Let’s Talk Fees
How different fees can affect an appraiser’s income.
OK, before you lob spears and bricks my way, we can.
This is not a ‘public event’ filled with associates in an open meeting setting. In places like that, the FTC takes dim view of any fee discussion, fearing price fixing and collusion.
But privately, fees can be discussed among peers, with no agreement that any certain, mandated fee be charged by everyone. The gubmint can’t stop you from talking with an associate.
For weeks and months, appraisers across many of the forums I read have been discussing the need for appraisers to get their fees up to an appropriate level – for their area – not influenced by the rock bottom barrel scraping fees often expected by the lower tier AMC’s who don’t direct-place assignments, and fish for lowest fee and fastest turn time.
This past week I have had two separate private ‘discussions’ with appraisers. One said this:
I’m charging and getting $1,000 for FHA, $650 for standard assignments. The AMC model is broken. They drove off appraisers with starvation fees. Now they cry when they can’t find anybody. Raise your fees – it has never been a better time.
The other said this:
I have received requests for appraisals from AMC’s, quoted my fee and turn time, and never hear back from them. Several days later, even weeks later, I see the same property being solicited by another AMC. I go through the process again, and sometimes they accept my quote, sometimes they don’t. THEN, I see it a third time from yet another AMC! And, on occasion, from a fourth. SO, by the time I accept the offer it has been a week, sometimes as many as three or four weeks, since I first bid a fee and turn time on the property.
Once I do get the order, I call the Realtor, inform them of the site visit (appointment) date (usually 2 weeks out, sometimes less) and I get “we have been trying to get this appraisal for weeks, a month, etc.”. So, I have to explain the number of times I have seen the solicitation from the multitude of AMC’s looking for cheapest and fastest and inform them that had the first AMC accepted my terms, this would likely already be done and to the lender!
So there’s the problem with turn times! It’s not a lack of appraisers or the appraisers work load out in these rural areas. It’s the AMC’s shopping cheapest and fastest.
A few weeks ago, an appraiser in Sacramento, CA posted on his blog an article about how different fees can affect an appraiser’s income. I decided to make an Excel spreadsheet of my own, which I have attached. A portion of that is shown here:
| FEE | $30K | $40K | $50K | $60K | $70K | $80K | ||
| $350 | 85.7 | 114.3 | 142.9 | 171.4 | 200.0 | 228.6 | Annual | |
| 7.1 | 9.5 | 11.9 | 14.3 | 16.7 | 19.0 | Month | ||
| $400 | 75.0 | 100.0 | 125.0 | 150.0 | 175.0 | 200.0 | Annual | |
| 6.3 | 8.3 | 10.4 | 12.5 | 14.6 | 16.7 | Month | ||
| $450 | 66.7 | 88.9 | 111.1 | 133.3 | 155.6 | 177.8 | Annual | |
| 5.6 | 7.4 | 9.3 | 11.1 | 13.0 | 14.8 | Month |
This spreadsheet graphically demonstrates how a certain level of income is dramatically affected by the number of assignments necessary to be completed, on an annual and monthly basis. It’s really obvious a higher fee will yield the same income by doing FEWER reports. Doing fewer reports lowers the stress level, and the hours worked on assignments!
Open the spreadsheet, and play around with it if you like. Save it on your computer. Send it to your associates, etc. – but give me credit if you do.
It is designed so that you can change the fee amount, or the income amount, and the table line or column will update accordingly.
Dave Towne on e-AppraisersDirectory.com
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Dave you’re the man. I’m emailing you a letter I wrote to an amc just today regarding these issues. Yet another longwinded letter hoping for a brighter future. An excerpt though from the end of my letter for the rest of the appraisers here posted at the end. In response to a caring and heartfelt amc manager taking the time to discuss the industry with me. Premise of the letter prior to this end piece, is that the appraisers need an advocate and up until the moment a middle manager distributor became involved, the appraiser was his own advocate. Also detailing why the future of the industry is bleak because it’s illogical to think a true independent would operate in a restrained climate where they have no advocate, and could not advocate for themselves. Also detailing that there really is no difference between amc and non amc distributors, so long as they all advocate for the lender anyways.
My final paragraph: “So I say stand united, and don’t worry about what the lenders think. If you’re not striking a good deal, get a better negotiator. It’s like Trump says; we’re tired of losing and won’t stand for it any more. Never pander to the lenders interests and tell them you’re the amc manager, and they simply will have to trust you. If they threaten to pull their service, you fire them first because it’s unethical for lenders to pressure either the amc or the appraiser. The amc is supposed to be at it’s ultimate core being, tasked with protecting appraisal/appraiser independence. There is a million lenders out there, and all amc’s need to do is adopt something different to set themselves apart from the pack. Most amc’s approach lender solicitation as a pure advocate for the lender, and that is exactly why lenders pushed the HVCC so long ago. It was the lenders whom needed relief from the appraisers, not the appraisers whom needed relief from the lenders. Those guys don’t work well with independents. If they ever play it tough, just give them my phone number and I’ll set them straight. Ha! Seriously though, that is the thinking this industry needs to adopt.”
Baggs, The dirty little secret of the AMC industry is that many use undisclosed kick backs on a per assignment basis to the people making the selection of which AMC to use.
Sometimes this is a direct split from the sales person for the AMC with or without the AMC knowledge. Example: AMC pays sales man $35 to $70 per order (based on volume produced). Sales person tells VP at mortgage brokers that he will kick back $20 to $25 (actually the numbers are much higher in the real world). I ‘ve heard of the kick back amount alone being as high as $75.
it explains why some of these completely off the wall companies that only work for a couple lenders are able to ‘compete’ with the big boys in the AC world; or why despite terrible report quality they stay in business.
