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I doubt that appraisers would be as excited if a cap were placed on appraisers…
Recently, I noticed many appraisers were excited about a new bill that was introduced in Virginia. This bill initially sounded favorable to me, but as I examined it more closely, I quickly became concerned with the excitement that was building up around it in the appraiser community. Laws in general are typically difficult to understand, and they can look better at first glance than they actually are. It is important for us to analyze new laws carefully before we advocate for them.
Senate Bill 655 had two main components. Firstly, it would require AMCs to disclose the amount charged for their services. In my eyes, this was a positive feature of the bill as transparency is generally a valuable thing, especially when it comes to government. However, the second part of the bill put a cap on the amount that the consumer would be charged for an AMC’s service – specifically that cap would be 20%. In other words, an AMC could charge the consumer no more than 20% of the total appraisal fee.
At first, this may seem like a fantastic way to keep AMCs in check and insure that appraisers are treated fairly, but I want you to try slowing down and really thinking through the consequences of this type of law. When we allow the government to limit the amount companies can charge, we also, by default, allow the government to limit the amount our own company can charge.
The same principles that apply to others also apply to you. I doubt that appraisers would be as excited if a cap were placed on appraisers and how much they could charge for their services. In order for a free market to work, companies need to be able to charge what they deem their service is worth. Before you advocate new rules, make sure you’re okay with those same rules being applied to you. P.S. Senate Bill 655 died a quick painless death – thank goodness.
For more information on this subject, please download and listen to The Appraiser Coach Podcast below:
An AMC cap is #1 consumer friendly. #2 Forced “Good Faith” in business dealings that the Banks and their AMC’s forced upon the Fee Appraiser. I’d like to know how did the AMC’s manage to keep their ill-gotten fees off the HUD1/Books. Write a piece on that.
That would be the amc’s lobbying to cfpb when selecting the new hud1 disclosure form, and the continued absence of an individual amc line item in today’s disclosures. The other hud1 proposed closing form did have an individual line for amc fee disclosure, apart from the appraisers fee. The amc companies would not be able to drive down appraisers fees for variable unearned additional profit if they were properly recognized as a stand alone service and the lender and/or consumer had to write two checks, one to the amc and the other to the appraiser. They drive the appraisers fee down in order to drive their own profits up, courtesy of improperly co mingled fees.
What do the following companies, or individuals all have in common?
Amrock, Appraisal Buzz, Axis, Clearbox, Corelogic, Service Link, Solidifi, and The Appraiser Coach (Dustin Harris).
Each participated at the latest Valuation Expo.
In part, I judge others by the company they keep.
Seek the truth.
While the appraiser coach is sponsored by some of those entities, I believe Dustin Harris makes the majority of his income as an appraiser. Since appraising is the cornerstone of ALL his other activities & income, I find it ignorant and shortsighted to merely point the finger and insinuate he’s “working for the enemy.”
I can’t envision a scenario where the sponsorship funds he **might** receive would be sufficiently large to sustain him and his family for the rest of their lives… which is probably what it would take to make him sell out appraisers and appraisals and obliterate all of his businesses. If appraising goes away, so does ALL of his appraisal business and coaching income (as there would be no one left to coach).
So, I read this and I’m like: “Are you freakin kidding?” ??????
No, I’m not affiliated with Mr. Harris in any way, I am not a subscriber to his groups, nor am I on the payroll of any of the aforementioned companies.
For the record, I think he makes a good point. We all know AMCs need to be limited or maybe even done away with entirely. But is anyone truly ready for such a slippery slope of the government capping fees? He’s right, next they could cap appraisal fees….
I’m not decided one way or another on such a bill. But VaCAP also makes some interesting arguments. We’re talking about this openly now.
Personally I think requiring AMCs to be transparent with their fees (ahead of time), would increase public trust as it may allow the borrower and lender to have more control… just a thought.
I’m not for or against the bill. But I think talking about it is wise, (without attacking each other in the process ?)
Dawn, you are certainly entitled to your opinion, just like everyone else. Dustin Harris has not been a good advocate for appraisers, nor the appraisal profession. These are facts that are easily provable. His actions, like his lack of research with this article, speak loud and clear to who he is and what he stands for.
For the record, there is no one named Dawn Aubrey listed in the ASC National Appraiser Directory.
How can this author ask how appraisers would feel about their fees being impacted negatively? Which AMC is he with? What a joke
If AMCs can only charge 20% of the appraisal fees wouldn’t that lead to higher appraisal fees so they end up profiting more?
