Usual & Customary? According to Who?

Try this method of “price fixing” in any other business and see what happens!

The “marketplace” usually sets what is considered “customary and reasonable”. Imagine asking attorneys to base their fees on what some government official (who knows nothing about their business) decides is “customary and reasonable”. It would NEVER EVER work, and should not be part of the appraisal (or any other) industry. It’s absolutely price-fixing which I always thought was illegal.

The HVCC started all this focus on the appraisal industry and everybody is so busy trying to remake the appraisal industry, the banking industry quietly slips away, paying their billions in fines (for the problems that were discovered) and are still counting their billions in profits quietly behind the board room.

The appraisal industry did not need the change, especially not to be singled out. The whole idea of a “customary and reasonable” discussion now just adds insult to injury. Who is qualified to determine how much money any profession gets paid?

Usual & CustomaryThink about that. Who gets to decide how much we should pay for things like attorney fees, home inspections, bank loan fees, pest inspections, insurance rates, etc. etc.? How the whole idea of someone outside the appraisal industry telling an appraiser how much they can charge is crazy.

If I work for twenty years and become a specialist in one unique market, do I have to work for the fee some bureaucrat sets? Does experience and quality have no bearing on how much we get paid anymore? This is not some computer software, appraisal takes skill. It is an “art” and should be compensated as such.

Try getting an appraisal license and then see what you think is a fair fee. Unless you know the process, you are not qualified to judge anything and have no clue what is a fair fee.

Appraisals are the last defense against mortgage fraud and overpricing in the real estate industry. Consumers deserve quality when participating in what is for many, the largest financial transaction of their lives. The only reason this discussion is going on is because banks want to profit from the appraisal process. This is all about taking money away from the appraiser and giving it to an appraisal management company; who needs little training, who accepts little risk, and adds no value at all to the consumer. This is about money, pure and simple. A professional appraiser protects the public, and quality (as defined by the appraisal industry, not an AMC who only cares about fast and cheap), should be at the top of the importance list. This massive smoke screen over “turn times” and lower appraisal fees is doing zero to help the home buying public. Appraisal Management Companies (who do not have to disclose what they get paid, although everyone else in the home buying process is required too) came into dominance overnight thanks to Andrew Cuomo. I vote they go out of existence just as fast as they came in. Take them out of the appraisal industry and let appraisers get back to protecting consumers instead of playing games with knit picking appraisal management companies trying to find anything to make them look like they are adding some benefit to the process; they are not.

Give the appraisal industry back to appraisers, before it’s too late! Customary and reasonable cannot be achieved and is downright un-American! It’s also a waste of time. Let the appraisal industry work on doing better appraisals, and let’s look at getting better information from Realtors®. Then we may see the improvement we all want and need. “Reform” needs to look at the real estate and banking industries and get off the appraisal bandwagon.

By Hamp Thomas
~ Source Institute of Housing Technologies

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9 Responses

  1. Retired Appraiser Retired Appraiser says:

    Excellent observation Mr. Thomas! Mr. Thomas is one of the few people who figured this out years ago; in fact he wrote an entire book on the subject of appraisers getting screwed.

    The fact that appraisers are given the task of valuing most people’s largest asset, yet they can’t even place a fair value on their own time. ~ That simple fact should go down as the biggest joke of the century.

    I recommend that every residential appraiser who remains in business (you know, the new guys) read the book that Mr. Thomas has written on the subject. I also challenge you to grow a set and boycott every AMC order on the 5th anniversary of HVCC (May 1st). Who knows, perhaps your wife and kids will stop laughing at you behind your backs if you step up and fight for your beloved “profession”.

  2. Avatar gt says:

    Just a thought.

    April 1 is coming up and is has been 3 years since us appraiser’s were to be paid “Customary and Reasonable fees”. How about on April 1, 2014. All the appraisers start quoting the same fees we were charging prior to HVCC. This would send a message to the AMC and to the regulators.

    Tell a fellow appraiser. We have no more to loss.