The VP authorizing the order for 100 appraisals a month is getting an extra $2,500 to $7,500 a month.
The bank may also tell the AMC that they have to do all this for $495 to $550. AMC MUST get $75 net profit per order after kick back and sales commission. They’d prefer to get double that.
So they take $150 for themselves; $75 for the VP and $25 for their sales person…appraiser only has $300 UNLESS he can cut into that $150 the AMC wanted to keep for themselves. The AMC really needs nearly 1,000 a month rather than 100 to maintain these kind of payouts.
Until the fee is removed from TRID limits and guidelines ad until the fee paid to an AMC becomes market driven cost plus arrangement, this will not change. AMCs don’t set the total appraisal fees. The banks and mortgage lenders do.
I agree 100%. Raise your fee’s when you can. they killed us for years, now its our turn !
I am taking calls and they are in real need of appraisers to keep their promises to their lenders.
5 day turn time…ya right ! How many of us can say its possible to do every assignment, whenever they order it, no matter what, can ALL be done in 5 days. That’s a joke and every one knows it. Yet its “the industry standard.”
They just don’t want the borrower to have time to talk to another lender.
They rush us to shave 0.1 day from their statics.
Cant wait to charge $650.00 !
A fair wage for the work involved these days.
Chris, the demands, requirements, or we will send it to the other 5,000 other appraisers within a few hundred miles (SoCal – Look it up) of you, is a REAL PROBLEM FOR THOUSANDS OF US. Five days is often a luxury as with the holiday next week everything I have is now due in 4 days (current rush from assignment – 48 hours). I’ve had this discussion a thousand times, but when the lenders, AMC’s, and government officials set the rules, one can fight them (as I do), while at the same time needing the flexibility to modify ones business model. The business model is not to carry 10 assignments and keep scheduling weeks in advance, but to carry just a few and be that hamster in the wheel. I’m fighting for change and support those states (VA) that have addressed delivery times (adopted VA standard 10 day turn times), but if I quote anything more than 5 days there’s a 90% chance I won’t get the work. Don’t even get me started on Solidifi and there 3 day turn time Perfomax program.
I am very sorry to hear that. Its a real shame southern Cal wont organize. the NUDE models in the is country did, the ones that stand nude for hours in cold conditions without breaks for the art students. If they could manage that, why can not the appraisers?
Appraisers are the smartest dumb people there are. I called 85 of them with the onset of HVCC and they all said, “organizing was no use”…after 20 minutes of talking to them individually, most agreed. I gave up though. Too busy with work, took 3 weeks to call them out of more than 500. But had I had the time….
Its a damn shame !
Those pressures are off in CO, but are replaced with something else and I’m not sure it’s better. But then again, non stop requests cr and at least 1 if not 2 weeks turn time. Market blew up, appraisers were unavailable, and I get daily calls and requests playing nice. It’s important to remember these national companies are just gaming the appraisers, because they do have reference to appraisers patterns elsewhere in other states. They play the principal of substitution card right up until the moment the shoe is on the other foot, then the whole process short circuits. I feel we’ve found more success in CO by appealing to lenders. When you field those orders, write a polite note to the lender management directly somehow, pleading with them to please take control of the amc, have them swap to direct assignment, run limited panels, standard minimum pay, and give you the 7 business days at least. Tag in a request to move to one of the direct platforms for better service handling. Amc was the new model. The new new model is having a senior mb or qualified staff person run the distribution department, and rake 100 per order standard. Everything runs direct, and it’s more symbiotic. Fast, it’s not for everyone. Blame the 2 a day solo appraisers for ruining it for the rest of…. See addenda.
I don’t do much (hardly any) AMC work so take this with a grain of salt. I quote ALL SFR/Condo clients 10 to 15 days. 10 working days excluding weekends and holidays OR 15 calendar days.
I usually quote LRES $1,000 to $1,500 fees and 2 to 3 weeks turn times on there constant rush orders. I’m going to be in trouble if they ever accept.
I don’t want their business. Unless Im broke after bills and nothing is in the queue I simply wont do a five day turn time. I explain that while I CAN, I also insist on enough time to do a cold review after a couple days where any errors will literally jump out at me versus a ‘hot’ review where my eyes may see what my brain meant to write rather than what I actually did write.
I would say $800 is a fair fee for a 1,000 sf cookie cutter home these days considering the amount of work and the liability involved. No B.S. That’s what your time is worth…if you aren’t making that much per day appraising then I strongly recommend that you change your career.
This message is meant for all appraisers and is not aimed specifically at Chris.
Retired Appraiser a.k.a. The Appraiser Who Walked Away At Mid Career
I have limited time (rush, FHA, complexity (mid-rise penthouse) due in 48 hours from assignment, however as I have said a million times, our issues vary via state, region, city, urban, rural, etc. Your chart has meaning, but has no clarity without taking into account the various costs of living throughout the nation. Many appraisers make a great living on those wages when their homes are under $200,000, however just as many are in the poor house completing the same amount of work at the same fee. Not that I live in these neighborhoods, but my primary zip codes have home prices near a million dollars where your income would need to be North of $350,000 just to qualify for a loan ($400,000 to $500,000 gross wages). I went back and forth with Dustin Harris on this issue (Cost of Living) via his written blog and he even tried to address it via a podcast (FAIL). There’s a lot more to consider.
Bill, Id like to remind you (or point back to) a C&R fee proposal I drafted and submitted to the Feds over a year ago. It is designed to account for locational COLA differences.
If you (or anyone else) needs a refresher it can be seen at http://www.mfford.com or the Appraisers Guild Website at http://www.appraisersguild.org
Just skip to the last page for the summary. If that makes sense then scroll back and read specifically how that particular sausage was made.
