You Should Be Insulted…

The Better Mortgage Business Philosophy Doesn’t Include The AppraiserA good friend and appraiser colleague of mine in the midwest sent me this appraisal order request from Better Mortgage in New York [redacted]:

Better Mortgage appraisal order

My friend and I and most of my peers marvel at order requests like this. They are paying half the market rate to the actual person analyzing the asset to be used as collateral for the mortgage, but most importantly that seems to enable them to provide free lunches and snacks to their employees who process the loans. See the review in Glassdoor.

Better Mortgage Glassdoor Review

Companies like this can often find a few appraisers willing to work for this fee because those individuals’ services aren’t in demand (they aren’t competent to earn the market rate), or they’ve fallen on hard times. It’s not a sustainable fee structure (half the market rate) to preserve valuation quality. And new millennial-targeting companies like this seem to be focused on anything but the value of the collateral. The millennials ordering Buffalo Wild Wings on Uber Eats or a mortgage don’t understand what’s behind that click. But they should because they will inherit the reckless mortgage process today as Baby Boomers did after the housing bubble crash. Those clicks aren’t cheap.

This disconnect is a pervasive problem that our industry has been unable to effectively change the message because we don’t have lots of venture capital or large legacy financial institutions backing us as the AMC industry does.

Do you want to take a first step? Think about that order. Stare at it. You should be insulted if that’s all you think you’re worth. If you’re not insulted, then you need to move on and get a job that pays at least minimum wage.

Jonathan Miller
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Image credit flickr - Jim Champion
Jonathan Miller

Jonathan Miller

Jonathan Miller is President and CEO of Miller Samuel Inc., a real estate appraisal and consulting firm he co-founded in 1986. He is a state-certified real estate appraiser in New York and Connecticut, performing court testimony as an expert witness in various local, state and federal courts.

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18 Responses

  1. Avatar Bill Johnson says:

    Unfortunately for us, some appraisers near the top of the media quoted pyramid (you know who you are) have loud voices (spreading their alternate reality), but most often ignore the truth of the greater industry to make a buck (often off the backs of fellow appraisers).

    The passion I have doesn’t keep me up at night, but rather gets me up in the morning (Bill Johnson 01/22/2020).

    Seek the truth.

  2. Avatar cjk says:

    I fine it interesting that many lenders and AMCs still require the 1004MC, even after FNMA, Freddy and the VA discontinued it’s use well over a year ago. One UW told me that she never even looks at it. I am so happy that I do not work for any AMCs. I do not know how some people can put up with this. My major client pays $600 for a CV, $650 for an FHA, $900 for a 5 day rush. $750 if they need 6 comps (only once or twice a year), $150 for a final inspection. Mostly they just need 3 closed sales with all original photos with a 10 day turn time. My second major client is very similar but they do require one active listing. These clients detest AMC’s. They both have a department (firewall) that works with the appraiser. One of them was even going to file a complaint on my behalf with the state, because the listing broker was hounding me about the value and making derogatory comments about me.

    • Avatar Bill Johnson says:

      What part of the county to you live in cjk? I will guarantee its not in suburban big city California where 1 in every 8 appraiser works. In CA (other than VA 7 days), the typical turn time is NO MORE than 5 days (3 to 5), and to get a rush (bid out), your quote better be in hours and not days. Direct lenders (credit unions) pay in the $425 range (private appraiser panels) after fees (Mercury / XOME, etc.). Keep in mind, the cost of living (COL) is outrages here (San Diego), with good neighborhood housing in the $800,000 range (3/2 1,500 sf / 50 years old), appraisers in my area have to do twice the volume (high COL / low fees), as compared to most parts of the country.

      I’m not an elitist, but my point is while a few can live like kings in this industry (low volume areas), lenders, AMC’s, etc., make up for reduced profits there, by doubling down with reduced fees here (extreme high volume). To put it another way, my single county of San Diego has a population of 3.3 million and +/- 900 appraisers (within +/- 25 miles of me), meaning my market area is bigger than the population of the bottom 15 states in America.

      Blast orders for $256, we call that a Monday where I’m from.

      Seek the truth.

