Take Control of the Appraisal Process
- Changes from Fannie Mae - February 3, 2022
- AMC Reviews of Appraisals - November 27, 2019
- New CA Law Negative Effect for Appraisers - November 8, 2019
If the appraisers want to take back their industry they need to come together…
This new law in NY has aroused a lot of comments from appraisers but let’s be honest.
Appraiser have been complaining about AMCs for the last 10 years and waiting for the government, regulators and other to solve the problem with the whole AMC disaster. I have written about this before, the appraisers have no one to blame except themselves. If you wait for someone else to solve the AMC problem you are looking in the wrong place. We all know of the problems with AMCs going out of business, bankruptcy (Coester, AppraiserLoft, and many others) and leaving many appraisers with unpaid invoices. The following would resolve that problem and would take most of the power away from the AMC which they now have.
If you could just get the appraisers, 75% of them, to come together and do just a few things we could solve most of our problems.
The first step is simple and most appraisers would love this small change. We all need to pick a start date (all appraisers need the same date), let’s say 7/1/2019.
On or about 6/15/2019 when you receive an appraisal assignment from anyone, every client, AMC, Lender, mortgage broker, everyone, notify them as of 7/1/2019 all appraisal invoices must be paid prior to the delivery of the completed appraisal report, no exceptions. If all or most appraisers would stick together on this they would have no choice except to go along with our demands.
This is the first step in taking back control of our industry.
Along with this the appraiser should also include that they will not pay for any technology fee, upload fee or any other fees (Appraisal scope fee, Mercury fee, AppraisalPort fee) imposed by the AMC or anyone else.
Remember that when you sign the report and send it to the lender/AMC the report is completed and the appraiser should be paid at that time, after you have submitted the report you have no power over the AMC/Lender, you are at their mercy. Many of them say that the appraisal is not complete until you have responded to all their revisions and other request.
I do lots of work for Attorneys, Accountants, private party and I always require full payment prior to delivery of the completed appraisal, no exceptions. I do not accept credit cards, PayPal or direct deposits, these can all be reversed if the payer complains. A check is almost as good as “Cash” in this county because if a check is returned for any reason, insufficient funds, stop payment or almost any other reason I can take it to the District Attorney for the county and they will collect the entire amount and send me the funds. The District Attorney collect 4 times the amount of the check and they keep 3 times the amount of the check and give me the full amount, no questions asked. They have been doing that for over 25 years in this county for any business at no charge.
The AMCs approach to the appraisal industry was simple, contact the source of the appraisal requests, lenders, mortgage brokers, mortgage lenders and promise them all kinds of fee services and corral the flow of the requests. Next divide and conquer the appraisers by sending out the requests to several appraisers at the same time and make them bid on the assignment. Since they controlled most of the assignments and the money the appraisers had little choice except to take what the AMC offered.
If the appraisers want to take back their industry they need to come together.
I only have one thing to say-“I AGREE!!”
The appraisal process has never been and will never be controlled by appraisers. Accept it or find a new profession.
The COD would be great but yeah that will not happen. All I ask is a reasonable payout. If AMCs lag then I put my efforts toward the companies that pay within 30.
Wanye, appraisers may never be able to “control” the appraisal process, but we certainly can command what our worth and working conditions are, just like it was for my firm before the AMC pimps came along! All appraisers are seeking is free enterprise and appraisal independence. I think the majority of this problem stems from newer staff appraisers who were trained by amc’s/banks with the mentality that “you do what we tell you to do, if not, retribution will follow!”
I have been saying for a long time that appraisers need to bid what they believe the assignment should command, based on complexity and workload. If they don’t like it, don’t do work for them.
I would call for a strike after ten years of abuse from AMCs. That will get the attention of everyone, from anxious borrowers to banks to congress. Political action is the way to solve this, otherwise we need to sue for restraint of trade. No other profession is regulated like that. Can you imagine a tax accountant having to work for a middle man who knows nothing about taxes? Would you want surgery from a nurse instead of the doctor with experience and education and training? Would you allow a mechanic to work on your car if they didn’t know anything about engines? What is expected in the AMC model is that we are as fast as a computer but it is our education, training, experience and ethical standards that makes us superior to any zillow or trulia! I guess artificial intelligence is respected more than appraisers, but that didn’t work out well for flying planes (ask Boeing) when the computer overrides the pilot; how about the woman who died in Phoenix that was riding in a driver-less car? We may like having a roomba to clean our floors, but that doesn’t affect everyone in the country who wants a loan, but bailouts are being engineered now, and they can blame the appraisers when it is the clever wall street guys who crashed the world economy in 2008, so we were just an easy target. That is because the banks have lots of money to pay lobbyists, and republicans are in lock step and won’t do anything for the consumer.