As it ties into this article (appraisal volume, fees, monthly and yearly output, etc.) and as previously mentioned (back and forth with Dustin Harris), the following is in part our discussion.
Bill Johnson says:
February 22, 2016 at 5:29 pm
“Your correct Dustin, an appraisal fee does not tell the whole story. To better understand the impact of the fee, one must calculate the cost of living to bring clarity. What’s the story if in Idaho Falls you collect a VA loan fee of $450 and in my area of San Diego/Carlsbad I collect a VA loan fee of $450. I’m sure the regulators, AMC’s, and lenders look at this fee number and assume equal treatment, but what does it really mean. According to Bankrate (C of L calculator) Idaho Falls indicates home prices are $185,380 versus SD/Carlsbad and $802,495. Apt Rent in your area is $604 versus my are of $2,054. Bottom line, the percentage increase to maintain the same standard of living in my area versus you area is 80.63%. To be considered at the same standard of living, that VA loan appraisal fee should be $810 for me and not $450. To better understand the impact of such below standard of living appraisal fees, I would ask you to step into my shoes and determine what your situation would be if your fees were 80% less ($90). Could you make a living at $90 per appraisal? While being paid $450 per appraisal in my are that is exactly what we are being asked to do. What say you Dustin?”
Bill Johnson says:
March 30, 2016 at 6:58 pm
“Dustin, thank you for expanding on your thoughts both in the comment section of your blog post and via the podcast, however I think we may need to agree to disagree.
The point was not to compare you to me, but rather to compare two separate areas to each other to get a read on a local level of what the impact is on set statewide fees (VA panel), national level fees (set AMC split fees) or customary fees in general. Although for many reasons I would guess that San Diego/Carlsbad appraisal fees are lower than your area (1,000 appraisers in SD and 5,000 within 200 miles / high ratio of AMC’s, etc.), I’m willing to concede, round the corners and say our fees are similar (+/-).
As it relates to establishing cost of living standards, again it was not to assume I know your standard of life, but to rather collectively draw from averages as pulled from 50 DIFFERENT C of L categories in the Bankrate calculator. On a side note, with the state of CA announcing this week that the ENTIRE STATE is moving to a minimum wage of $15 in the next few years and future increases will be tied to inflation (C of L), the increase in the gap (your area versus mine) will likely explode from the current 80% higher in my area.
In listening to your podcast and your explanation as to perhaps your area being of higher complexity compared to mine (no way to truly test) I will again provide my side of the complexity story. My primary county of operation (San Diego County) exposes me to ocean/bay front properties, international boarders, several military bases, and has a diverse geography (Mnt, desert, ocean). The area also has a traditional big city downtown (high-rise condominiums), rural areas, agricultural areas, Indian reservations, and some of the most expensive real estate in the country. In fact, my primary zip codes have a median price approaching one million dollars (higher liability / Jumbo loans). San Diego is also a very heavy local and international city for investments and specifically with the influx of professional house flippers. As it relates to your local connection of appraisers, perhaps they are getting the cookie cutter properties as only a few times a year can I ever reuse something I’ve comped before (everything is a one-off assignment).
As it relates to travel, one must not only take into account the distance in miles, but also the actual TIME in traffic. Although my daily commute a few years back (3 to 4 days) was from San Diego to Palm Springs (126 miles one way), big city traffic jams (San Diego is 17th worst) often result in daily time commitments of a few hours. As a side note, a check of national gas prices today showed that my area was on average $1 more per gallon than in your area.
In bringing this all together Dustin, I truly believe collectively that our areas of practice have strong similarities (fees / complexity), however the outcome changes dramatically when you apply on a local level the cost of living and one’s final standard of living.
The entire point of my comments weren’t to debate the facts as I have laid out above, but to take them to help determine why on a local level appraisers can have such strong feelings about their profession. If we take the Bankrate data as fact (average person) it states that my area is 80% more expensive to live in as compared to yours. If at the end of the day an appraiser in your area gets to pocket a $1 after local expenses while under similar circumstances my area gets to keep 20 cents, we are not going to be looking at the problems of our industry from the same angle. At equal fees, appraisers in similar areas to you can live well ABOVE what is considered typical for the area (standard of life), however at the same fees, appraisers in my area live well BELOW what is typical. To better understand my point of view, reduce a $325 appraisal fee by 80% and live off of a $65 appraisal fee in your area. The goal is to have you live below what is typical for your area so that you can have a true understanding of what it’s like to live off of $325 in my area.
After you are in the above situation, there’s a very good chance your opinion might change as it relates to the requirement to have a 4 year degree, 2 years of apprenticeship training (6 years to make $65), and the importance of establishing customary and REASONABLE appraisal fees. Your ability to establish a small business with hired employees will most likely face much steeper challenges based on your gross income, etc.
Although the solutions to our problems are much longer than my comments today, the emphasis should be on the reasonable aspect of appraisal fees. As in, just because $xxx may be customary, the true reasonable fee may need to be double or triple in some areas when the C of L is considered.”
Bill Johnson says:
February 24, 2016 at 5:40 pm
“As it relates to time Mike why has no other commenter considered my argument as it relates to appraisal fees and the cost of living. Although Dustin and I shared civil dialog on the subject, no one is taking this stance seriously. If you want to keep it simple Mike the state of Idaho and CA pay the same fees for a VA assignment ($450) while my area is 80% more expensive to live in. As it relates to time Mike, with a typical mortgage in Idaho Falls ($600) the appraisers need to complete 1.3 appraisals each month to pay for housing. In my area ($3,000) at the same VA appraisal fee we are completing 6.6 appraisals to pay our mortgage. Assuming 8 hours per appraisal the Idaho appraiser must spend 10.4 hours per month to pay for housing while the San Diego appraiser must spend 52.8 hours. All discussions should start after the C of L is taken into consideration.”
