Appraiser’s Response to LRES Order Blast
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LRES Standard Interior Appraisal Request?
Your special requirements and micromanagement of the appraisal process dictate that I charge a fee commensurate with the additional, but typically unnecessary work needed to produce credible results.
You are the potential client (agent), so that that is your prerogative and it would be my pleasure to accommodate you as long as appropriate compensation is provided.
Respectfully, there is little about your appraisal request that is “standard”. Please explain briefly what you consider to be a ‘standard interior appraisal’. That definition does not appear in The Appraisal Institute’s Dictionary of Real Estate Appraisal.
To be clear, you are requiring that TWO written reports be provided to you. One in an ENV format and the other in XML format.
I find a fee of not less than $1,500 to be required for all of your extra requirements, and multiple report formats. A turn time of 10 to 15 days is needed. Ten working days excluding weekends, or fifteen calendar days, assuming there are no unusual problems.
Additionally, you as the lender’s agent need to provide a preliminary policy of title insurance or a copy of any existing policies so that I can verify any underlying issues that could or would affect the fee interest. You have indicated that the appraisal is intended to be used for mortgage financing purposes but you have not indicated whether this is a refinance or purchase transaction. Your own guidelines as well as USPAP require that an analysis of any contract be performed.
Lastly, I note that your order form addresses multiple property types. I assume it is boilerplate. Please advise which sections of your order apply and which sections do NOT apply so as to avoid any possible confusion.
For orders with fees in excess of a $1,000 I require remittance of 50% in advance prior to starting the assignment. You may make the deposit via ACH or by mail. No appointment will be scheduled until payment is received and cleared. Cancellation less than 24 hours prior to the appointment will result in forfeiture of the retainer. Cancellation prior to that time will be entitled to a full refund less any costs incurred by the appraiser which include research time billed at $75.00 per hour.
Please confirm if these arrangements are acceptable to you. I look forward to working with you on your request. Thank you.
From: LRES employee name redacted per LRES request *** [mailto:…@lrescorp.com]
Sent: Thursday, July 21, 2016 12:46 PM
Subject: Standard Interior Appraisal Request- Redacted property address
Redacted property address
We have an appraisal request for the property above that we need completed. If this is something you are interested in, please provide us with your fee and fasted turnaround time.
REQUIREMENTS: (Please read before proceeding)
UAD COMPLIANCE REQUIRED
REPORT IS TO BE SUBMITTED IN BOTH ENV AND XML FORMATS
- Purpose – Mortgage Transaction
- Intended Use – The intended use is to evaluate the property that is the subject of this appraisal for a mortgage finance transaction, subject to the stated scope of work, purpose of the appraisal, reporting requirements of this appraisal report form, and definition of market value.
- Intended Users: Lender/Client (Conventional) and PennyMac Consumer Direct
ATTENTION COLORADO APPRAISERS:
The following (4) Colorado counties have been designated by FEMA as eligible disaster areas:
- Clear Creek
- El Paso
Due to this new designation, you are required to:
- indicate whether the property has been adversely affected by the disaster; and,
- include information on the impact of the disaster in the subject’s immediate neighborhood; and,
- note if the effects of the disaster is having a negative impact on marketing times and/or values within the subject’s market area
- **Appraiser to include Tax Card in report and verify correct reporting of APN Number**
- Update LRES on the access appointment or any problems within 24 hours of accepting the assignment.
- If any appraiser will be completing the appraisal other than the appraiser shown, please notify LRES ASAP before proceeding. Failure to do so can result in non-payment for this order.
- Report should be completed on the appropriate forms on or before the due date.
- Fannie Mae 1004 form UAD 9/2011 – for one unit property or PUD
- Fannie Mae 1004C form March 2005 – for manufactured home
- Fannie Mae 1073 form UAD 9/2011 – individual condominium unit
- Fannie Mae 1025 form March 2005 – small residence income – 2 to 4 unit
- Must include form 216, Operating Income Statement
- If the subject property is occupied by tenants, must include both Fannie Mae forms 1007 and 216.
- ***On any Single Family Comparable Rent Schedule, FNMA Form 1007, completed for this client***
- Please note that only “rented” or “closed” status Rental comps will be accepted by this client. Do not use Active rental listings as Rental Comparables 1-2-3. Active rental listings can be used as additional support for a rental survey. This is a client requirement.
Please check the Carbon Monoxide and Smoke Detector Requirements for your State (links provided):
- Appraiser is required to address the requirement for CO and smoke detectors as required by the subject state.
- See links for information on your specific state.
Two listings will be required for all market areas noted to feature decreasing values. Two of three comps must have closed within 90 days. In the case where they are not available, appraiser must provide a detailed explanation as to why. No canned statements. In an Addendum note the percentage of REO sales in the subject market over the past six Months In the sales history section identify any comparables that are foreclosure sales. In the Comparable Sales Grid Report the Days on the Market for each comparable. In the addendum please address and justify any of the following conditions:
- The 1004MC indicates that the overall market is declining however, there are no time adjustments made to comparables with sale dates older than 3 months
- Use of comparables older than 3 months in the grid where the number of settled sales in the “Current -3 month” column on the 1004MC exceeds seven (7)
- No REO comparables were utilized in areas where REO sales exceed 25% of sales in the subject market in the prior 3 months
If distressed sales were used please include this language: “The Distress sales were used by the appraiser to establish comparable values because they were the only comparables within reasonable proximity of the subject property.” The Percentage of REO sales within the Subject’s market in the prior 6 months In the addendum indicate in writing that no other comparables were available where the following conditions exist:
- All of the comparables have sale prices lower OR higher than the market value of the subject
- Any of the Comparable Sales utilized exceeded one (1) mile in urban/suburban areas or five (5) miles in rural areas
- The average Days on Market for all comparable sales exceed the Median Comparable Sales Days on Market from the 1004MC
- More than one comparable sale has a greater than 25% gross adjustment, 15% net adjustment or multiple line item adjustments greater than 10%
- More than one comparable is located opposite a major traffic artery, freeway, expressway or waterway from the subject property
In an Addendum, report and explain any room additions, or garage conversions. If it appears that there are security bars on the windows. Please confirm if they are on the bedroom windows and if so, if they have quick release latches. If not please make subject to the installation of quick release latches or the removal of the bars. Penny Mac will purchase loans secured by properties with “unpermitted” structural additions under the following conditions:
- The subject addition complies with all Fannie Mae and Freddie Mac guidelines (for conventional appraisals);
- The quality of the work is described in the appraisal and deemed acceptable (“workmanlike quality”) by the appraiser;
- The addition does not result in a change in the number of units comprising the subject property (e.g. a 1 unit converted into a 2 unit)
- If the appraiser gives the unpermitted addition value, the appraiser must be able to demonstrate market acceptance by the use of comparable sales with similar additions and state the following in the appraisal:
- Non-Permitted additions are typical for the market area and a typical buyer would consider the “unpermitted” additional square footage to be part of the overall square footage of the property; and,
- The appraiser has no reason to believe the addition would not pass inspection for a permit.
In addition to the photos required by Fannie Mae/Freddie Mac, the client requires photos for the following value-influencing situations/factors
- External Site Influences – Identify all external influences and explain how they impact the marketability and value (e.g. busy street, interstate, commercial/industrial, schools, parks, etc.)
- Upgrades/Remodeling – Describe the recent Subject upgrades or remodeling and provide supporting comments for any adjustments
- Outbuildings – Describe any outbuildings and provide supporting comments for any adjustments
- Deferred Maintenance or Health and Safety Hazards
If the Subject property is located within 1/4 mile of a high traffic street, an airport, freeway, rail road tracks, or within a block of an industrial area, the Client requires:
- At least one closed sale with the same influence, or
- Appraiser to include specific detailed commentary regarding the lack of such comparable sales and your rationale/support behind any adjustments given
When the appraiser has determined that the subject has a C5 or C6 Condition Rating, the Client requires the report be made ‘ subject to’ based on the hypothetical condition that the required repairs/inspections necessary to bring the Subject up to C4 or better Condition Rating have been made AND that the following be provided:
- A description of the repair/inspection items, specifically noting if any represent Health & Safety issues.