That was my initial thought. But I do see where Dustin Harris is coming from
This guys logic is missing, a cap on AMC fees which is a percentage of the appraisal fee would not hurt the appraiser, it would only serve to make to AMC not see the appraiser as the enemy.
I see lenders of all sizes moving to their own staff appraisers or managed panels. This is happening because the total cost of paying the AMC and the appraiser is quite high. They are getting less for their money because the assignment are bid out, not based on competency or experience in a market. AMCs better figure out a way to please their customers and the more qualified appraisers.
James Strickland they should just bill their fees to the HUD. Make it separate from our fees.
VaCAP is disheartened in the lack of due diligence done by Dustin Harris in writing this article. Since he has failed in providing the facts behind the introduction of SB 655, VaCAP will provide them.
First, neither VaCAP, any appraisal organization, nor any Virginia appraiser, was behind this bill. In fact VaCAP found out about the bill by an automated email from the Virginia General Assembly. VaCAP researched the bill and obtained the facts.
This bill was introduced by a Senator as a result of a consumer complaint in which the AMC fee was more than the appraisers’ fee. Both the consumer and the Senator were aware the bill would not move forward, however, they both believed it was best served for public awareness. The introduction of the bill was successful and it started conversations among other legislators about the issue involving appraisal management companies.
Public Trust is why appraisers are licensed. Public Trust is why appraisal management companies are licensed. This bill was a wake-up call about Public Trust, nothing more.
Thank you VaCap for sharing the facts behind the bill. You guys have been on the forefront of advocacy. Appraisers across the country appreciate everything you do!
Dustin Harris is not a friend of the appraiser! I have no respect for him or his opinions.
So the AMC’s may be looking for the appraiser with the highest fees since their fee could only be 20% of the appraiser’s fee. Not a win for the consumer.
Food for thought… Alamode is a sponsor on his show. Who owns alamode? CoreLogic. Who would not benefit from a cap on amc fees? CoreLogic.
Do we think Dustin Harris is a SELL OUT?
Missing this yet?
Independent Valuation Protection Institute – IVPI Proposal “To promote and preserve the Public Trust inherent in professional appraisal practice”
How to get ahead of the peer standard in real estate appraisal; Collude with amc’s to defraud consumers and capture the lion’s share of work orders. Then outsource and write articles about how successful your business plans are. This shillery was old 10 years ago.
Senate Bill 655 had two main components.
The first main component should have been, can the state over-ride the cfpb, how, bcfp, and the answer is: No.
And, can the state change the Truth in Lending Act? Same answer.
“The same principles that apply to others also apply to you. I doubt that appraisers would be as excited if a cap were placed on appraisers and how much they could charge for their services.”
Dustin, in big cities and big population areas (100’s to 1,000’s of licensed appraisers), with TRID regulations (appraisal fees determined in advance), and reluctance to restate to the consumer a need for an increased appraisal fee (complexity, or what ever), in essence there is nearly a 0% chance to have the fee altered from the original quote to the borrower. By default, when lenders just go to the next dozen, next hundred or next thousand group of appraisers looking for a single yes to the pre-determined fee, the system in place in essence already caps the appraisal fee.
Seek the truth.
Again, not necessarily true. In some markets, yes. It’s called capitalism. However, if you provide a good product, clients will come to you and you won’t have a shortage of work. Good appraisers can charge for their work. All the good appraisers I know are slammed with work, and their fees are good…. seek the truth. ?
Dawn, I work in San Diego County where there is a population of 3.1 million people and 900 licensed appraisers call this county home (all within 30 miles of me). Regionally, the number of licensed appraisers quickly approaches 5,000+. My issue with Dustin often involves his experience from a local level (Rural Idaho / 300+ appraisers state wide), where he in turn creates thoughts and opinions on a national stage (Blogs, Podcasts, booths at Valuation Expo, etc.). What might be typical for him in his entire state, is not typical for 3 times the people just in my single county. In other words, his reality is not the reality for most in this industry, and I truly believe his preachings to the friends he keeps (he does 4 to 8 appraisals per day, reviews work in as little as an hour, we’ve all had raises, etc.), does more harm than help.
Seek the truth.