Bill Johnson says:
February 26, 2016 at 10:55 pm
“I get it Clint and thanks for the dialogue. In part, my point about fees and weather one appraiser will take an assignment or not (Say $275), is directly related to local costs (C of Living). If in another part of the country I can get away with paying $8 per hour for office help, while in my area the cost of living puts that cost at $15, then the take home pay for the business will be much different. With a gross of $275 in San Diego, general expenses of $75 and a single employee at $15 per hour ($120 per day), the net per appraisal to the business is $80 per appraisal ($10 per hour to the appraiser/owner (8 hr per assignment)). If the typical mortgage in my area is $3,000, then the first 37.5 appraisals completed each month would only go to my mortgage. If in a different city you take that same fee ($275), have an area that is 80% cheaper to live in the results are much different. With $50 in general expenses, and $64 per day being paid to a single employee, the net to the appraiser is $161. If this other area has a typical mortgage amount of $650, then the appraiser/owner will only need to complete 4 appraisals per month to pay his mortgage ($20 per hr). If we call appraising a profession, please tell me what other industries pay half as much per hour when the C of L could be 80% higher.”
Bill you of all people really do have to read our (AGA) suggested minimum fee proposal which can be set for individual states or nationally. Its been submitted to the feds; Virginia commented on how thorough they thought it was before adopting the lower (easier to get passed) VA fee.
It is predicated on Civil Service pay scales and area multipliers as well as hourly time and appraiser experience. The multiplier range is from 15% to 31% California was a 27% and Virginia was about 24%. No area is lower than 15%.
Let a trainee inspect property by themselves and a fee of around $500 to $550 could be reasonable (anywhere). Require a certified and it goes up. Require a certified for a complex assignment (time) and fee goes up.
http://www.mfford.com or http://www.appraisersguild.org just jump to last page. If it is interesting to you go back and read the in between explanations.
Over the past year I have really noticed an increase in prices of many products and services. Just returned Monday from taking my 8 year old grandson on his first plane ride and vacation to Washington DC. This city is awesome and lots to see and spend money on. I always enjoy traveling there. At the suggestion of staff at our hotel we went across the street to eat at a restaurant. A $43.00 rib eye for an eight year old with a side order of $9.00 mac and cheese. REALLY? I do not feel bad at all charging $150.00 for a final inspection. Fees here start at $450.00 and not one penny less. I would go up and up but we of course have that silly group that want sardines and crackers instead of rib eye steak. Ok well! LOL
Fees should be based on supply and demand. VA just raised fees in Montana for a basic 1004 to $900.00, why because they could not place order’s in some rural states. I imagine an appraiser there doing just 2 a week in a state where the cost of living is low is doing very well. I feel bad for the CA appraiser’s seems like there are too many in that state and they are undercutting each other for $200-$300 crap AMC fees, Supply and Demand, as long as they accept those fees, AMC will keep churning out the low ball orders!
Ralph, just one glaring point regarding that…. Why doesn’t the cost savings from reduced cost of appraisal services be returned to the borrower then? They pay the same fee regardless of the appraisers fee. Perhaps a read of the junk fee rules is in order…. You can’t lean on the free market sustainability argument, if the end consumer experiences no cost benefit. Worth less by proxy? I don’t think so, because the consumer charge remains constant. This is the key reason the new hud1 form did not itemize the difference between the appraisers and the appraisal handling total fee. How else could a junk fee be veiled when it’s so close to the surface? Have you seen some of the amc advertisements which offer profit sharing back to the lender as a service term? The beat skips on.
Don’t have an edit button anymore. Correction: Why doesn’t the cost savings from reduced cost of appraisal services be returned to the borrower then?
I had to give you a thumbs down Ralph as your statement is incomplete. Although it was not a true free market at the time, prior to HVCC the business models that were in play often determined varies fees from company to company for the same work (in theory). Overnight, the number of appraisers did not change, nor did the available work, but yet our service was suddenly seen as equal and we were lumped in together with that individual appraiser. If I had a company of 10 seasoned appraisers, varying local officers, a regional presence, could be present for monthly meetings at local bank/lender branches, etc. then by skillset was visible and my higher fees were a bargain. The supply used to be skilled offices/appraisers versus rookie individuals, and the demand used to be experience versus no experience. The business model was blown apart by way of not being able to transfer appraisals (inter-office), thus we have all been lumped together.
As a veteran I want to buy your house. Does the VA dictate the commission that Realtards charge? What if the home needs to be painted, maybe a new roof, HVAC serviced, Plumbing needs some repair or electrician needs to be called. What does the attorney charge for a warranty deed, note or deed of trust….where is the VA when protecting me from any and everyone that wants to overcharge me? They are stomping the hell out of the stupid appraiser! If the honest appraiser arrives at an estimate of market value that is less than my contract then the VA requires the appraiser to go thru the Tidewater Bullshirt to attempt to allow me to be ripped off for a larger price than I should have to pay. Thank you V the Hell A!
How about the members of the appraisal standards board, etc. Have these dudes ever done an appraisal?
Oh well….this industry sucks for the pitiful appraisers in our group that work with AMCs and national appraisal companies. Once these dudes starve out of the profession the rest of us can make a good living. I believe that time will come pretty soon! i Wonder why so many in our profession do not understand that they can be making at least 50% more if they will just charge that fee! Lenders in my market are begging for appraisals….Really, you will be surprised what you can charge if you just have the ba**s to charge it! Why do you want to be a pitiful provider? There are about 76,000 appraisers in the US and only 31% are doing residential appraisals….do you not see an advantage in that? You cannot fix stupid!
Wayne, I don’t know about the standards board but the appraisal practices board has ONE (1) residentially oriented member on that board. She is an SRA and a great person…but she is ONE voice.
