The Lack of Transparency in Appraiser Compensation
In their letter to the ASC, NAR highlighted the importance of appropriate compensation for appraisers. They stated that fair and reasonable compensation is critical to attracting and retaining high-quality appraisers, as well as allowing them to invest in their skills and education. However, the current system lacks transparency when it comes to reporting appraiser compensation.
The issue lies in the TILA-RESPA Integrated Disclosures (TRID) form, which requires an aggregate appraisal fee to be reported. This means that the fee includes both the appraiser’s compensation and any fees charged by third-party entities, such as Appraisal Management Companies (AMCs). This bundling of fees makes it difficult to determine the actual amount that appraisers are receiving for their services since the current TRID form does not accurately reflect the true cost of an appraisal. Third party fees, like AMCs, included in the appraisal fee, lead to a discrepancy between what the consumer pays for an appraisal and what the appraiser receives. This lack of transparency can create confusion and distrust for consumers.
NAR suggests a simple and effective solution to this problem – separating the field into fees received by appraisers and those charged by third parties managing their services. This would provide clarity and transparency in the system, allowing for a more accurate understanding of appraiser compensation.
The lack of transparency in reporting appraiser compensation has been a long-standing issue. Many appraisers have expressed their concerns about low fees. This has also led to many appraisers leaving the profession due to inadequate compensation.
NAR’s proposal to modify the TRID form is a step in the right direction. It not only addresses the issue of transparency but also highlights the importance of fair compensation for appraisers. This move could also encourage more individuals to consider a career in appraising, ultimately benefiting the real estate industry as a whole.
Appropriate compensation is critical in attracting and retaining appraisers of high quality. The current system of bundling appraiser compensation with third-party fees can lead to confusion and frustration for both appraisers and consumers. Separating fees on the TRID form would help ensure fair compensation for appraisers and promote fairness and accountability in the real estate market.
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I am required to be a member of NAR in order to access MLS for my sales data. I have been a member for 18 years. This is the only gesture made by the NAR on behalf of appraisers and its the best thing NAR has done in a LONG time.
Let’s see if NAR backs this up and it is not just lip service!
As NAR is on the brink of bankruptcy
No kidding, what’s that about?
https://www.zerohedge.com/economics/real-estate-brokerages-zillow-redfin-tumble-after-jury-finds-realtors-conspired-keep
https://nowbam.com/nar-ceo-shares-real-story-after-critical-wsj-article-was-published/
https://nowbam.com/doj-proposes-an-end-to-seller-paid-commissions-for-buyer-agents/
https://news.bloomberglaw.com/antitrust/real-estate-verdict-spurs-race-to-courthouse-over-collusion
I’m in NY State and the DOS requires that an invoice be included in the appraisal disclosing the fee paid to the appraiser and the fee retained by the AMC; when this started the pushback by the AMC’s was terrible, from threatening to not send anymore work to reporting this as a USPAP violation (good luck with that). Most still HATE it but we do it per NY State! At least all parties know what we get paid and what the AMC gets. The NAR is beginning to realize that appraisers are actually important to the process after decades of looking at us with impunity as deal killers. Too little, too late, the “lets get rid of appraisers” ship has left the dock and is sailing a 40 knots!!! We are a doomed profession in the eyes of Fannie & Freddie, FHA is not far behind, the only one who cares is the VA for now.
While putting the fee splits on the invoice is laudable, there is no guarantee that the borrower who pays the fee receives a copy of the invoice and even if they do there is no guarantee that they read it or if they do understand it as a middleman charge and not part of a typical appraisal business model. Separate line items on the closing document are more transparent.
Yes there is a storm on the horizon! Unfortunately the appropriate powers to be have no interest in secure loan standards. Pay attention to announcements of failing banks and then look at how the big banks are doing -https://www.trustpilot.com/review/usbank.com – Ask yourself why would the financial services industry have as their mission statement to reduce appraisal fees to 10 years ago and encourage 3rd party inspections. Maintain your integrity and hang on, Lyle Rieke (Fannie) has none.
NAR has approximately 28,000 appraiser members, which means we are Realtors as well (a Realtor is a member of the National Association of Realtors). The Real Property Valuation Committee is active in promoting our profession within the organization and to the public. I am proud to be a Realtor Appraiser and a member of the RPVC. I also support the comments expressed by NAR in this letter to the ASC.
For those who watched the Appraisal Subcommittee fourth Hearing on Appraisal Bias and wish to share their comments on the topics covered in the February 13th hearing, public comments will continue to be accepted at AppraisalBiasHearing@asc.gov through March 8, 2024.
Sadly the majority of appraisers are unaware of this committee and what they try to do! We need to keep sharing this info. Thank you Maureen.
Something good and decent from the NAR regarding appraisers?
Did I just see a pig fly by?
One possible hypothesis is that in this time of notably reduced real property sales volume, incompetent amc appraisers may be derailing too many deals, they’re costing sales agents their careers too. They can’t make up volume and it’s all or nothing for each deal for many of the agents out there. I’ve been talking to several managing brokers whom have laid off or dealt with resignation notices of over half their sales staff. Just not enough to go around. When things go wrong they contact experienced appraisers, constantly hear the same story; They will not work with mortgage lenders because of the amc’s unfair fee raking and unfair priority distribution to only the fastest and cheapest appraisers out there. The remaining sales managers are back in the field doing the legwork again for the first time in a long time, and they don’t like what they’re seeing in terms of amc appraiser service quality. Just a guess but would be a logical speculation.
Ive been asking this for years. Why is it so important for the invoice to NOT be added? Seems shady. Well, it is. Junk fees tacked on to the consumer under the guise of appraisal fee.
Welcome to our planet
https://www.zerohedge.com/markets/realtor-group-settles-lawsuits-slashing-commissions-risks-mass-exodus-agents
The appraiser blood bath, nearly complete. Next up; Realtors. See you later MLS systems as we have known them.
The last line of the article says it all ~ “For all the unseasoned realtors, you’d better start looking for another job.”
Nice job National Association or Realtors. At least they are talking about it. But this has been going on for a long time.