- An itemized cost-to-cure estimate for the repair items
- Comparables sales that reflect the ‘as-is’ condition of the comparable sale property at the time of the reported transfer
- o Photos of the appraiser’s observations which indicate the needed repair(s)/inspection(s).
(NOTE: If during the inspection it becomes evident that the Subject condition deficiencies are such that repair would NOT be financially feasible, completed the inspection and then contact AMC for further directions and/or instructions.)
- Client requires that the appraiser provide the MLS Number and related verification document information (- i.e. recorder’s document number, etc.) for all of the comps provided in the appraisal. For comparable sales provided by the builder/developer or their sales office (or any other party with an interest in the subject transaction), the client requires the appraiser to report all of the sources and comment specifically that all necessary information has been verified through a reliable independent third party source that has been identified (by name, contact info, and type) in the appraisal and the appraiser’s work file.
- For all condominiums – the client requires that the appraiser meet the minimum requirements of the investor for the assignment (Conventional – Fannie Mae, Freddie Mac) and a minimum of 3 closed sales;
- At least one (1) sale from inside the subject’s complex
- At least one (1) sale from a competing development/project
- Specific and detailed commentary is required;
- anytime the appraiser cannot meet these requirements and anytime they are indicating a lack of comparable sales within the subject’s project (if the appraisal indicates a lack of comparable sales in the subject’s complex, the appraiser must provide details on all sales within the subject’s complex in the prior 12 months)
- anytime the subject is selling for substantially more than the most recent prior sale of a similar unit within the subject’s complex
- on the marketability of the subject and subject’s project anytime the appraiser is indicating that there are no recent sales from a competing project
- Site condos can be included on either the applicable SFR/PUD form or the applicable condo form at the appraiser’s discretion, but if the SFR/PUD form is used, the appraisal must include information all required condo project (total project and subject phase) information including number of units, number of units, number of units rented, number of units sold, number of units for sale, etc.)
- If the subject is located on the Hawaiian Islands, the client requires the appraiser to provide the Lava Flow Hazard Zone for the subject property
- If the subject has a basement (finished or unfinished) provide a sketch.
- A copy of Appraiser License and E & O.
- California and Colorado Properties: if the property is located in the state of California or Colorado, please note if Carbon Monoxide Detectors are present on premises and meet state law.
Mandatory Appraiser Independence Requirement Comment:
Insert the following Appraiser Independence Requirement comment for appraisals/review appraisals in the addendum of the report:
No employee, director, officer, or agent of the Seller, or any other third party acting as joint venture partner, independent contractor, appraisal company, appraisal management company, or partner on behalf of the Seller has influenced or attempted to influence the development, reporting, result, or review of this assignment through coercion, extortion, collusion, compensation, instruction, inducement, intimidation, bribery or in any other manner.
I represent and warrant that, as of the date of this Report, I have had no contact with anyone that would in any way be construed as a violation of the Appraiser Independence Requirements; the only individuals with whom I have had any contact regarding my preparation of this Report have been limited to representatives of LRES Corporation and the designated individual required for entry into the subject property for purposes of inspection. No agent or representative of lender/client whose name appears on the first page of this Report has contacted me directly and I am obligated to and would report any such unauthorized contact, whether in person, by phone, or electronically, to LRES Corporation immediately.
Income Reconciliation Section:
- If any portion of the subject is non-owner occupied (tenant occupied, or vacant and intended to be tenant occupied or investment property) please provide the current rent which can be secured by the owner/tenant. If the subject is for a single unit (SFR, PUD, Condo) purchase transaction and the subject will be non-owner occupied (investment property), a comparable rent schedule (FNMA Form 1007) should have been ordered. Please notify the AMC for direction/instructions if this is the situation and the FNMA Form 1007 has not been ordered.
1004D Appraisal Updates:
- The Scope of Work for a 1004D Appraisal Update requires the appraiser to: “Research, verify and analyze current market data in order to determine if the property has declined in value since the effective date of the original appraisal.” The Appraiser certification requires the appraiser to affirm: “I have summarized my analysis and conclusions in this appraisal update and retained all supporting data in my work file.”
- To support the Update conclusion (and to be consistent with these requirements), the Client requests that the appraiser provide when submitting a 1004D Appraisal Update:
- The updated status for all active listings and pending sales used in the original report
- Provide at least two sales that closed after the effective date of the original report
- Recent listing activities may also be provided to demonstrate additional support.
- Must provide an Opinion of Site Value & Estimated Remaining Economic Life, even if the cost approach is not required to be developed per USPAP guidelines.
- If site value exceeds 30% of appraised value, comment on whether it is customary for the region.
- If Legal Non-Conforming zoning, must supply commentary on ability to re-build subject 100%, reason for non-conforming zoning and effect on marketability.
- If predominant value varies by 15% from market value, commentary must be added to exhibit the effects of the over/under improvement on the subject’s marketability and support the opinion of value.
- Explain all variances in GLA, room counts, etc. between the local tax records and appraisal report.
- Provide land value in cost approach section.
- Make certain that signature, effective date, telephone number, and e-mail fields contain accurate data.
- Location map with subject and all comparables must be included.
- Explain the reason for use of any comparables that appear to cross major neighborhood boundaries; and/or roadways.
- Sketch with subject room layout and exterior dimensions must be included.
- Confirm whether the subject’s utilities were on and in working order at the time of inspection.
- Do not submit a completed appraisal without obtaining and analyzing the sales contract.
- IF borrower name, subject property address, or owners of record differ at all from those provided on coversheet or sales contract, commentary is required listing the differences and sources of information.
- Subject photos must be taken of the front and rear at opposite angles to show ALL SIDES of the dwelling. Additional photos are required for any improvements with contributory value that are not captured in either the front or rear photograph. Street scene photo must include a portion of the subject site. If the subject property is proposed construction and the improvements have not been started, the appraiser should take a photograph that shows the grade of the vacant lot.
- All interior photos of each room in the subject property (including the kitchen, bathrooms, and finished/partially finished basements) and they must be properly labeled.
- No personal photographs or religious items should be included in the report.
- Any “areas” including foyer, laundry, utility, etc.
- Any outbuildings (porch, shed, deck, detached/attached garage, pool, etc). Must be full frontal photo.
- Unfinished areas/renovations must be photographed, included, and commented upon.
- All problem areas of the subject property to include physical, functional, external and health and safety issues (both interior and exterior).
- Front photo of each comparable (this includes land and listing comparables). Original photos required to be taken at the time of this appraisal assignment, MLS photos and stockpile photos are not acceptable.
- Assignment As per Scope of Work, the appraiser will inspect each of the comparables from at least the street. If property is inaccessible (e.g. private road, gated, pedestrians obstructing view, etc.) take the photo of what you have observed, and also provide an MLS photo of the comparable property in question and submit it on an additional photo page in the report. If a photo of the property is not available on the MLS please provide a comment stating so along with the MLS number.
When submitting the report to LRES:
- File must be uploaded in AI READY (.ENV) format and (.XML) format to our website at www.LRES.com.
- DO NOT attach invoice to the report.
- Please make sure to put the correct LENDER/CLIENT information as mentioned above.
- Appraiser must be available to make corrections/revisions and must supply the revised report within 4 business hours after request. Payment cannot be issued until the order is corrected and deemed complete per the instructions.
Appraiser is not to communicate any information to Occupant or Borrower regarding Appraisal Fees or Values! This is grounds for Cancellation on any Current and Future Assignments.
Time is of the Essence
LRES will compensate appraisers within the time constraints that comply with the applicable State law. However, the appraisal report must comply with USPAP, Federal and State law and Client provided guidelines. The appraisal report’s time of delivery is of the essence; LRES reserves the right to re-assign the appraisal assignment without further liability or penalty in the event that delivery does not occur in accordance with the terms of this agreement.
Appraisers shall use reasonable efforts to, from time to time at the request of LRES, without any additional consideration, furnish LRES further information or assurances and take reasonable action, as may be necessary, to carry out the provisions of this Appraisal Assignment within the provided due date.