There are two business valuation representatives-one of whom is from Mexico and maintains her business address in Mexico. Seems very intelligent and sincere but I have to ask how and why a board member from Mexico fits into FIRREA and protection of AMERICAN consumers and taxpayers.
this is particularly concerning because business valuators (accountants really) and real estate appraisers have completely different techniques to applying approaches to value that we call by the same names. A BV analysts income approach would be considered blue smoke and chicken bones approach to a real estate appraiser. Its not wrong per se but it is NOT the same. The BV community is exerting undue influence on IVSC. TAF is about ready to adopt IVSC 2017 BUT should not do so. Problem is very few (TAF) members can articulate the reasons why this should not happen yet.
Its especially an issue in third world nations.
There is a business equipment or personal property representative and I believe two commercial oriented appraisers. I’d have to look the others up.
Point is that most of the ASB members do NOT do residential real estate appraisals; and several may share the same biases that the AI does toward non commercial work..
Really… we have appraisers that need to feed a family. These folks do what ever they have to do to make ends meet. Seems that these are the ones that accept the AMC work at the bottom of the scale. I cannot blame them as there was a time that I had a family to feed. Life does change.
An AMC does suck the profit from any appraisal assignment. They add a lot of additional bullshit to the assignment. They provide no purpose and they provide nothing to the appraisal process. We need to flush them from the industry!
Oh please, that tired old line? 25lb of rice is 15 dollars at wholesale store. Bag of beans is 10 dollars at any mexican grocery. If appraisers are taking the position where they’re competing like they’re on welfare, they may be in the wrong business. Who wants an appraiser to value other peoples financial investments, when they can’t maintain good credit and good finances on their own? The same arguments appraisers use against amc’s and credit management should also be applicable to appraisers themselves. The welfare argument falls flat every time. This business is for intelligent people, not everyday worker bees.
OK Baggins, what is “that tired old line”? We have 75,000 appraisers in the US and 31% do residential assignments. Last week I was on vacation in Washington DC with my grandson and next week I will be on a cruise to Cayman Islands, Cozumel and Jamaica. There MUST be some pitiful appraisers in our group. I will quit this damn profession before I accept an assignment from a silly AMC or national appraisal company. Again…someone in our profession is accepting this crappy AMC work….I just have to believe that they need to do so to survive. i do not understand that but if not why would they do such a stupid thing?
Wayne, the industry is falling into two camps, those that work the areas where they are making BIG MONEY (Ralph $900) (typically in areas of average to below cost of living) and those areas that make less today then 10 to 20 years ago (typically in high cost of living areas). Those that make the big bucks and can afford a single vacation let alone several (you), have no dog in the fight (C&R), nor do you want to make waves to change what you have. The high cost of living areas have massive concerns (CA losing 1 appraiser a day), but we are fighting a losing game (set higher fees, longer turn times = DENIED), living paycheck to paycheck and are not in a power position to resist (families to feed). With both camps mostly silenced for different reasons, the winners have been the AMC’s and software portal companies (FNC, Inc. / Appraisalport sold for $400,000,000). If lenders and their hired puppet AMC’s want us to live in the areas that we serve (high cost of living areas), then simply focusing on what is customary and not addressing the reasonable side of the law, then nothing will change.
400,000,000 in provable junk fees. Will the wonders of this industry never cease?
The wording of the law actually read “reasonable and customary” not customary and reasonable. Makes you wonder how the C&R phrase came about rather than it being R&C, right?
Customary was vague and ambiguous. The very method of determining it could be argued forever. Distraction from the banking and AMC industries. Look at the shiny baubles rather than the most important issue. In fact, rephrase it so the fact that customary is said first makes it the issue of concern in most peoples minds.
Reasonable on the other hand could be quantified too easily.
1. Is a fee that is lower than it was 30 years ago reasonable-No.
2. Is a fee for a professional service requiring a four year degree that is lower than a plumber or auto mechanic charges per hour reasonable? No.
3. Is a fee that is lower than the salary equivalent of a county tax assessor appraiser or state enforcement appraiser or federal appraiser with comparable experience reasonable? No.
The ‘R’ part of the argument is the ONLY part we should focus on or discuss as appraisers anymore.
Honestly I love my fellow competition. Many of them are signed up with ever AMC on the planet. They are on a treadmill working for chump change. They are so busy that when a local bank calls them to place an assignment they refer the bank to me as I can typically meet a three week turn time. I like the local banks and credit unions as they pay top dollar and very fast. However there are thousands of dollars to be earned with Realtors, individuals, lawyers, accountants, and on and on. The key is to market and market again! If you are working for AMCs you are a looser! Just my opinion! LOL
As an appraiser Wayne living in neighborhood (A), you can run numbers all day to determine what the typical buyer does in your area, however my neighborhood (B) does not work like yours. The spread between direct lenders, credit unions, civil use, etc. is at times only $20 to $30 more. With OVER 1,000 appraisers in San Diego county alone (primarily no more than 20 miles from each other) the discounted AMC fees have caused significant downward pressure to ALL FEES. For a good time, check out San Diego’s Craigslist and look at the same day service for $200. From a pure business model Wayne, one can seek out those individual clients that pay $30 more, or seek out AMC’s for $30 less with a promise of all you can eat.
That’s locationally specific thinking. In CO I’m hard pressed to find a CU whom is not aligned with an amc. I’ve called many of them at this point. Working with amc is no different than direct, since they all advocate for lenders, and only a rare few non amc clients have any loyalty to appraisers anyways. Top dollar is a locational consideration. I’ve got an appraiser buddy who plays the principal of substitution game right back to amc’s, and routinely rakes double fee. If the shoe fits, the other guy can wear it first. Realtors, lawyers, accountants as clients? Well…… Hey dude, I’m just in this for the beer money. Those guys ruin my buzz every time. LOL.