  3. Avatar Appraisermorons says:

    Things have changed in this job. I was tempted to call it a profession but it’s not a profession anymore. Adapt or die. The cheapest and fastest is the new norm. The newbies are making more money than they did sharing fees. Get out while you can before you lose everything. All these moron appraisers telling everyone to boycott AMCs is a joke. Never going to happen. Sell your house and move into a one bedroom apartment if you want to continue to be an idiot thinking that things are going to change. The banks are in control and always will be. You have no chance.

  4. Baggins Baggins says:

    There is a distant parallel to big ag, with these issues. Control the price, eliminate the small scale suppliers, then supplant the large scale suppliers. The appraisal profession is under attack, because once we are gone, the lender can control both price and value at once. Eventually they’ll eliminate the salespersons as well. There will be no checks left, in the checks and balances system. Appraisers are being phased out, to pave the way for a brave new market where all burden of responsibility falls on the consumer, regardless of the behavior of the lender or sales persons.

  5. Avatar Benji says:

    The “Profession” needed change. It needed Independence. Only an enslaved mentality would call it an Industry. Independent Appraisers are doing fine. At least I am. I use my Independence to the fullest. Unfortunately, the enslaved mentality won’t get far and they are a detriment to the “Profession.”

    The change didn’t come with the HVCC. It came with Independent Appraisers in late 1998 and in 1999. It took 8.5 years to create the entire HVCC Document and White Paper. The HVCC was something that came about as being part of the beginning; it was a document timed and it went public months before the collapse “on purpose.” The HVCC got the Professionals talking, as well as, Skippies and those Appraisers that came to the party late.

    If Appraisers properly knew the history they may get some where. Just Sayin’

  6. We being a non-national AMC we are appraisers and we pay full fees to our panel. We don’t nickel and dime the appraisers and our clients appreciate our ability to take care of them and our appraisers in order to get a quality appraisal within a reasonable time. We do, however still deal with difficult LOs that think it is still the old days but for the most part they appreciate us and our overall structure.

    When you talk with a national AMC you generally are getting someone who may have never seen a 1004 let alone know what one is. I know someone who worked in compliance for an AMC and didn’t know anything about an appraisal, just how to order one for the cheapest and quickest they could find to make the company as much money as possible and hose the appraiser in the process.

    National AMCs are ruining the appraisal business and what appraisers work for. If they paid good fees and gave some respect to appraisers it would be one thing, however that is not the case anymore and they are going to end up getting their clients and appraiser panel into trouble.

  7. Avatar Paul Lander says:

    “Usual and customary” fees were mandated so that the newly established AMC’s would be guaranteed a profit so that many of these new corporations would form and thrive. Of course no politician or bureaucrat was concerned that the guaranteed profit for AMC’s was taking money out of the appraisers pocket and that many of the best appraisers would leave the industry. The neophyte appraisers living in mommy and daddy’s basement would take any fee offered by the AMC’s. Appraisers are currently powerless.

  8. bubba jay bubba jay says:

    the ONLY way we will ever get reasonable and customary fees is if WE, submit an invoice for the work have done! THATS IT. a quoted or billed fee should never come from anyone else. we should be able to bill for the work we have been asked to do. the fee we will be paid for our appraisal should never come from an AMC or anyone else for that matter.

    secondly, if an AMC wants paid for their work, then so be it. BUT, their fee should NEVER come out of someone elses pocket, including ours. the AMC should be a line item cost similar to title work, termite inspection, whatever. they are another service, let them bill the consumer for their service.

    reasonable and customary fees for us are a total farse and will never happen, as long as an AMC or a bank is in control of our fees, and their profit is tied into what we are paid.

    keep adding work to my report, i dont care, but i expect to be paid for it. our fees have not gone up in 10 years, but the workload certainly has. a step in the right direction to save this profession and keep good appraisers, is to pay them appropriately based on the work that is asked of them, and their exposure to liability, both which are very high right now.

    until at least this happens, you will continue to lose more and more people.


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Usual & Customary? According to Who?

by AppraisersBlogs time to read: 3 min