LRES reserves the right to withhold or void payment in cases where there is a breach of this agreement, or performance of service violates USPAP or any published standards of best practices. In the event there is a dispute regarding payment, LRES shall notify the appraiser via any established method that establishes proof of delivery, including electronic mail, return receipt requested, within 30 days after the date the appraiser first transmits the appraisal with the reason why the fee shall not be paid. All disputes shall be managed in accordance with LRES’ established dispute resolution process.
Name redacted per LRES Request ***
Appraisal/BPO Order Specialist
765 The City Drive South, Suite 300
Orange, CA 92868
O 714.872.7811 | F 714.520.5499
*** AppraisersBlogs Team received an email from LRES Compliance Department requesting that we remove the contact information of their employee, the Appraisal/BPO Order Specialist, due to an ongoing domestic violence situation. Name of the employee was redacted from the article on 8/19/2016.
Seriously, why do many appraisers feel the need to be antagonistic toward clients, or potential clients? The people contacting you are simply doing their job, and you’ll never know where they’ll show up in your future.
Regarding assignment conditions, every client has different ones. “Standard” requirements are simply minimums required for certain assignments. And what many consider “standard” are simply not required for non-lending assignments.
I suggest taking a different approach: “My fee given the scope of work it $_____.” and be professional about it. It’s really so simple.
How shall I say this?
Because AMCs are blood sucking parasites that were forced down the throats of appraisers! Yummy
Do you routinely kiss ticks, tape worms, leeches, and such and sing them lullabies?
Why do the amc’s feel the need to hang up the phone on me when I was courteous enough to answer the call, but refused to provide a fee quote and bid. Why do they get upset when I ask them what their maximum allowable fee would be instead of providing a number myself? They’re the ones in touch with the lenders right? Fee quoting seems somewhat reasonable, until that day when the market explodes and appraisers statewide literally have phones ringing off hook all day long while amc’s desperately try to play the substitute game when it is the appraisers who readily substitute them instead.
I tell them no need to call for individual orders, $700 standard fee. They cry; oh but if you refuse to negotiate… I tell them; Nope, I just provided firm negotiation you can count on, so now let’s focus on better operational efficiency without these time wasting per diem assignment methods.
Let’s be honest Dave, they’re fishing for low fees so they can either pocket the difference or at least reduce losses based on flat rate contracts. They are not seeking the best deal for the borrowing customers best interest, that’s for damned sure. Pure advocates and if the antagonistic shoe fits, well, they chose to wear it first. As the only non advocate in the mix, we appraisers are supposed to be naturally antagonistic to any and all points of unethical engagement. Professionalism and attention to ethics is not supposed to be measured in the way it is now, with the ethics side being largely absent, and feelings, process compliance, and business productivity being the tantamount considerations.
David, where is the antagonism? I AM being perfectly straightforward and letting this potential client know MY requirements. Most states REQUIRE AMCs to assure the competency of the appraiser to perform the specific assignment being considered. Please note that some of THIS particular “client” requirements violate Dodd Frank.
1. I have NEVER performed an appraisal for this client because they have never met MY requirements for specific orders.
2. MY claiming portions of their orders are ‘illegal’ is subjective. By posting one here, other appraisers can decide if forbidding me to attach an invoice or state the amount of the appraisal fee is problematic.
3. For the record, I couldn’t care less if this potential client ever sends work or not, though I would of course require that any exclusionary listing comply with Dodd Frank.
Here you go; sentence #1:
“Your special requirements and micromanagement of the appraisal process dictate that I charge a fee commensurate with the additional, but typically unnecessary work needed to produce credible results.”
This very first sentence assumes that you know more about what the client needs more than client does. Seriously, are you kidding? And the followup comments indicate that you don’t like the client in the first place, hence the confrontational verbiage.
Appraisers provide services for others, not the other way around.
Personally, I don’t work for AMCs, because the fees they pay are not commensurate with the requirement. I can do a bare bones commercial appraisal for $1,500 plus, or a similarly priced residential appraisal, for less aggravation than one cookie-cutter AMC assignment. But I don’t waste my time arguing about it with the AMC, nor waste time pissing them off. There are better things to do with my limited time.
Dave: This very first sentence assumes that you know more about what the client needs more than client does. Seriously, are you kidding?
Me: I don’t think he’s kidding, and I fail to comprehend why you think unlicensed amc telecom staff would know more about lending client needs than the appraiser. These are the same telecom people who were handling pizza orders last week, cell phones last month, and may have been used car salesmen last year. I track amc workers linkedin pages quite often, and am no longer surprised to find long histories of varied leap frog sort of employment short term. And owners are rarely qualified in the industry and/or often come from vulture capitalism industries. They need a new place to feed I guess.
Surprise factor; low. Kidding factor; absent.
Need for amc’s to stop being pure advocates for lenders interest, start actually facilitating unbiased distribution in a symbiotic manner, and finally for once listen to reasonable appraiser consultation; unyielding high.
I guess the old three circles of appraisal activity is right out. Amc’s are naturally positioned in front of the appraiser and I guess by proxy, they’re above the need for professional consultation.
Dave, an important consideration is that these average amc people are hopelessly inept when it comes to detailed understanding of the laws and regulations which they are supposedly tasked at protecting. I’ve been quizzing them lately and almost all amc workers have completely inadequate understanding and comprehension of any and all associated regulatory structure. They know hud approved, make client happy, drive appraisal fee down. That’s all they know, it’s pathetic. If you wanted to work with many of them, I’d bet their reluctance to accept reasonable consultation would result in unacceptable assignment conditions, simply because you understand ethic, and they do not.
For any of the major AMCs, the requirements do not come from the front end personal that make the phone calls and requested the updates. The all have staff appraisers behind the scenes. There are exceptions, such as for non-GSE-related residential assignments, and commercial assignments, where an appraiser will actually get on the phone from the AMC.
From a business perspective, they are dealt with just like any other client. A client with twice the aggravation and twice the requirements means twice the fee and then some. There is no reason to get into calling there required “non-standard,” etc. Given the scope of work, here is what I charge. Simple. If they don’t like the fee they can go elsewhere. I haven’t quoted in eons because my fees for AMCs were way out of line with what their usual appraisers were charging, and I’m not going to waste my time anymore on assignments I not going to receive in the first place.
WTH? An ENV is just a different format and it literally takes 30 seconds to produce with one click of a button. I see nothing wrong with the requests of this client. These are all standard in my market. How some people stay in business is beyond me.
The issue Shari is that we are NOW (post HVCC) being asked to do a hundred things that may only take a few minutes (extra pictures, utilities, farm lists, etc.) but add up to a few hours on EACH REPORT. In addition to the extra time we are NOT being paid for, how do we put a fee on the extra liability? A single sting by one bee may be no big deal, but we are being stung a thousand times. Many will not survive.
env is literally proprietary coding originated from ACI and the software review rules came before XML FNMA CU rule sets. The big smoke and mirrors which is important for appraisers to know about, is that the review systems read the raw data from xml and env type formats. Then a range of correlative review is applied to form filling, check box, etc. The software providers sell the software to be reviewed to the appraisers, and turn and sell the detailed software review packages to the lender side. There would be no business for review in the same way there is now, if the appraisal software providers would not have sold us down the river like this. If software providers were not playing both sides, they would have made sure we had absolute access to all review parameter options, and even could have set up systems so we could mirror most lenders parameters. But how could they have sold plug ins, and review tech software and all of that? The money is in selling to amc’s, per order charges, and selling to lenders, even major fnma contracts behind the scenes. The money is not in selling to the dwindling base of appraisers. Double dog dare you to change the title of your maps and comps pages to something specific instead of the auto supplied language. Then tag in addenda notes which are picture and pdf form, rather than scrapeable text which can disseminate to xml data for easier readability. See how much you like env then. Triple dog dare you.
Irony is paying for the env plug in, and releasing review control to another party instead of having that benefit yourself.