Bill I do understand what you are saying. i totally agree with most of what you have said. I am just one of the lucky guys that have a general certification and 65 years old. I am VA and FHA, TDOT and every other type of approval in the industry. The days of chasing business is over as they chase me now! I am lucky as that for every assignment i accept i normally turn down four or five! I understand that some of my fellow appraisers take assignments from AMCs and national appraisal companies and I feel sorry for them. For those folks I can only say Market and market some more..the mortgage lending business is not the only game in town!
As it relates to turning down business Wayne, I to at times turn down 4 to 5 per day or 50+ per month. In one of my long winded responses above (February 26, 2016 at 10:55 pm), what’s the purpose of saying yes, paying dependable staff $15 per hour (soon to be min. wage for the entire state), and clearing $10 per hour for my self. The question becomes what if EVERY LENDER/AMC, WAS FORCED TO PAY A MINIUMUM FEE (Customary) of say equal to my states VA fee ($450). Instead of netting $80 per appraisal (see example above) and $10 per hour, the net would be $175 more (no new expenses) and the hourly rate would be $31.87. If assuming one works 230 days a year at 40 hours (yea right), then the income becomes $58,640 per year. Without company benefits, knock off an additional $15,000 to $20,000 a year and at a rate of $450 per appraisal your lucky if you end up at $40,000. If you live in Idaho Falls where according to Bankrate the typical monthly mortgage is $600, than after all expenses your housing runs you 18% and you live very well. In San Diego/Carlsbad with a $3,000 typical mortgage that same $40,000 will result in 90% of your income going toward housing. If we assume $450 is a REASONABLE FEE (COST OF LIVING) in Idaho (18% toward mortgage), than for the San Diego appraiser to live a similar reasonable lifestyle (same % toward mortgage), than according to my quick math, gross fees in my area should be $1,200. NO ACADIMIC, INDEPENDENT, VA SCHEDULE, NOR ANY OTHER SURVEY I’VE SEEN, TACKELS THE ISSUE FROM THE REASONABLE SIDE OF THINGS.
The ‘contingency billing arugment’ has been plaid against appraisers like a snake plays the mouse before eventual consumption. Lenders used to routinely structure billing by price, and appraisers simply were not allowed to upscale the billing in alignment with lenders billing, as a way to prevent improper movement of final value opinion to boost the appraisers earnings slightly, since with slightly higher value opinion, would come slightly higher fee. The notion that all appraisal service should be uniform in cost is folly at best. Normal scale is normal fee. High end, golf, rural, distant, that’s at least half more if not double fee. You don’t want to hear my fee for the country club since I refuse to appraise that far above my personal social stature. Buy me a membership at the club, help me gain the business presence to afford to live near the club, and perhaps eventually I’ll consider appraising there…. It’s the kiss a***s of this industry whom loves to wear those rich boy shoes and get all up into the country club like it’s a thrill or something. Too stuffy for me man, you can’t pay me enough to even go there for a round of golf. I’m a public course kind of guy, what more to say. I remain unapologetic for upcharging everything that is even possibly a little complex compared to the low side of the average. And I’m not breaking contingency rules by upcharging when I see $500k+ That’s my business decision and there are no guarantees my value will support the loan. There is one guarantee I claim for myself though; Those borrowers can afford it, and I’m charging more. Plain and simple. Higher dollar is more work and more risk. If it’s not, perhaps I’ll get lucky with a spiff, but that’s entirely unlikely and entirely random if such an event does happen. The only constant in high dollar for regular static fee, is you work harder for less. That’s the only guarantee. Contingency billing is not applicable at all, so long as the appraiser does not promise any results beforehand. Scale up those fees and scale them high.
You haven’t been paying attention for the past year Bill if you have not seen the reasonable side addressed. Its published. Its been submitted to the Board of Governors of the Federal Reserve; the CFPB and the appraisal sub committee. It was presented in person to the Virginia Real Estate Board where a lower rate and metric (VA fee) was already being promoted and that had a better chance of being passed
When links to it used to be published here, many appraisers responded with “By golly I’m not going to have anyone or anything set MY minimum fees!”
Read myth about free enterprise in this blog.
Just my 2 cents, does anyone actually know how many apprasiers are working for $300 a job ?
Maybe, the AMC’s just advertise $300 to see if some fool will go for it. Then, they may actually give the work to their best appraiser for a standard fee.
I myself do not know any appraisers working for $300 any more.
We are in PA, so any Pa appraisers write back and tell us if you are accepting $300 fee’s.
I know every market is different. But lets think about it, how about handling rural counties for a higher fee, set appointments for 2 days, grab a motel and actually EARN more money per appraisal.
The biggest residential lender in the world (I think) is Wells Fargo, and assuming they do more appraisals than any other company, they have (since HVCC) and still do by way of RELS and now Corelogic, pay in the range of $250 a pop in my area. At $300 an appraisal the assignment may be need to be FHA, a rush, or have a complexity fee. Bank of America and Chase have similar fees. My argument is this Chris, what’s the issue if they pay rural, etc. appraisers top pay (7, 8, $900) with very low volume, while they pay heavy volume areas (thousands and tens of thousands) fees in the $250 to $300 range? As proof of low fees, one must look no further than imortgage by way of Flagstar and their $10,000 fine in the state of LA for paying $200 for an FHA assignment.