Note that the Consumer Protection Bureau has been dismantled. Banks got huge bailouts but they are not loaning to anyone without an excuse not to loan because there is risk! If banks had to keep the loans on their books for the remainder of the loan term, we would see an interest in having well-documented appraisals done by professionals.
The vast majority of appraisers stopped reading the article after the second sentence because it would require work on their part. They are far more interested in putting in the lowest bid for an appraisal of a 2 million home.
[Do I hear $225?]
Retired, you’re necessarily pessimistic. So funny though. I’ve found a reasonable solution in the form of actually complying with the ethical principal of a fair billing structure regardless of the client. As I charge a full fee, this naturally excludes so many amc’s from the rotation. Although they may try to quote, I respond back, why bother, I told my my quote amount and you can simply assume that figure will never change from one individual request to the next. Problem solved.
Anyways, it’s my favorite time of the year again, the federal register published a moderately sized list of mortgage lenders receiving penalties. You know I love to read those ones. However, the fines are so pathetically small, it’s no wonder they never stop. When it costs more to investigate than the fines are worth…
I repeat, the AMC business model was designed for and by lenders and lender interest groups. The AMC is NO friend of the appraisers doing appraisals for lenders. IMO, the AMC business model is the closest thing to professional slavery. I’m so glad, I stop doing lender work 18 years ago. Pratt I agree with you.
Do what Prince did before going in to meet with record executives. Paint the word SLAVE on your face. Can you imagine the media coverage you would garnish if a tiny fraction of appraisers did this and showed up at homes for inspections. LMFAO
T shirt options? “The lenders middle manager forced me to accept a half rate appraisal, but you the consumer did not save a penny, they pocketed the difference.”
It’s so sad what they have done to the appraisers in this country. But their day is coming, some would say it’s almost here. It naturally occurs as our number continue to drop. Then there will be new rules with those of us still standing. The west coast has it worse that the east coast, there are still way to many appraisers out there falling over each other due to over supply. Simple economics…supply and demand !
YUP, just today I receive a email for a appraisal on a $2 million home. Fee $256 and due May 5th. Laughable, but what is more laughable is that some appraiser out there will take that assignment for $256 or something close it $256.
I’m hopeful for the appraisers, because I can’t see it getting any worse. This inequitable financial arrangement situation needs to get better. Stand up appraisers.
I’m laughing that you still allow that company to email you in the first place.
Whenever amc’s would twist me up I would simply go on 1 year vacation within their web management systems, or via mercury client management page, something like that, and also possibly may then refuse to ever update my credentials ever again with them. Most of them just automatically go away. Who has time to answer every aggressive telemarketer, I surely don’t. Amc’s, the telemarketing company with a finite list they cycle through to infinity. Who’s still actually signing up with these companies and willingly staying on their lists? Remarkable.
Even Home Inspectors are smart enough to get paid before the client can open the report!! They will be around a while I assume.
My first independent residential fee appraisal was in 1985. The fee was $300 and I got paid at the door by the borrower. hmm….those were the days. I no longer do much lender work, since 2000.
When I was an apprentice I sat down at my step dads small town office location sometime in 2006 and had $10,000 worth of billable files on just my desk. I saw the potential and was instantly sold. They constantly cycled through work duties as files passed here or there. My step did went to his last day without ever actually using a pc himself. We hired and earned well, because we did not live check to check but rather booked out sometimes months in advance. People trusted his office because he was trustworthy. Almost all fees were uniform on a reasonable scale of home size and complexity, and easy or difficult individual orders did not affect the billable amount.
There is a better way, the tried and true old fashioned way. I was 9 years old in 1985. Flash forward 2008; “Can you comp search this?” 2015; “What’s your fee and turn time?” 2019; “Do you complete hybrids?” Some things change, other things stay the same.
In 1973 after my first year in business for myself I found $10,000 in collectibles unpaid. I essentially shut down for a month collecting. Human nature is different for all, so is honesty.
I tried to price my self at a fixed figure, the main pressure was Idleness from time to time, so I tried adjustment my prices to my work load. WOW. Found a lot more work, it all took a fixed amount of time, and I couldn’t raise my prices because of the need to finish the past quoted work.
Idleness v overload at low prices, shouldn’t be an unsolvable quandary. Experience is an expensive learning process. Can we learn by any other method?
I am paid 60% (non-refundable retainer) to 100% IN ADVANCE prior to setting appointments; and in 99.9% of the cases, I am paid the full balance prior to report delivery. Those terms are spelled out in my bids and my drafted LOEs/Service Agreements.
Withholding payment until all stips are done puts the appraiser in a position where their fee is held hostage to doing what AMC/lenders want and THAT is an AIR violation. One that both AMCs and lenders routinely violate.
This is the single biggest impact decision an appraiser can make for themselves, and their businesses. Freedom or Serfdom?
My friend and competitor Jim each (bid) a job, my bid included that (authorization to begin was payment in Full).