One appraiser “gets it”. I suspect many more do as well. My real objection is as follows: I am REQUIRED by law to insure that my report is not miscommunicated either by myself or other parties. I can apply reasonably prudent controls to a printed hard copy, and even a pdf, but how do I KNOW that I have control and that an entire complete appraisal report is being transmitted to all possible decision makers to whom FNMA has extended my liability?
Is the hedge fund purchaser or bulk securities purchaser getting my entire appraisal; or merely a one line summary with a value stated? My liability should only extend to specifically authorized and individually identified parties that have or can prove they reviewed and relied upon a complete appraisal PRIOR to making any money related decisions.
Try opening one of your xml files and see what it states. It says XML, unlike PDF’s, doesn’t included 100% of the actual appraisal form fields. It also removes your signature from the signature page. For those of you going to say don’t worry the PDF is embedded inside every XML file. I say where have we heard that one before. Do you know how many docs were missing after the crash 8 years ago?
In the Additional Comments section of all my reports I state the fee paid to me the appraiser and how many total pages there are because when you convert to xml or env the report does NOT show the page count.
Shari, you focused on the least troubling aspect of their one size fits all order. It is the USE of the env format that I object to. Recently CoreLogic cited “data from over 13 million appraisals” for one of their prognostications.
I never gave them permission to use my data, did you? I PAY for the use of their services. Every appraisal I complete has a specific intended user and a specific intended use. Supplying the raw data for automated alternative valuation products of suspect quality is not among the authorized uses.
I don’t do FNMA work anymore because their ever increased open ended intended user burdens could have me liable to some farmer in France that invested in bundled securities five years from now if the market crashes again.
I stay in business by providing exemplary service and highly developed appraisal skills to clients capable of appreciating why they are important. Clients that don’t flinch at fees of from $115 to $400 and hour.
Times area changing in the appraisal industry, the pendulum is swing back our way and the lenders better wake up to this new reality! I have raised my fees several times over the past year and my good clients haven’t even blinked an eye. The others search elsewhere, but they have been coming back.
In my opinion Mike’s response was very professional. Again I say they are unable to find anything wrong with our reports, so lets hit them with they are being unprofessional. They do not want us to use “canned statements” well they should not be able to use generalized “Standard” requirements. It should be assignment specific.
The program to have that ENV conversion is not free. Well at least I’m paying for it maybe you can tell us how to get it for free.
The piling on continues!
People grabbing these for $300?
If Mike is busy and gets higher fees and less aggravation from other clients, I see no harm in sending the letter. And itt is not aimed for the contact person. It is aimed for the CEO.
AND the statistical averages they compile claiming them to be appraiser quotes.
Mike said it all, and did it well.
If Mike has been dealing with LRES for more than 5 years, he’s probably just reaching that last nerve, last straw etc. Like most AMCs LRES has been cutting fees over the years, and amped up TAT to 48 hrs. Every order is on “Auto-Nag” , so regardless of how diligently you update the portal, reminders and past due reminders (emails and sometimes phone calls) arrive every other day. This happens even when you’ve informed them of access delay.
I did the local $300 REOs because I was sent back every 30-90 days until the rat hole sold, each time for ANOTHER $300 fee. After it went under contract 2 more $300 appraisals were ordered, one current and one retro to default date, which was usually close to the first appraisal date anyway. I often made more money than a Realtor commission who had both ends of the deal. Local REO inventory has declined, along with the orders.
Ah, the good old days when REO was king!
Actually, I have never done an order for them – they have never offered one that I considered to be acceptable from either a fee standpoint or conditions of the order standpoint…but I DO like to read what they are offering!
Yeah . . . sorry . . . but this appraiser is out to lunch! Most of my clients require each report be delivered in ENV and XML . . . the amount of extra time this requires is seconds . . . This appraiser seems to think this will require an entirely separate report, but even if that were the case, it would just be a matter of saving the report twice, in two different formats! Yes, the other client specific requirements are a pain in the butt, but these look pretty standard, based on the AMC jobs I used to do . . . nothing unusual about them, in that respect. Sounds to me like this appraiser just got fed up dealing with this AMC (maybe ALL AMCs), and took this as an opportunity to vent, because he sure as hell knew he wasn’t getting this order!
The way I deal with AMCs is more professional and direct . . . I quote them a fair market value base fee for an SFR 1004 UAD appraisal in California ($450), and they give the job to one of the many appraisers helping to destroy our industry by doing jobs like this for $225.
John, they are asking for TWO appraisal reports. Period. Admittedly a small issue. How about the certification they are requiring to be signed despite their clearly dictating the terms under which the appraisal will be performed? How about the one about “any portion of the subject being rented”? So now I’m supposed to know that the third bedroom is rented out to a boarder? If so, to then increase the scope of work through inclusion of irrelevant additional forms? Or, better yet to perform a rent survey based on a single room in a market that does not record all other related relevant data?
John you have either missed (or disagree with) the bigger issue that boilerplate blast assignments include a host of liability issues for an appraiser that usually only become evident once a state complaint is filed or a court case is filed.
I’m hoping AppraisersBlogs posts the one I sent where I ask the ‘client’ if they can refer me to the opposing sides attorney.
Your $450 California fee is fine for NON COMPLEX FNMA conforming loan limit appraisals in metropolitan areas where transaction amounts are well under a million dollars. Otherwise your $450 fee is doing the same thing you accuse the $225 fee appraiser of doing.
I DO however respect the difference in opinions. It’s why blogs such as this are so necessary!
Seriously, read the first couple of sentencse. It is dictating to the client what is “standard” and “unnecessary.” Why? If I wanted to hire someone to provide a service, and they started dictating to me what they should be providing me, I would tell them to go take a hike.
I don’t think you’re reading between the lines of Mike Ford’s letter. He’s simply telling the AMC to Go To Hell in a discreet and professional manner. He’s certainly not worried about getting the order or any future work from this AMC.
And how would such a position apply to fees? I dictate my fee, yet the fee is pre negotiated along with the pre written SOW. Peas in the same pod. You can’t have your cake, and eat it too. Remember the three circles of professional appraisal practice. Someone forgot to state that in mortgage lending specifically, consultation is not applicable?
How sad to learn that some appraisers believe such lengthy requirements are standards. Who has time to read such nonsense?
Seriously, do you need to be told to fill in your name, address, license number, and email address correctly? This client is treating appraisers like 2 year olds.
My clients’ requirements fit in ONE paragraph with a few sentences. That’s all. This is a badly written novel!
Oh I think AMCs are the bane of our industry! This is why I don’t accept AMC orders . . . all I was saying was that the thing this appraiser pointed to in justifying a $1,500 fee is a thing that takes less than a minute to achieve. . . As much as I hate AMCs, it is ridiculous to charge $1,100 over the fair market fee, for less than a minutes work.
One of the many reasons I stopped accepting orders from AMCs, on top of the crap fees, were the ridiculous laundry lists of client specific requirements, most of which have little or no impact on coming to a solid final opinion of value.
If people want to burn bridges with clients they don’t want to work with anymore, that is their prerogative . . . but the lending world is a small world . . . I have wanted to similarly make past clients feel small for the ridiculous requirements and terrible fees, but I chose to handle myself professionally. On more than one occasion this has proven to be a wise decision, as the very person I wanted to chew out wound up working at a non-AMC using lender that paid fair market fees . . . and they most definitely remembered me! Had I chosen to put this person “in their place” five years back, I would have, likely, not held on to the new client for long . . . if at all.
So, all you down thumbers . . . maybe that makes my point more clear.
Who told you that $400 was a fair market fee? I’m guessing that they live in the 2009.
Don’t underestimate the power of burning bridges with clients; it’s the most intelligent thing that a residential appraiser can do. I recommend not only burning them but using dynamite if possible to eliminate the temptation of returning to this pathetic “profession”.
John Moonitz: “for less than a minutes work”
I knew it would happen eventually. Ladies and gentlemen, I present to you: “The one minute appraiser!”
Baggins – Tools
Are you seriously being this big of a tool? I will handle you as I would handle any other obnoxious child . . . with a condescending pat on the head, and a “Shoo! Shoo! Get on out of here! Grown folks are talking!”