Those are the appraisers whom are constantly signed up with all the records checks and cross reference sites like clearbox and that other sterling, and the likes. You can pick them out and then hit their business up on some web income research to get the public tax figures. The 2 a day appraisers skew it for the rest of us hard working folk. And they don’t just earn big, they earn very big. Like shooting stars, here today, gone tomorrow. Keeps the distributors hungry for more generic india written reports though, packed full of ‘see addenda’ commentary which of course, leads to addenda with regurgitated MLS facts which every employee of the lender, even the janitor, has ready access to…
Hey Bill… what if Wells Fargo determines that the typical customary and reasonable fee for an appraisal is FIVE DOLLARS. Let say that VA, FHA, FANNIE Mae, etc. etc all agree. Why not Four dollars? I do not give a silly damn what those folks think is customary and reasonable. If they do not have an appraisal… Larry the loan officer does not get his paycheck, Randy the Realtard does not get his paycheck, on and on and on. As an appraiser I can do assignments for the highway department, the divorce court, insurance company, estate, etc. etc. If enough of those folks do not get their paycheck THEY WILL notice that we are gone! It really will not take that long! Are they going to make loans without appraisals? Maybe…. would you buy a share of stock in a bank that was making loans without appraisals? I know damn well I would not….. If I gamble it is Black jack and on the cruise ship or Las Vegas…. no need to gamble with a silly bank! We need to wake up!
I disagree with your thesis completely Wayne. Not only has the writing been on the wall for appraisers for nearly a decade it’s being carved onto your foreheads with a dull knife each and every day.
Take a look at this Wikipedia article: https://en.wikipedia.org/wiki/Algorithmic_trading
Pay particular attention to the graph showing the amount of trading done by computers up until 2012. That number certainly exceeds 90% by 2016. If computers can be trusted to trade $169,000,000,000 daily they can easily tackle the mundane task of basic real estate valuation. The only thing that appraisers will be used for in the near future (if you are fortunate) is basic inspection services. You will of course be bidding against home inspectors and Realtors for those $50 orders.
Those of you who continue to ignore this fact are doomed to endure a long slow agonizing death.
P.S. I can assure you that analyzing the value of a company’s stock in real time based on split second news from around the globe is a far more daunting task than appraising the home down the street.
One key point there Retired. Insider trading fraud is very real. From everything form algorithmic structure and alerts, all the way to nefarious NSA style phone tapping and systemic misuse of such informational privilege, there is probably more insider trading than not these days. I dismiss that entire argument about the relevance of mass data with a simple yet logical point; You’d have to trust the programmers behind the data, in order to trust the data itself. There is no such thing as basic real estate valuation. It’s a people business and until computers walk, talk, smell, and have logic equivalent to a human, they will never be effective substitutes for a human.
If you thought fraud with humans involved was a big deal, just wait until you read up on fraud involved with automated systems. It’s always right there under the surface, you just have to look for it. When using google, try applying these fun keywords after the end of any research request: hack, crack, whistleblower, fraud, complaint, legal case. Any number of disclosures come towards the top hits, which you would otherwise never see as they’re purposefully buried in corporate based web searches…. (Drumroll……) Buried by the same algorithms which things like trading rely on. Just this week we’ve learned facestupid routinely censors conservative opinions. You’d never know that though, if you only acquired your information from facecrook. They promise to adjust the algorithms, yeah right. The writing is on the wall regardless of which industry you choose, corruption is rampant nationwide.
Bagins:
“Buried by the same algorithms which things like trading rely on. Just this week we’ve learned facestupid routinely censors conservative opinions. You’d never know that though, if you only acquired your information from facecrook. They promise to adjust the algorithms, yeah right. The writing is on the wall regardless of which industry you choose, corruption is rampant nationwide.”
i am not sure what you mean by all of that. I am not a very good investor but take a look at DBD… Paying a yield of 3.22% for the past 61 years; or NWN paying 4.33% for the past 59 years; PG paying 3.34% for the past 58 years… on and on and on… There are many Champion Dividend Stocks… Take a look in that direction if you want to secure your retirement. Wish you the best… hope to see you on the next cruise!
Retired Appraiser,
I share your disappointment in our industry. I do see your point of view but I believe that the total responsibility lands with the individual appraiser. NO BUCKS… NO BUCK ROGERS…. If I do NOT accept an assignment then the AMC cannot earn their fee unless YOU accept the assignment and provide them with an income. it is NOT me that is keeping these parasites feed!
Honestly, there are so many sources of work for the typical appraiser I do not see how any of us are out of assignments. We have been misled to believe that the AMC way is the only way. If that was true I would been out of business a decade ago instead of busy as hell!
I have no degree in finance. I do love to play the game! The computer generated “sell, sell, sell” that is a part of the computer finance game is funny. Great Britain dropped out of the European union and Kinder Morgan stock took a hit. Does Kinder Morgan have any pipelines in Europe? What about Old Republic Insurance? They do title insurance of property in the US…why did they take a hit? You have to admit that it is a very fun game!
If lenders do away with appraisers as you seem to think will happen it will be a wonderful world again. I remember in my youth that banks and savings and loans were ruled by the “loan committee” these folks were the dude that owned the Ford Dealership, the State Farm agency, etc. etc. They had absolutely zero clue about real estate valuation. That was the way it was back then. If I could only go back to those times, knowing what I know now….I would be as rich as Donald Trump!