      • Avatar cjk says:

        I just confirmed the fees with one of my clients they do a tone of work in CA. She said the fees are from $475-$550. In CO the fees are from $600-$650. I have no idea why the CA appraiser fees are that low (an oversupply of appraisers). Or, it might be because the CO appraisers drive a lot with the rural properties.

        • Avatar Bill Johnson says:

          California versus Colorado, California versus Idaho, suburban versus rural, over the long haul +/- we all do the same work on the same forms but get paid variances of 25 to 50% of each other while living in areas that vary in cost of living by 25 to 75%. You driving 150 miles a day, me spending 2 hours in traffic to go 30. You having only 5 sales within 10 miles of the subject, while I might have 75 within a 1/2 mile. Me doing million dollar properties every week, you doing them rarely (?).

          In doing similar work, over the same amount of time that’s why I’ve always said this industry can produce winners and losers not solely based on work ethic, experience, etc., but rather by the appraiser location lottery (not meant as a dig against you cjk).

          It is what it is, and with my big mouth thank goodness I’m not the typical appraiser in CA (no AMC work).

          Have a good weekend, and remember to seek the truth.

          • Baggins Baggins says:

            Rising fees in Colorado were not a bonus, they were a much needed lifeline which kept many of us in business.

            Amc’s and lenders alike are actively chomping at the bit to roll back such pay increases.

            There is very little consistency to industry wide billing compared to cost of living.

            The carpetbaggers are here.

            Can anyone answer if when Better mortgage procures an appraiser vendor for a lower cost of service, if those cost savings are returned to the borrowing consumer, or act as a profit incentive to put downward pressure on the vendors billable amount, with the distributing company pocketing the difference between the appraisers fee and the consumers fee for the appraisal service?

            It’s one thing to offer the service cheaper. It’s quite another thing and an unethical action, to offer a thing of value in order to sit in the lead chair. If actions harm others, including discounting the service fee, such actions should not be permissible under normally expected peer standard models.

            It’s funny, I’m always hearing these news stories about industry corruption here or there, I always like to read those stories. The things we have adapted to find as common place daily activities in appraisal distribution are still recognized as serious scandals and serious breaches of ethical standards in other industries. What’s your fee and turn time, nevermind we have already established the consumers fee for your services. Now again, what is YOUR fee and turn time?

  3. Avatar cjk says:

    Colorado Springs. The city had an estimated population of 472,688 in 2018, and a metro population of approximately 738,939, making it Colorado’s second most populous city, behind Denver.

    • Avatar Bill Johnson says:

      Been there a few times, beautiful country and with others thinking the same thing, here’s to your state not becoming the California of the Rockies. No hard feelings, its just part of this crazy industry where the same or similar company will perhaps shake your hand and smile, but a cubical over they are making bank from their “Western Division” and stabbing us in the back by the hundreds.

      Good luck cjk, and go watch the Pikes Peek Hill Climb for me.

      Seek the truth.

  4. Avatar sb says:

    $256 Paid to Appraiser = $500 charged to Borrower

    They’re just another Rocket Mortgage WANNABEE with a dumb Millennial targeting domain name.

    Disruptor Mortgage companies are full of snot nosed, Foosball playing, high turnover 20 something employees. They probably have kegs tapped next to their “stand up desks”.

    Outdated MC Addendum request confirms their complete ignorance and lack of industry knowledge. Selling mortgages is secondary to them. All Venture Capitalist funded companies care about is selling a borrower’s personal data. Much easier to “scale”. It’s all about the IPO. Paying appraisers fair and reasonable fees aint gonna be on their radar screen.


  5. Baggins Baggins says:

    Better Mortgage appears to have used bait and switch tactics to build their panel.

    Mid 2019: Building direct assignment panel, get on board, standard $700 fees!

    Late 2019: Approved, please log into scope and enter your appraisal fee. (follow up requests about departure from a standard panel wide fee schedule were met with the typical pr line, set your own fees.) Codeword for we are going with the lowest possible bidder approach.

  6. Avatar Truth B Told says:

    As I’ve stated before, there’s a new breed of appraiser, ones who were trained to fill out a form and be willing to make changes to the form/value whenever the person that is paying says so! They don’t know anything else!