Oh come on Moon, have a heart. You said it, I just repeated it, and only barely slightly out of context.
Arguing for lower fees and defining fair market as a mere 400? I’ve seen it all in this industry. We got that 20 years ago. Perspective over long term is everything in this business. If appraiser compensation per hour spent would have kept up with the realty and origination mb industry, some previous studies from years ago indicated the base fee should be 750+ by now. Run along with the $400 crowd, it’s a treadmill you will be on until the end of time. Or get tough and demand more. Did I tell you the story of an amc manager who said that he thought 450 was a fair fee, especially considering that tracked up 40% over just 2 years? He had a whole 4 years under his belt and also presumed to know what a fair fee was. If they could call someone else they probably would. Yet they are on the phone with me anyways. I don’t have to pander and neither should any appraiser out there. Appraisers continue to drop left and right, most from old age.
John ONE THING???? Go back and re read their requirements. ALL of them. Then THINK about the impact of real compliance with those requirements. I do not accept orders that I cannot comply with. Remember THEY are the agent of my client – not my actual client. They are telling me that contrary to Dodd Frank I cannot let my client know the fee that they are paying me?
But on the other hand they demand that I certify no undue or prohibited influence was used? How about the restrictive data requirements or ordering (weighting) of comparables?
It says not to communicate the fee to the borrower, the borrower is not your client. Again professionalism unfortunately has to be spelled out.
Frodo, now you lost me. There are prohibitions against forbidding appraisers to communicate the fee they are paid to a borrower…who asks. THEY paid for it! Some states actually require it’s disclosure.
Don’t conflate being a professional with being a willing participate in fraud being played out against homeowners. You may want to reread whatever texts you are consulting for definitions on p r o f e s s i o n a l i s m.
While we are on the topic, lets dump FNMA and TAFs definition of who the client is and go back to the ones most commonly defined in law…the party that pays for the service; with fiduciary obligations to all other intended users.
THAT is how trust is preserved and promoted-not by constantly changing traditional definitions of words and terms to suit the liars, cheats and thieves controlling so much of the process.
LOL. Mike, I was thinking the same thing after reading Frodos’ last comment, but I chose not to respond because he “lost” me too!
I think the operative word here is “lost”!
John, where do you get the impression the fee is $1,000 over the “fair market fee?”
Why assume the fee is ‘for’ the env part of the request? Maybe it is to cover the added time burden of all the other silly (some of which are flat out illegal) directives?
Retired Appraiser got it exactly. I also respond to these because I know that AMCs compile job bids and use them as arguments to claim that fees that would have been low 20 years ago, are somehow ‘reasonable’ today.
Several responders here have said they charge $450. They ALSO would not get the order from a lender (this one specifically) that thinks $225 is ‘reasonable’. WHY should I give them a quote of only $450 then to use as the top of their range when calculating C&R fees?
The fee of $1,500 is well supported and is consistent with what I submitted in proposals to the ASC and FFIEC along with a very detailed explanation of how fees are calculated.
http://www.mfford.com or http://www.appraisersguild.org if you’d like to see the details of the proposal. Save yourself time–jump to last page first. Id be interested in hearing your honest views.
Yes his response was overkill. However, based on the client instructions it is borderline employer/employee not contract labor. If contract labor, am hired to do a job and complete by a certain date. Also most everything beyond that is my decision. I schedule the appointment at my convenience. As long as I have no issues that would delay submission I should not have to constantly update. Can this be considered similar to “punching a time clock”? I choose the most recent and most comparable properties and develop a credible, well documented report. This business of two sales less than 90 days…where does that come from? And on and on.
2 in 90 is the automatic FNMA CU requirement if you check the hot or declining market box. In standard I think this is reduced. But who knows, we lowly appraisers are not allowed access to 1000 point xml scoring criteria. Our software providers have access with setting tailored around official FNMA FAQ and XML docs, but do not reveal the additional settings points to appraisers. How else could they sell the ‘advanced review capability software’ to the lenders?
Per IRS definitions, they are in violation, but nobody has successfully pursued that yet. Reasons why the appraiser complaint hotline was started, stopped, structured, restructured, and stopped again. Amc’s and MB’s immediately abused the process and directed upset persons to redirect the complaints against appraisers instead. And yes, the unlicensed amc workers expect the licensed appraisers to posture like employees. Being time punchers themselves and not licensed, this is a natural position for them to support.
Two in 90 has nothing directly to do with FNMA CU Baggins. I’ve studied both the FNMA Patent application (previously published here I think) as well as taken the online mortgage bankers courses from FNMA direct. It’s just the opposite. FNMA has moved away from automatic “guidelines” to discourage appraisals directed to guidelines rather than being reflective of the local market.
The number 1 thing appraisers need to consider re CU is the census tract. CU will pull up comps as old as three years from the same census tract which if improperly interpreted in the “human analysis” prior to contacting the appraiser will in fact have the appraiser justifying use of comps one month old that are outside the census tract instead of the older comp inside it.
The SECOND thing is that ALL peer adjustments FNMA refers to are derived from their admitted flawed database compiled when even they recognized appraisers were appraising ‘to the guidelines’ rather than to the market.
You clearly do your homework! I’m impressed. If you need a copy of the CU patent application email me direct and I’ll get it to you. Of the seven “inventors” given credit for it NO ONE was a licensed appraiser at the time (2 or 3 were former unspecified level appraisers with unknown qualifications and expertise).
I am tired of getting surprises when I go out to inspect. Then the order requires maybe different comps after we sketch the home due to poor public records. Some require more commentary than a “standard” report. Yet, the non stop email and phone calls only slow us down when we are trying to get our jobs done. The flexabilty of due dates is no longer rational..I often have to comment back to AMC that this is more complex then expected due to………………This report will take longer for it complexity. Nor did I ask you for an additional fee. Yesterday I had a day of inspections. I can’t tell you how many emails and phone calls I got about nonscense. I can understand timely on purchase transactions. Reverse mortgage on older homes and FHA reports do sometimes require more work than expected. I was beyond frustrated at the end of the day yesterday with the emails and calls. My constant emails and calls made my eyes cross as I was looking for comps, driving and micro managing the updates that I had already given. I am way past frustrated. I am tired. I must say there are of clients/AMCs I find it a pleasure to work with. Some take on too much theirselves and their pressures trickle down to us as they torment us with needless calls and emails. Sometimes I have to change my phone recording and put a do not disturb on my door to get work done. Very tiring. Nor do they appreciate if we do weekend work. It seems to be expected. Fees I can’t complain about for the most part
JUST GOT MY 4th email for same order in the last 24 hrs. This is what I am talking about. This time how many files. I find this so annoying, yet they want us to get reports in.
An important consideration point for which company to provide your service to, or alternatively drive the fee up. They ask more, you charge more. This is the balance to the imbalance. If you charge less, you have actually funded the available time allotment for more ‘update calls’.
I drop those PIA’s right away and in my market finding new clients ain’t hard just gotta do the research. I had a client for 5 yrs then boom their “requirement” pages shot up to 9 full pages from 3! Bam showed them the door! You do know you don’t have to answer/reply to them every min. of the day. I set up some time first thing in the am and then a little more time in the late afternoon for calls. In between I’m in the field or working on the computer and that’s how I keep sane.
Your business and you gotta make the decisions of what’s good for you.
The amc’s are cold calling appraisers who never wanted and rejected any notion of being on panel or being available to that specific amc. They cold call, cold email, and if you put their emails on spam, they come back to inbox. They do not offer vacation settings if you are signed up. They’re turning to more calling to avoid this mass spam setting which hinders their legitimate email capability. The agents are rude, hang up on appraisers if necessary, and get rude if appraisers demonstrate independence. The supposedly senior staff persons cannot answer simple ethical questions. For appraisers who support this sort of unwelcome counter product process, you’re part of the problem not the solution.
Trust me, from an appraiser directly, you don’t understand how out of control this business modeling can become, if you’re not in an under supplied appraiser area. These companies run on contract and essentially direct the appraisers fee before ever working with appraisers. They sell the service before they acquire the vendors.