Hey Retired. I understand your difference in opinion with me in the previous posts. I am no stock market guru….I have bought a dollar or two in companies that pay dividends. I enjoy the dividend payments into my account… Heck, they pay for me to cruise on board the Carnival Ship to the Carribbean. The Carnival stock also gives me an extra $100.00 on board credit each cruise. Not much…but I like it! It is nice to have money deposited into your account every month whether you are asleep or awake. Better than working for AMCs! LOL
The problem with your scenario Wayne is that Wells Fargo has not lowered the appraisal fee (post HVCC), but RATHER IT HAS INCREASED it while the split to the local appraiser has declined. Prior to them selling the last 50% of the AMC company they owned (RELS), they directly benefitted from higher fees, and lower splits to the appraiser. Not that I think more government is the answer, but if a floor has been established by way of customary fees (VA schedule, academic, independent) of say $450, then a fee of $449 is already a violation of the law, so forget saying $5. WELLS FARGO SHOULD NOT BE DETERMING FEES as a legal system is already in place. As it relates to your argument about civil use assignments, what do you think will happen to those fees if you say Wells Fargo and the like start paying $5? Appraisers are fed up with the 20 page engagement letters, increased scope of work, etc., as it relates to lender work, and it has become a race to the bottom ($) for civil use work. Civil use fees have a direct connection to what is happening on a local level as it relates to fees paid by lenders. My example above made reference to local appraisers staring at $200 for same day civil use work. The issue we have Wayne, is a lack of enforcement of past and current regulations.
Ron Paul: We should not reject free market principals, because the truth is we have not had that.
We are in a constrained controlled market without an effective advocate. Appraisers used to be their own advocate. Now that a decade has passed, I see why HVCC rolled out the way it did. Lenders wanted insulation from independents, but sold the package the exact opposite as if such insulation was good for appraisers. In the moment a distributor whom hand to answer to the lender was in place (amc or not), the appraisers lost their only advocate, which was themselves.
Just came across the following info:
http://www.prnewswire.com/news-releases/disabled-veteran-owned-appraisal-company-awarded-2-federal-contracts-in-first-half-of-2016-300293480.html
It appears that we may soon have more AMCs in control of our industry. Unless appraisers can come up with a way to rid our industry of the plague of these AMC taskmasters our numbers will continue be reduced. The current information indicates that as of 12/31/2015 there were 76,800 actual appraisers. This number is decreasing at a rate of about 3% each year. With approx. 64% of this number being over the age of 50 the number of appraisers leaving the industry may increase. The study indicates that of the total only 31% prepare residential appraisals.
There are many who believe that computers, etc. can and will take the place of appraisers. That may happen one day for the mortgage lending industry. I do believe that we will most certainly see more changes to come!
Valued Veterans: “Schedule this immediately or we will reassign the order!”
Me: “Good, reassign it, don’t call, don’t write.”
Follow up: “Please could you keep this order please.”
Me: “Too late, already filled that slot. Again, don’t call, don’t write.”
Senior person wrote me to apologize for the employee stiff arm. Too bad, they should have hired better trained more professional staff to begin with. When a know nothing unlicensed fresh brookie green thumb greenhorn newb jr office cubicle worker thinks I’m the one to push around, well, there is a reason I refuse to work at the office any more.
When computers replace the appraisers, there will be no effective check and balance system in place and consumers of mortgage products nationally will be irreparably harmed.
Join us, the next cruise is aboard the Carnival Breeze, leaving July 10th at 4:00 PM. We will be going to Cozumel, Jamaica, and Cayman Islands. Better pack quick as it is this Sunday! If you miss this one there will be many others!
This appraisal business is a very good business. Do not let the nay-sayers tell you different. Just do not be a chump and be a slave to the AMCs… Think about all of the users of appraisal services within your market area and go after those folks. I paid dues for years to organizations that promoted designations that I do not have. I paid for subscriptions and publications prepared by folks that do not even do appraisals. I decided to spend that money to market my own business and it works just fine! Good luck to you!
Hey Retired Appraiser, Baggins and Bill Johnson. As I have said in previous posts the view is different from each of our windows. It is not my intention to make any of my fellow appraises mad. Just know that I will not ever accept an assignment from an AMC or national appraisal company. Just not going to happen!
If you guys want to work with the AMC scum… that is totally your choice. I do not give a damn what AMC you work with. If you want to do so…that is your choice and I wish you would not do such…but your choice!
I turned 65 today and all I want to do is play. I have done the appraisal of the explosive manufacturing facilities, the steel plating facilities, the high rise office buildings, the flood plain, right-of-way, construction easements, slope easements, the national guard armories, etc, etc. all I want to do is make a few bucks to pay for the next cruise! I want to play and have fun…you guys do whatever you want! A few nights ago I was at the steak house on board the Carnival Breeze…an 18 oz rib eye cooked to perfection with french onion soup, cesar salad on and on…$35.00 per person…. Are you really dealing with some pitiful AMC clerk telling you how your report should be prepared? Really? Have you completely lost your silly mind? Grow a pair!
Totally up to you…grovel at the feet of an AMC or play any game that is offered.
I bailed out a couple years ago after 20 years but like to keep up with what is going on.
I am glad to hear some of you all are getting better fees and terms but what happens when rates go up and refis go away and sales are fewer.
It is a permanent rat race they put everyone on unless you have a private client base.
Good Luck
What seems to have happened in L.A. is during the mortgage boom, mortgage brokers, lenders, certified appraisers and everyone else in the lending industry put the word out that appraising was a good job, paying good money and they could put you on the fast tract to getting your license. How, apparently, there were appraisers that were giving folks experience hours who hadn’t earned them. Their training consisted of gathering data and bringing it back to the office. These people went out, started their own business and when the bubble burst, they were willing to work for low fees because they had no idea of what a credible report was and how much time it takes to complete one. Its taken them several years to figure out that cash in your pocket today, doesn’t mean your profitable! Because the appraisal thing came so easy to them their attitude is, “I’ll ride it as long as I can”. “I know I’m not doing the research I’m supposed to, but if I get caught, then i’ll move on to something else”! They were trained on boilerplate, that’s why the AMC clerks like them so much, because this appraisal thing is about doing what you’re told, not communicating your own credible analysis. One thing I know for sure, Appraisers need to be concerned about an oversupply of appraisers. Longer turn times should be the banks problem, not ours!