The Big Issue for Appraisal Fees (if you want to get higher fees) – Consumers are paying more for appraisals if AMCs are used
There is only one relevant consumer issue: they are paying more for appraisals since AMCs took over.
They just want to get their loan. Why would they care about the appraiser? Plus, much more complicated issues such as Dodd Frankenstein, AMCs, etc. etc. are very difficult to understand for consumers. Lenders don’t care. They just want to pass their regulatory audits and sell their loans to investors.
I have no idea why appraisers don’t promote this simple message.
You could change the pitch to all consumers in the U.S. : “Why have borrower’s appraisal fees gone up?” Nobody cares about what appraisers are paid, except appraisers and a few others. Everybody, including appraisers, does not want to pay for inflated appraisal costs.
But, for appraisers, AMCs are a much easier target. AMCs work for lenders and do what they want.
I have been hearing that a few direct local lenders have started changing their fees up and down depending on the market. I don’t know why they hardly ever changed their fees before.
FYI, before licensing and mortgage brokers, lenders managed their own appraisal departments but didn’t change fees much and there was no or little bidding (residential) – since the 1930’s, when lender regulators started requiring appraisals and American appraising took off.
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What are customary fees?
I don’t know. AMCs have about 80% of the market. What is left for lender fees? VA (doesn’t change fees very often) and direct lenders are dropping fees.
What about non-lender fees? With borrowers paying lots more for appraisals, I keep increasing my fees to well over customary lender appraisal fees. They are still less than what borrowers are paying.
Since I don’t do 1004 lender work, I keep my fee at what borrowers are charged (locally, $400, more for equipment appraisals or unusual) – no one ever squaks because thet know what the AMC is collecting, but don’t know what the AMC is paying the appraiser!
Louisiana has trumped California with its implementation of C&R fees.
Ҥ3415.15. Fees; customary and reasonable; disclosure
A. An appraisal management company shall compensate appraisers at a rate that is customary and reasonable for appraisals being performed in the market area of the property being appraised, consistent with the presumptions of compliance under federal law. ”
http://www.reab.state.la.us/AMC_license_law.html
The fees were determined by an independent third party – Southeastern Louisiana Univ. It was funded by the LREAB (Louisiana RE Appraisal Board on May 2013. AMC fees were excluded.
See: http://www.reab.state.la.us/forms/REAB_FeeStudy_Notice.pdf
I have asked several Institute sources if there is any legislative process similar to Louisiana in the offing. I have yet to get an answer.
I am in a rural area, along with low fees, the AMC’s have unrealistic turn times. Even after I have a negotiated a higher fee and longer turn time, the AMC sends the 18 to 24 page request with the mandatory 24 hour inspection and 2 day after inspection turn time. They often threaten to reduce the fee if the turn time isn’t met. I often email them again with my quoted terms. I haven’t had my fee docked,yet..
I never bought into the reasonable and customary fee model. The fact is there are too many appraisers. The population of appraisers will go down when the number of orders goes down. In terms of residential orders for appraisals for refinances we are headed for disaster. The interest rates are at artificially low levels. When rates go to 5, 6, 7 percent or higher refinance residential appraisal orders will go up like a puff of smoke. Orders will go down significantly (70-80-90% do ya think). If an appraiser does not have an established private clientele they will be doomed. Question: Who cares about trainees? There are already too many appraisers. Trainees are just more competition. In addition, what college student in their right mind would want to be a residential appraiser in the current environment.
As long as there are appraisers that will accept $200-$300 for a 1004, we’ll have the problem of low fees. I have never heard a consumer complain about a high appraisal fee but appraisers complain all the time about low fees, unreasonable AMCs and ridiculous stips. Yet they continue to accept low fees. I get full fee for every appraisal; no negotiating. I don’t even answer the phone if the caller ID looks like an AMC. If all appraisers played hardball with AMCs like AMCs do with appraisers, the profession would be a lot better off.
Organizing appraisers is like herding cats. It’s almost impossible. We tend to be whiners who think everyone else is wrong. Most believe there is no benefit from joining one of the appraisal organizations. Until we organize and have strength in numbers, the profession is doomed. However, I believe “appraiser scarcity” will keep me busy until I’m ready to retire (if I retire).
I’m hoping an appraisal revolution will start on social media. It could happen.
Fees for my services are tied to demand.
Now The AMC’s are passing on an ever increasing “Technology Fee?” that appraiser’s must also pay when delivering the reports on top of reduced fees…
AMCs are the pimps, appraisers are the hookers waiting on the street corner to compete for the cheapest trick. Until the AMCs profits have no relationship to the appraisers fee nothing will change. The financial relationship needs to be between the lender and the AMCs
The solution is pretty simple……..Make Appraisers Scarce. You can find the answer at this website http://chris975.wix.com/take-it-back