As a group, the amc’s whom operate this way severely hinder appraisers operational efficiency. They call down the line looking for a miracle and if they cannot deliver, the lender bounces to the next amc, or even perhaps sends the same order to multiple amc’s at once for ‘best terms’. Best for whom? It should not take that many man hours to assign individual appraisers, and such distribution methods severely hinder the appraisers operational efficiency, in a cumulative way. If appraisers successfully move the fees up, amc’s cry about price gouging and taking losses. Tell me with a straight face this is a sustainable business model that will not eventually wipe out all future appraiser participants whom may be forced to deal with this. Imagine your working week consisting of no less than 50 cold quote calls from seniors to jr agents (always from a set of new and repeat companies), repeat calls despite your objection, repeat calls from different numbers if you block, agents hanging up on you for not accepting pre stated fees, no less than a half dozen panel invite requests. You cannot believe it until you see it and I say; What’s happening in under supplied states is a glimpse into the future of appraisal management nationally.
Per the lengthy engagement, well that’s the typical line of lawyer originated cya, and they just copy from other companies these days. Plagiarism in SOW is rampant.
If only I was recording these phone calls… If companies in other industries operated this way, they would face legal penalties for bonafide professional misconduct and most likely embezzlement as well.
The parasites continue to cold call me 7 years after we chose to walk away from the insanity. There was a time when I responded with long letters like Mike has written. Over the years I’ve been far more efficient however; so efficient in fact that I’ve managed to say everything necessary in three words: “F*** O** AMC”. [Slams Down Phone On Them]
They’re cold calling everyone. Just learned today they have some sort of auto feed from the HUD website to source the call numbers. (as I had to put another 2 amc’s on block for repeat calling.) Sounds like being an FHA approved appraiser has yet another downside; automatic inclusion in amc cold call market campaigns. Forget the do not call list, you’re on the FHA call every day ten times a day list.
Will someone please tell me the estimated number of amc industry workers at this point? I think we’ve finally reached the point of more people working to sell lenders and assign orders, than there are actually persons completing them.
Retired appraiser. You are my hero. Are you on Facebook? Please join my private appraiser group called 100% real estate appraisers. We have a ton of members and I would be honored for you to join and share your thoughts.
Sorry Mark I don’t do Facebook. I was doing Facebook when it was known as AOL back in the mid 1990s though if that counts for anything. (God did AOL blow a golden opportunity).
I propose a new Social Network strictly for AMCs and lender use. They could call it AssBook.
Thanks for fighting the good fight Mark. After seven years of revealing the dirty facts about AMCs and encouraging hatred towards AMCs I’m glad to see several of you guys just getting fired up about it.
For years I preached boycott AMCs. We know that’s not going to happen now. I’m open to hearing any solution that you folks may have. Something has to be done. How about a Jack The Fee month? Get as many as possible to agree to jack up their fees to make it extremely painful for AMCs.
Baggs, You hit on an important facet. We’ve all heard of appraiser shopping but few understand that AMCs get ‘shopped’ as well and their conversations start with loan brokers ( I use the term assumptively since many are not actually brokers or licensed to begin with…they operate illegally under loan brokers but they themselves are often unlicensed).
‘Loan Broker’ to AMC “I have a house at XYZ street. We want to close by end of next week so I have to have the appraisal by Monday. Yeah I know its 4:30 PM Friday now. Can you get it done?” “TRID disclosed appraisal fee is only $500.” [AMC charges $150 so appraiser is only going to get 350].
This is in reply to your latest comment on 11/23/2016 to my original post regarding “Fair and Customary fees”
I checked out the link and downloaded the proposal. I don’t have time to read it just yet (reports to get out), but I am intrigued.
I would love to fight for $1,000 to $1,500 for a standard 1004 SFR fee, but I also need to keep a roof over my head and food on the table, so I’m wondering, what sort of clients are you finding that have no problem with such high fees?
Part of my problem may be that I only came into this industry in 2002, in the middle of that ridiculous tornado of inflated values. Unfortunately, I started under an appraiser that was simply churning out as many garbage reports as he could a day. I realized within a few months that what he was doing was, at the very least, bad business and dangerous. I got him to slow things down and start turning in higher quality appraisal reports that wouldn’t put him at risk later down the road. I was largely self trained in the beginning (along with the courses I took to get my license), but soon started working for other appraisers with more experience and knowledge. I pride myself in the quality of my work as well as my ethics with regards to the appraisal industry, but I believe I may be stuck in a mindset (regarding fair appraisal fees) that is informed by this flawed model.
I don’t have any special honors or designations . . . I’m simply an AR with about 14 years of residential experience (and about a year and a half commercial experience, assisting and MAI AG appraiser) . . . considering this, do you think that I could demand $1,000 to $1,500 fee for a standard SFR? Remember . . . I do need to eat and drive and keep a roof over my head . . . I can’t afford to blow off my current clients and spend two years hunting down that client willing to pay $1,500 for a report he can easily find a dozen other appraisers willing to do for $450 . . . or less. What separates your reports from those of another hard working, ethical, quality focused appraiser?
As soon as I am able I will read the proposal and respond here. Until then . . .
We hear you on the challenges in picking up the clients. There are two primary engagement methods which distributors of report requests may choose. Some allow appraisers to enter their own fees. The other engagement method is where clients pay a standard minimum regardless of the order. It is difficult to find the clients whom don’t ask appraisers to compete against each other on fees, but they are out there. Most appraisers don’t ask the right qualification questions and spin their wheels indefinitely with a weak set of clients. Even in competitive climates you can still land approval slots with direct or standard fee companies. The crucial qualification questions are; what is your standard minimum fee. Appraisers enter their own fee is code word for having to undercut to get the orders. So you apply with them anyways, but maintain the same or higher fee as you would get for direct. When they call you they need you, price accordingly. / The winning play is companies whom have direct consumer to appraiser billing relationships or fixed rake. Per diem bidding is for the birds. Try out Cendera, us mortgages, prmg, members amc (MAMamc), Universal Lending direct, Ameripro, hell even landmark plays bidding but you can get good fees out of them. there are a lot of them out there. If you ever dare discount to get an order, you define yourself with that company and your lowest fee ever accepted will become your new standard maximum fee. aka, the race to the bottom. Stay thrifty, stay debt free, never dip into equity, and a 20lb bag of rice still costs 10 bucks at costco. Mike does legal and estate. Shoot, I’m just CR, and don’t need an alphabet soup of special titles to be better. You don’t learn about real property in a class room, you learn it in the field. If appraisers want to be better at their jobs, they need to get away from charts and graphs, and develop real skills with utility systems and understand their value is not just in production quantity. If appraisers are not better informed than an average home inspector, and cannot upsell and outsell the corny amc telecom phone guys, they will be relegated to the discount crew and eventually need to subscribe to typist services and discount the fees to stay in business. Just opt out of that sort of engagement, it’s so easy. Solicit more, keep careful records. Ask the right questions. Cheers.
Good advice. I actually do already do this with any AMCs that court my services, but I have only been quoting $400 to $450 per standard SFR, and have not received any orders from them. After reading some of Mike Ford’s posts, I see the value in quoting higher (it looks like he quotes between $500 and $650 for standard SFR orders), if only to add to the database of “customary” fees.
I appreciate all of your input!
With the passing of regulation in the state of Virginia as it relates to appraisal work, I was hoping this was going to be a blueprint to change in the industry. When the new standards indicated C&R fees must be based on what is required only in a Veterans Affair assignment, I thought there was hope.
If say the VA panel fee pays $450, then this is the floor where all fees should start.
Extra photos, ANY active or pending sales, a formal request for more than 3 closed sales, the cost approach, checking of utilities and or systems, due dates prior to the 10 day VA standard, farm lists, graphs, extra maps, commenting on pending litigation, inclusion of state only requirements (CO detector/water heater straps), restrictions on where comps can be and how old, requiring comments on policy guidelines that no longer apply (gross, net adjustments), demands to make properties in the C5 range subject to repairs, etc……….. SHOULD ALL COME WITH HIGHER FEES!