    A ten-year appraiser was a supervisory appraiser for a staff of appraisers for a lender. He had never worked or been trained by anyone else except in a staff environment. The lenders offices were right down the hall from the appraisers offices. Anytime the value did not come in at was needed by the loan rep. they would call this supervisor to have him get it “fixed”. He would contact the appraiser and give them double-talk, make suggestions on other comps that were not as compatible and suggest that the appraiser re-look at the report. By the supervisor putting this appraisal back in the appraisers workflow, it made his numbers look bad, which led to him getting less work. This is the type of foundation and environment the new appraisers are getting. Therefore, these appraisers have no sense of independence or worth

    • Avatar cjk says:

      I am not sure what to make of this, after a 3 year apprenticeship with a fee appraiser I worked as a staff appraisers for 3 lenders. I do not recall ever changing that value, unless I missed something. I even saved one company from a mortgage loan scam that a Real Estate broker was running. He defrauded the FHA for millions. He tried to pressure me to over value the property. He sent a 3 page letter to the lender complaining about me. The UW wanted me to respond, before I had a chance to type my letter. It was all over the news that this Real Estate broker had turned himself over to the State Attorney General for defrauded the FHA. When I sent the front page of the news paper to the UW with the comment “this is my response to his letter”, her reply was “thank you for not falling for it and protecting our company.” They laid me off 2 years later. That is when I decided to do my own thing, I never looked back. 2 – 5 more years and I am done.

  7. Avatar sb says:

    From the fee schedules I have seen, Alaska, Hawaii, Oregon, Washington seem to pay the highest GROSS fees BEFORE AMC theft fees.

    New York fees are on the lower end most likely from an oversupply of appraisers.

    • Avatar Bill Johnson says:

      Gross fees only tell a partial story sb. Consider that many low fee states are also the most expensive to live in (often 30 to 80% more expensive), and the net impact becomes massive. It would’t surprise me if New Your, and or CA appraisers need to gross 50 to 75% more just to be even bottom line with some median numbers / states / appraisers.

      Seek the truth.

  8. Baggins Baggins says:

    Click reviews, rating lowest to highest, lowest first.

    Am I reading this right, free alcoholic drinks? New engagement term; I want a free lunch certificate for every appraisal accepted.

    Sounds like a commission based quickly growing company with potential, just like their solicitations to appraisers. Downside appears to be too swift of growth, inadequate training, and boiler room style shoulder to shoulder sardine style employee placements.

    Better Mortgage, all we need is a consistent upfront fee and thousands of appraisers will be back on board with quality service. If the primary vendor you’re dealing with is the discounters, we can’t protect you from yourself. Quality valuation service requires quality valuation engagement. I wonder if they hire mb’s and execs with the same approach, lowest bidder gets the job. Think about it.

    Still hope for better but their direct panel launch fizzled so quick, barely noticed them.

  9. Avatar Bill Johnson says:

    To whom it may concern, and to those who want to know how I achieved legend status, I dare you to check out the the below link where it was Bill against the world, or at least Bill against Dustin Harris and his gang of cheer leading Kool-aid drinking no stars.

    Seriously folks, although a little dated (2016), it is 100% related to the topic of this post. For a tease, discover how a $450 appraisal fee in one area is like $90 in another area.

    Seek the truth.

  10. Avatar Ralph says:

    Companies like this don’t care one bit about the quality, just want someone dumb enough, to give their signature away for $256.

  11. Avatar don says:

    WELLS FARGO got caught cheating, both State and federal regulators are delving into financing laws and rules in this election year, the chair of one of the powerful comities insisting on changes, the banks and banking interests are sorting out their future in a world economics.
    Appraisers are a minor affecter in the banking industry and will be tossed from discipline to discipline.
    Our only future can only be influenced by strong politicians who have confidence in Appraisal products that have defendable goals.
    Should we ally ourselves with accountants as we have in the past or with attorneys, bankers, or with wall street with which SFR appraisers are complaining about being cheated.
    OUR EDUCATION junk unless we control it and are able to understand and apply it correctly


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You Should Be Insulted…

by Jonathan Miller time to read: 1 min