Appraisers shall not provide a financial incentive to be the preferred appraiser selectee. This is against fdic rules on fair appraisal selection, and our own ethics book. Another illogical premise is that a non appraiser can effectively qualify a licensed appraisers work product to make those quality of product distinctions in the first place. The majority of amc companies do not pass cost savings from reduced cost of appraisers services back to the borrowing consumer. The vast majority of amc’s pocket the difference and therefore have a financial incentive to drive down the appraisals fee for variable padded junk profit over and above any supposed contribution they have made. Defrauding consumers does keep a lot of appraisers very busy indeed.
You did not research your job properly.
i am really disappointed.
Not cool Dustin! You are an appraiser, research and analysis is what appraisers do best. You failed miserably to do any. Not cool at all.
It’s the principal of the matter, deceptive and unpredictable fee markups without any additional effort to earn them. Amc’s get a free pass on otherwise applicable regulation because their services are errantly co mingled with appraisal fees, and cost savings from reduced cost of appraisers services (gained by way of anti competitive actions taken by the amc) are not returned to borrowing consumers. A service should cost a certain amount for mortgage consumers and should not have variable flex profit padding room. Amc’s are still contended as not being necessary that’s why they have never been successful at justifying a stand alone fee because lenders and consumers can otherwise still make the whole loan package happen without their inclusion into the process. They fail the basic bona fide services litmus test and yet still get to pad the consumers fees with no restrictions which would otherwise be applicable to mortgage lenders, appraisers, title fees, etc. They often rake a larger ‘appraisal fee’ than the appraiser themselves without actually being appraisers. What exactly have they contributed which is so valuable? They should operate on a cost plus basis. Cost savings for reduced cost appraisal services should be returned to borrowing consumers. They can’t get a solid handle on what they’re worth or what to charge because they don’t actually provide anything of value so there is no basis of value to begin with. How many times do we need to spell out this very simple concept to the appraiser and regulatory masses? The abuse of the appraisal industry continues unrestricted.
Lots of legal language out there, this is just one example;
This clarifies that a lender may collect funds from the borrower for the payment of (i) bona fide loan – related goods, products, and services provided or to be provided by third parties, and (ii) taxes, filing fees, recording fees, and other charges and fees paid or to be paid to public officials. It provides further that a third party provider shall not charge or receive (i) any unreasonable compensation for loan – related goods, products, and services, or (ii) any compensation for which no loan – related goods and products are provided or for which no or only nominal loan – related services are performed. Loan – related goods, products and services are defined to include fees for tax payment services, fees for flood certification, fees for pest – infestation determinations, mortgage broker fees, appraisal fees, inspection fees, environmental assessment fees, fees for credit report services, assessments, costs of upkeep, surveys, attorneys fees, notary fees, escrow charges, and insurance premiums.
NC 1149 Prohibit Predatory Lending: Long Summary
Federal Court Rules Against Fee Markups
and other who think “cost plus” is a cure all
Pick your favorite AMCs, google their name with the word “affiliates”
Realize that the AMC you are dealing with, might be two, three, four corporations deep in the affiliate list, and the fee is passing from the lender to the mother-ship, with each affiliate in the middle needing to cover expenses for placing the order to the affiliate below them, until it finally gets to the affiliate you are working with.
Rethink. This isn’t 1950 anymore.
Yes, the amc is often a profit center for parent companies. Your solution?
There isn’t enough space here for that.
Put forth a full article if you have the time please. Not all of us are allowed to participate at the secretive Appraisers Forum. Censorship is running rampant these days…
Dustin Harris is a loser, never liked this dufus, a disgrace to the profession. “Appraiser Coach” should be changed to Appraiser ROACH. Roaches eat crap and don’t go away easily. He should take the other traitor Joan Trice and go work for Core-illogic.
Dustin, attempting to create some kind of moral equivalency between capping appraiser fees and amc fees is downright disingenuous.
AMCS have ALREADY illegally capped appraiser fees. Let’s go a step further. AMCS in collaboration with Banks have also conspired to fix appraiser fees before the appraiser is ever even contacted for an assignment.
AMCs in collusion with banks, other AMCs and a whole host of related special interests have formed ‘trade groups’ to continue to prevent appraisers from receiving reasonable and customary fees as mandated under Dodd Frank; even conning the FTC to plead their cause. Investigating how THAT complaint ever got processed with only 2 or 5 total commissioners would be interesting all by itself, but that’s another issue.
Dustin, there can be no moral equivalence between two parties when one of those parties has no discernible morals to begin with. You are increasingly losing credibility with every post defending what we all know is a completely corrupt system. Not merely inefficient. Blatantly Dishonest.