The STANDARD assignment should be one that only MEETS USPAP guidelines and not what has become typical of the day. It should be mandatory for every bank, lender, AMC, etc. to receive and understand what is minimally required (USPAP) and that ANY EXTRAS cost more.
ALL OF YOU…. Outstanding comments, insight and suggestions. May I add…”always respond to fee quote requests”. They are building appraiser fee survey databases to use as third party studies. THAT is why I ALWAYS respond with $1,500 or more to these types of requests. Eventually, perhaps IT will become the average C&R fee!
I always respond with my fee even if I turn down the assignment. Like Mike says, maybe they will wake up and stop offering these insulting fees.
I agree with Retired Appraiser . . . I have been “jacking my fees” to AMCs for a few years now (once I finally got enough Non-AMC clients so this wouldn’t force me to live under a bridge). Since I started doing this, I have not received a single order from any AMC. They send me an order, offering me $250 for a 1004 UAD . . . I reply with my fee of $475 base. Not one has contacted me a second time with any of these orders. I believe that if enough appraisers get behind a “fee jack” one or two random months out of the year (preferably the busiest of the year), that this would bring the AMCs to their scumbag knees (not to mention the scumbag banks facilitating this nightmare). I don’t think it would take many months before these clowns would be forced to pay ACTUAL fair and reasonable fees. Note: if this is organized, a specific base fee cannot be dictated (price fixing), but I believe that so long as a specific base fee isn’t dictated, that this would not be considered price fixing. I may be mistaken, but it is worth looking into. As I said, I haven’t worked for an AMC in about 3 years, but forcing them to pay fair fees would only do our industry good.
Be careful what you wish for. In states like CO, TX, OR, and one other they mention to me but I forget, they are being forced by market forces to pay a fair fee. The ensuing changes present calamity for appraisers operational efficiency. The amc’s continue to either run on national flat rate, and take loss per order when they pay ‘fair fee’. That or they were only able to attain better negotiations for fees, with strong attention to turn times. Once amc fair fees hit, expect an infinite train of micro managed orders and never ending phone calls. Don’t use terms like fee jack, hike the rate, etc. Remember that we’re not price gouging, but merely forcing the order providers to stay current so we can survive as independent businessmen.
Id like to point you to a SPECIFIC method of calculating (generally) uniform fees that has been submitted to FFIEC and CFPB who are both ignoring it as we type.
It was presented to VaCap and Virginia as an alternative. If lenders can price fix for a one size fits all national TURD fee we can to. Express it as a range and we are fine.
I propose anywhere between $550 and $850 for standard, conforming, non complex FNMA where transaction amounts are under $1,000. Its actually based on an hourly rate than runs from about $60-$65 up to about $115 You can read it at my website or the AGA website http://www.appraisersguild.org …just skip to last page and final graph…its dry reading.
Just read this comment . . . This makes more sense to me, and I agree with you completely . . . I will be reading the proposal soon. Once I do I will reply.
That engagement letter actually requires less work than Clear Capital who require everything stated above, but 6 comparables 3 sales & 3 listings for an OUTSTANDING FEE OF $225.00! The appraiser’s that take this work likely have it typed in India, as there are companies who will do all the data entry for $10.00 an hr over there and per the newest USPAP course, it is not against USPAP to have someone do data entry, only no adjustments or comments etc. Bottom line, big banks and lender’s do not like appraiser’s and AWFUL AMC’s are here to stay, your only option is Non AMC work if you can get it, which I highly recommend!
Ralph, you illustrate an important, but completely ignored point in this industry.
You said; Per ethics; ‘only no adjustments or comments’.
top google hit appraisal data entry per top ad page:
Appraiser Send Us:
1. Cloned template file
2. MLS of the subject property and comps.
3. Public/tax records from NDC or RealQuest or County Assessor’s website.
4. Home inspection sheet
5. Rough draft sketch
6. 1004MC data
7. Any relevant data, such as contract or PUD details.
Appraiser gets back from us:
– All subject and comps data pre-filled
– Almost completed report software file ready for adjustments and valuations.
Since 2009, we have completed approximately 100,000 appraisal reports
USPAP has become an accommodation of lender interests over ‘principles’ as I understand them.
I’m reminded of the phrase or question “What is a little bit pregnant?” Either one is, or one is not.
The principle associated with confidentiality requires that I NOT disclose any non public personal information without the consent of the client. This dates back to when borrowers or owners were ALSO fiduciary clients.
Regardless, the fact that ‘someone’ at 12345 Exwhyzee Street has applied for a loan in the amount of $500,000 (or any amount for that matter) IS NON PUBLIC, PERSONAL INFORMATION of a confidential nature!
We already know data aggregators such as CORELOGIC in the USA take or have taken confidential appraisal information without permission and created commercial products from it.
TAF is not always right. lately, their track record appears to be slipping. They are becoming an agency in search of a purpose at risk to the one they are charged with serving.
FWIW, the confidentiality section of USPAP says nothing about personal information. It only specifically addresses assignment results, and information deemed confidential by the client…that’s it.
David, no question.
I’ve worked inside a mortgage company before. They pay money for leads. They also consider THEIR leads to be confidential. Again, where specifically does the line get drawn? We go from common sense and ordinary businesses practices to “the client didn’t say I couldn’t, therefore I’m allowed to?”
Admittedly it is a changing profession and environment. Not necessarily a better one.
Just wanted to add that I recently read a detailed news article about what was going on at that bank that just got busted for fake accounts. In it, it describes how dogmatic the bank was about not only the quota of new accounts, but how much time the employees had to do it in, and the restrictive guidelines on how to process the accounts. I couldn’t help but think about the time constraints, fee restrictions and added requirements the banks put on the AMC’s, who in turn try to make their profit off of the appraisers!!
Under the TILA RESPA integrated Disclosure the appraisal fee is effectively caste in concrete when the loan application is taken and the TRID is given to the borrower…long before an appraisal is ever ordered. Technically exceptions to the TRID can be made for appraisal variance but the process is difficult to get done and very few lenders will allow it.
Loan officer quotes $600 and that has to include (1) AMC fee; (2) Any bank required review or processing fees, and (3) actual appraiser fees.
*I wonder how many do even though it’s required. I’ve been asked numerous times by borrowers what my fee is and avoided an answer when possible. But I have been told how much the borrower was paying for my services. Typically anywhere from $100-$200 over what I was being paid.
Recently one of my associates received an appraisal order which had 26 pages of instructions to the appraiser which the appraiser had to agree. I suggested that he prepare his own “Letter of Engagement”, (I provided a copy of mine) for guidance. The last paragraph of my 1 page agreement is as follows: This agreement constitutes the entire agreement between the client, the intended user/users as cited in the appraisal report and the appraiser and supersedes any and all other written or verbal communications between the parties. All changes or amendments to this agreement must be in writing and signed and dated by all parties.
It is very apparent that many appraisers on this post have never, nor will they ever, work within the highly regulated field of lending. Appraisers, which I am one with 33 years’ experience, are notoriously bad at following even the simplest instructions, like comment about certain required items by the GSE’s. Therefore, the AMC’s have to spell out everything that is needed, otherwise these same appraisers will say you didn’t require that (example, photo of a kitchen, or angled photos of comparables for FHA). Just take the time to understand our field of expertise, stop whining, and go out and get other clients. By the way, the AMC is your customer, their customer is the client, without that relationship, they would not ask you to do the appraisal for them, it is their fee to share with you, some share more than others but that’s your fault, treat them as a customer and maybe when executives leave the company and start their own lending company and can go direct, they will remember you. Bring professionalism back please.
Frodo, many of us cut our eye teeth on appraisals for lending purposes, whether for HUD/FHA, FNMA or Freddy (before they became GSEs); and long before Cuomo and HVCC.
While there is a lot of merit in what you say regarding customer service and simply following a clients legitimate requirements; there is also the undeniable fact that many of those so called ‘client requirements’ are not client requirements at all, but rather their agents, the AMCs. Fourth sale comps / listing comp are a good example. So are “only certified appraisers”.