Jim won the bid by accepting 1/2 in front. He got half, couldn’t collect the other half. Al, my old boss taught me lots of lessons.
The institute at that time frowned on biding, thought it was unprofessional. Talk about controlling your competition!!
50%-60% non-refundable retainer up front to start; balance due upon notice of completion and prior to report delivery-no conclusions verbally. From my old SRPA (Society/AI) mentor.
This law starts tomorrow and not one amc or lender I work for in ny ever heard of this. None have any new requirements to comply. And I work for over 10 amc and lenders.
Per Miller’s post, Corelogic Valuation and Solidfi have notified appraisers on their panel
Rich, I’d be tempted to email each and every one confirming phone calls that they had not yet heard of the new law and “wondering if” the state’s Notice to licensed AMCs have been adequate or not. Be sure to cc each email to the state though.
I’d imagine they won’t be telling others they never knew about it for very long.
I emailed 3 local amcs and they knew nothing. I had to send them articles to show them.
Sounds like Stockholm syndrome to me.
Next productive step. Clearly, the state’s outreach program to notify licensed AMCs of new rules has some gaps in it. Seriously, write the State AMC licensing agency and let them know you are concerned because of three AMCs you contacted, not one was aware of their obligations under the new law. It’s best to nip this type of “planned ignorance” by the AMC in the early stages so that we don’t have to spend the next 4 or 5 years trying to get NY to pass follow on enforcement legislation. Let regulators know there is a problem right at the onset of the new law.
The first suggestion obviates the golden rule: He with the gold sets the rules. A more feasible notion would be to begin, say as of 7/119 to use your example, not doing appraisals for chicken feed.
Thanks for the article Mr Pratt. Good times.
Rather than resist these companies on an individual basis, we can all simply use our superior marketing and sales analysis powers to market to lenders directly and move them away from amc’s.
I say if appraisers can’t best the non licensed, minimally experienced in this industry, amc sales staff, they may not be all that well equipped to be value analysts for real property in the first place. What is the logic of appealing to subservient people to ask them to advocate on our behalf when they clearly advocate against our interests on every possible turn. They have no restriction of individual licensing to hold them back so they certainly will say and do anything. Resistance is futile but absence is always an option.
When I need a pick me up I print out the top 100 lenders known to be approved in my state, I solicit down the line one at a time, referring to my decade worth of previous client folders, generating a new one for every solicitation as I go. I identify those whom do not use amc’s and promise them superior service. Lenders whom have moved back to or stayed with direct assignment are the ones whom deserve superior prioritization in the client ladder anyways.
I’ve heard legendary tales of amc’s whom use cost plus billing and pay a true C&R rate but I think that’s like the bigfoot story. People love to generate all this hype about the subject matter because it’s a money maker, but on a personal basis, you’ll never actually find one no matter how long you try or how hard you look. At one point I was approved with nearly every single amc whom operated in my state, I never once found one whom paid equivalent to direct on a normal reliable basis.
What about us who run a great AMC and have personal relationships with our appraiser’s? I heard some AMC’s are just absolutely dreadful, but not all of us are. The ones that know how to run a business are not like this.
True. Some are decent. My friends own a small AMC. I think they pay too little but I also know that the LENDER CAPS what they are allowed to charge borrowers. While their software is set (by default) to “auto annoy”…they also are the first to say ignore it. They also stand up for (& to) appraisers as appropriate.
AMCs are tarred by the same brush already polluted by the bad AMCs and the Sherman Anti Trust Act violating lenders that lie through their teeth about ‘appraisers setting their own fees’.
Family members are refinancing their duplex. The appraisal fee SET BY THE BANK is $615. That includes both the AMC fee and the appraiser’s fee. (Est $125 AMC? $490 left for the appraiser?) I wouldn’t get out of my chair for that.
We expected to pay $700-$750. Possibly more.
$490 for a 1025? Hell no way. We have been upping our fees to the lenders because we already feel bad about paying only $450-550 for a simple non complex 1004 to our appraisers. We still need to turn a profit though and with the technology fees from mercury $15 per order (don’t get me started on mercury….) And paying our employees it’s tough to stay competitive. We charge a little more but have excellent customer service for our clients (who I secretly hate most of them deep down) and are trying to give our appraisers a fair fee (whom I love).
I felt guilty about it myself but I dont set the fee. I can’t pay more direct even if I wanted to for obvious reasons. I DID have the units measured out & sketched for him though (ANSI) so all he had to do was verify. *G*. Also gave him default comps (no cherry-picking) and a list of repairs made and repairs proposed.
I expected someone with limited skill. Frankly, the guy was pretty professional and seemed knowledgeable but we didn’t talk specifics much. I just answered any questions he had.
I’ll be curious to see if his opinion is within 10% of my own…recognizing my own potential bias.