or government appraisers are overpaid is conclusively proven, by any standard!  I hope your extensive efforts are somehow rewarded.  Best wishes, Dan Williams

  3. bubba jay / Retired Appraiser II bubba jay / Retired Appraiser II says:

    i totally agree with your fee figures Mike, and i think they are much more inline with what an appraiser fees should be. however, i still dont understand how a 1099 self-employed appraiser, can be told by anyone what their fees should be. if an appraisers fees are controlled by anyone outside of their control, they are no longer in business for themselves and they are now an employee.

    anyone who has a GS# is a federal employee are they not?

    APPRAISERS should be the only ones in control of their expenses/businesses. only an APPRAISER knows what his expenses are. an appraiser is either self-employed or they arent, and i dont think any business owner should be considered self-employed if they dont have full control of their own businesses. right now we are 1099 self-employed business owners with very little control of our businesses/expenses, and its WRONG, and we are losing people every day because of it.

    the bleeding continues . . . . .

  4. Retired Appraiser Retired Appraiser says:

    I agree with your fee projections as well Mike but those same projections are a pipe dream as long as appraiser’s refuse to boycott for fair fees. Which leads me back to my reason for leaving the business so I could earn those same fees elsewhere.

  5. Hi Bubba~RA II; & RA the First (RA-II) You misunderstand. You do NOT become a GS employee. I am only talking about comparability of compensation, or “parity”. The federal government tells people that they must pay vendors minimum fees or compensation all the time as a condition of doing business with the federal government.
    Some kinks remain to be worked out but the probability is to seek to have this (or very similar scale) adopted as a DEFAULT minimum C&R fee in any state that has no stipulated process for independent study of C&R fees. It simply would say IF you have not otherwise ‘proven’ specific fees are C&R, then THESE would be the default scale to be used.
    It might also be used to challenge state studies that appear to include or be influenced HVCC/AMC low fees.
    RA#1 ya old curmudgeon! Ya done went and got Bubba Jay to be an apprentice retiree! Sincerely hope it works out for him. As for boycott, I don’t think we need it. IF OPEIU was able to get AB 624 spiked in just a few weeks, I think THEIR parent union (AFL-CIO) should be able to get this favorably considered without resorting to traditional union job actions.
    Just like those that get laws and regulations quietly passed for their benefit; I think we can get something like this passed for the 80,000+ appraisers that are still left…not to mention the taxpayers who keep getting screwed by shoddy, unprofessional, discounted half-assed appraisal work (like the 1/4 million Countrywide/WAMU appraisals reviewed by FDIC).
    Give us a hand! Pass proposal along to appraiser friends and ask them to write Janbellas@appraisersguild.org and go on record as supporting the proposal. Thanks.
    SEPARATE ISSUE: Had a chance to speak by phone to blogger Wayne C out of Texas. What a pleasure, and what a true gentleman! I look forward to future communications.

  6. All above, please contact Janbellas@appraisersguild.org and let her know you support the proposal as a concept…even if we cant get you to join AGA yet. We will need to be able to go before our own parent union (either OPEIU or AFL-CIO) and demonstrate support or it will not get traction.

    Dan, you are right. Several assumptions can be argued with but bottom line is we are underpaid. The only question is to what degree. I think THAT is a very fair topic for future debate by all parties with vested interests. Excluding the less than three year end of the range, I see a final number falling somewhere in between $585 & $685 for NON COMPLEX. More for FHA.

    I also think it is a range that AMCs could embrace as long as they were put on cost plus basis by their lender clients. I spoke with one yesterday (trying to get them to mail the proposal to THEIR panelists; One never knows until one asks!).

  7. JH - Colorado JH - Colorado says:

    Quite the article there, interesting. Thank you.

  8. Avatar Bill Johnsom says:

    Putting aside what I think a fair fee should be, much of the issue as I see it revolves around people not understanding what we do. Does the borrower, processor, agents, or loan officer even understand what it takes to become an appraiser? Do they know in the state of CA you need a 4 year degree, 2.5 years of training, thousands of hours of documented reports, pass the trainee, residential, certified residential, hundreds of hours of continuing education, background checks, etc.? Do they know that in a state of almost 39 million people only 8,000+/- people have the license to complete an appraisal. I’m tired of being asked if I do this part time. In a city where I can pay rates of $75 per hour to my mechanic (cheap), and my kids baseball hitting coach, why are we challenged to get $20 an hour? When on a national average it takes only 70 hours to become a real estate agent and they get 5% commission in my area ($500,000 median = $25,000 commission) we need to educate the public.

  9. Avatar Mike says:

    Hey Mike,

    It looks as if you really put a lot of work into this post. The information that you have presented is an eye opener. As you know, I am from the old school and want to set my own fees. I believe that your proposal has a lot of merit as there are pitiful appraisers who do not have any idea what a reasonable fee is.  When a professional appraiser sees another appraiser accept an assignment for $350. for an silly AMC with a turn time in the 3-5 day range…just have to shake our head at the stupidity. I personally have grown tired of the battle…let those appraiser folks take and take that crap. Honestly, I refer many assignments to my fellow appraisers in the area. While they are on the treadmill doing AMC foolishness, the rest of us are busy with the best assignments. When interest rates increase (Gee…duh will that ever happen) these AMC type folks will starve. Just my silly opinion based on 35+ years of experience. Better start working on your plan “B”!


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‘Customary’ & ‘Reasonable’ Fees – Oxymorons

by Michael Ford time to read: 2 min