Those are for the most part AMC inventions to be used as sales gimmicks when they are out hustling business. It allows them to pretend they are a ‘cut above’ their competition that only requires three comps. As if adding a fourth LESS similar comparable sale adds anything except confusion when mandatorily included.
I review complaints against and by appraisers all over the country. 90% of what I see do not involve issues like you are describing (simple customer service/ professionalism issues).
1. By far, the most involve failure to pay reasonable and customary fees as is required by federal law.
2. The next most common are intrusive stips and requsts by non appraiser AMC employees purporting to be UWs.
3. Next follows outright violations of DF appraiser independence laws; or allegations of same. (Trust me I know a little about this one).
4. In virtually ALL state board complaints where more than one report was ever uploaded to CU or for an SSR every single complaint by states has treated each report version as an entirely separate report-not merely a modified or addendum explanation.
IF a small technical violation is alleged then it automatically becomes TWO alleged violations; or a serial offense for the same purpose. MUCH harder to defend against.
By all means explain via addendums when required, but do not ever issue a ‘new report’ even with the same file number or make minor unnecessary changes just to keep a client ‘happy’.
IF there is a hint anyone associated with the deal (client OR NON client) is unhappy, it is an invitation to hand more, sometimes fatal information to state investigators.
Go BACK to the old style where we did not retype entire reports. We referenced them via separate addendum pages or letters that were sent to the lenders UW.
Unless or until USPAP specifies very clearly that state regulators may NOT count multiple report versions as anything other than drafts in process rather than separate chargeable offenses, ALL appraisers should refuse ALL revisions requests to modify the original form report.
IF a GSE doesn’t like that, then lets REALLY test appraiser independence!
Professionalism does NOT include any requirement to treat unprofessional, incompetent or dishonest AMCs with a hint of respect or recognition that they may have an iota of legitimacy.
Nor does it require convenience changes that add potential liability or risk to an appraiser.
Frodo, I sincerely congratulate you that in 30 plus years you have never had a state complaint lodged against you. If you had, you would understand first hand what it is I am describing.
After thirty-three years of working to perfect your craft (assumption) and reading about all these injustices that have occurred amongst your peers, you conclude that it’s about appraisers not being professional!. Perhaps you might think of changing your name from Frodo the wise. Once again, Mike, you nailed it!
frodo the wise is not an actual appraiser. He/she just acts like one on blogs… FAKE appraiser…AMC hack….bottom feeder.
I have worked as an Office Manager for 8 years. When I first started the company had 12, maybe 20 clients where they got most of their work from (Yes most were AMCs). Of those companies, 3 of them were about 70% of all the incoming work. I took on this job as if it was my own and saw a pattern I didn’t like. There was too much power over the company from those companies and went to work to change that.
I now have a base of 168 clients were we get work from. This did several things. First it allowed us to set our fees (currently 450-550 for 1004 sf with no complexities in Indiana which has one of the lowest fees on average). It also allowed us to cut away clients that I deemed to push, nudge or threaten the appraisers.
The problem I face is that so many appraisers are so stuck on the “Lone wolf” attitude which admittedly was a brilliant move by the other parts of the mortgage industry to instill unto the appraisers because it made all you “Lone Wolfs” into lap dogs that ate their own. It also had another advantage, it makes raising the fees so much harder because no one in our profession (I just got my Trainee license not too long ago) likes to work together. This means that few appraisers will form a group or work in an office or train anyone because they want to protect their precious (with Billbo Baggins and Frodo, I figured I would use a line used by Gollim). I do not see how anyone working by themselves can handle a large number of clients. 168 clients with 4 sets of passwords, 168 websites, 168 ways to upload or send an appraisal would take up more time then the appraisal process.
For 8 years I have heard appraisers crying and whining about how unfair it is and how they are mistreated, misunderstood and taken advantage of… All that is talk and not a single thing has changed. Why no change? Why hasn’t the AMCs, Banks and other clients moved to help the appraisers in their time of need? Why. As long as you stay the lap dog that get beaten for their failures and only ask for crumbs to eat, why should they. Change requires action and with all the empty threats, crying and devouring the souls of our brother and sisters in our profession so that we feel important, no one is taking positive action. We all want others to do something. Now we have an average age of 50yr old who just want to make it a couple more years and have no time to plan for a future.
Thank you for your Blog post Mike, I have read your words in other posts and other forums for a long time. I use to use the information from a retired appraiser to join several boards before I just couldn’t listen to the same whining over and over again. Maybe people will wake up. However, after 8 years I can say not a single change was made that was not from the other sections of the mortgage industries in disguise as an organization that was made to help us but made up of owners and operators of AMCs or in their pockets one way or another.
Hmm, that was a bit of a rant…
I guess I should go decaf the rest of the day…
YOU learned a great lesson. A few difficult clients can kill a business or at least limit its growth. Many diversified clients can collectively mean more money; better jobs, better fees and have far less impact when one gets upset. Great job!
Dan, we are not whining we are just venting, discussing, passing around ideas. I try to do that with my better half, who’s in the medical profession, but her eyes start to gloss over because not one word is understood when digging into details. It’s sites like these (thanx AB) that let us discuss amongst others in our field and get ideas to solve problems we face.
Things are getting done but in this profession it takes time (years) you know the David and Goliath effect.
Thanks for the discussion!
LOL, I just ranted on an old article. What is real funny is that in 2/3 years, nothing has changed and it makes my point. Too funny
It is funny, but I think we’ve all done it.
BTW – a few things have changed. 8 years ago CoesterVMS was illegally operating sans license in several states. Laws were passed to prohibit that, but notably Virginia DID NOTHING about his past offenses OR his ongoing failure to pay C&R fees. Nothing about reported multiple bad check writing.
In the end, he was brought down by his own avarice, bad treatment of his own staff, and the courage of one single appraiser willing to put it all on the line to stand up for his rights. Mark Skapinetz; National Director of Marketing and Advertising; & Georgia State Representative for the American Guild of Appraisers.
Many other successes were on individual appraisers behalf. Precedents were set for recovery of funds from lenders. Louisiana stood up to FTC and REVAA.
All these things take time Dan. It’s a very slow, steady grind by a relatively few people from ASA, AI, AGA, State Coalitions and concerned independent appraisers not aligned with any specific organization. We often take 3 steps forward to then have to take 2 back…but progress is being made.
PS: GLad I’m not the only one posting on old articles.
Mike, I have read many of your posts since becoming the office manager here in Indiana. I have found they have become even more useful an a re-read them as an Appraiser Trainee. Thank you for always being willing to stretch your neck out for what you believe as well as supporting those in need that deserve supporting. You are correct, there have been gains made and we can do more when the body of appraisers as a whole decides they will actually work together.
We had a simple line my group and I use to say while deployed when things seem to be going sideways, “Keep on Keeping on”. We made a flag from a T-Shirt with this saying in marker. It was my mantra if you will, that I used to keep myself focused and kind of spread from there. Mike, Keep on Keeping on and we will make it through. Hopefully more people will do the same. It would be nice to see large blocks of Appraisers working in the same direction with the same goals.
I look forward to reading and learning more from people like you!
Daniel, thank you for the kind and encouraging sentiments. KoKo has always been a good motto.
While it’s been a slow road, More of the Big Boys (professional appraiser associations); The Guild, and State Coalitions are working together in more areas. There are still some areas where better coordination could be helpful, but all are learning and revising priorities.
In the end it’s really going to boil down to just a few national issues though, that are common to all appraisers across America. Solutions are simple, though radical sounding.
In any event, here is my cell number 1 (714) 366 9404. Feel free to call anytime after 10AM PST up to around midnight. The invitation is open to any appraiser, novice to expert that wants to call and ask questions or just have a sounding board.
Another invitation is to join the AGA and help us in the fight for appraisers. Contact email@example.com for information.
I did one appraisal for these folks. It was a high rise luxury condominium in the marina. I had to do a few things outside of the box from a standard type of condo appraisal and it was all fully explained and documented. I got an automated review back that rated my appraisal less than average. Based on the comments and data it was showing, it was obvious that it’s algorithm was based on a cookie cutter condo. I haven’t done an appraisal for LRES since.