$200 appraisal fees – appraisers removed for refusing low fees!!

Blacklisted for Refusing Low Fees
Source: WorkingRE

Excerpt:
Dawson (quoted under an alias because she fears retaliation), tells a story that many appraisers can relate to. She says she was blacklisted for requesting what should be protected under law-her right to customary and reasonable fees. Dawson is different because instead of being secretly blacklisted and left to wonder why she stopped receiving orders after requesting a fee increase on an assignment, she was formally removed from an AMC’s panel after insisting that the AMC’s fee was not customary and reasonable…

Recently, however, her client began using an AMC to manage the appraisal process. After an 18-year relationship with a quality client, Dawson found herself dealing with an AMC that wanted to pay her considerably less than her standard fee. Dawson says the AMC wanted to pay her $290 for an appraisal. “For five years my standard fee with my client was $375. They decide to go through an AMC and now I’m expected to accept a fee of $290 for the same work,” says Dawson.

She discussed her concerns multiple times via telephone with the AMC. “I told them that I would not accept a fee of $290 for the same appraisal that my client had previously paid me $375 for. Their fees are unprofessional and not in the spirit of Dodd-Frank. One girl just laughed at me on the phone because I wouldn’t take $290. She told me they didn’t need me because there are plenty of other appraisers who will do it,” says Dawson.

Dawson was removed from the fee panel for “Unprofessional Conduct – Derogatory responses to communication from Nationwide Appraisal Network,” according to a document supplied to Working RE . Dawson says it was her pushback on fees that led to her removal, which followed her sending the AMC an email pointing out that the C&R fee established between her and her client was $375, and that the fee offered by the AMC was neither customary nor reasonable. The return letter from the AMC concludes: “Due to the issues we have experienced with your conduct… you are hereby notified that you are being removed from our approved appraiser list.”

http://www.workingre.com/blacklisted-refusing-low-fees-2/

My comment: Appraisers are getting letters or emails that they are being removed from AMC lists because they are turning down low fees. I am also hearing about desperate AMCs who can’t find anyone to work for their low fees. This often happens in rural areas with few appraisers. Low fees can be ok in nearby conforming tracts but go rapidly go downhill from there. I have no idea who will be doing appraisals as more and more appraisers are turning down the low fees.

I am also hearing some AMCs are raising fees. Maybe they have figured out that one fee for an entire state often does not work well!!

—————————————————–

$200 Appraisals – Poor Business Decisions for the Appraiser AND Lender
By Joanna Condé
Source Arizona Association of Real Estate Appraisers

Excerpt:
As many of us fight for customary and reasonable fees of $350 or more, some of our appraisal brothers and sisters are still taking the $200 appraisal and not only hurting the cause for the rest of us, but doing something that will eventually, if it hasn’t already, hurt themselves.

… there are many AMCs that pay customary and reasonable fees of $350 and more, that give five business days to do the report, and that will pay more if the properties are complex, in an area that requires more work and research, and will allow more time if there are reasons…

So why would anyone accept a fee below $300, let alone in the $200 range. I can only attribute it to not thinking it through.
Below are the reality checks as I see it.

Reality Check – $: The net from doing one $350 appraisal is about the same or even more than doing two $200 appraisals…

Reality Check – Time: There is twice as much time spent on two appraisals as there is on one. So, the appraiser taking the $200 appraisal spends twice as much time for the same money unless corners are cut. If an appraiser tells me he doesn’t do the same amount of work for the $200 appraisal as he would for the $350, then there is no other choice but to believe he is: a) cutting corners, or b) not doing a full report and providing the information necessary for a credible report, i.e. USPAP compliant. Not smart. The issue becomes not “if” you get reported, but “when” you get reported.

Reality Check – Liability: It seems apparent to me that the same lenders that have the highest foreclosure rates are also the lenders that work through AMCs that pay low appraisal fees and ask for short turn around times…

To Lenders: For those lenders that do not inquire of the AMCs they use what they pay their appraisers, and the time they give them to complete the report, shame on them. They are putting their own company at risk as well the borrower. Why?
The best appraisers won’t work for cut-rate fees. They know the quality of their work and they charge for it. Those appraisers who work for low fees usually produce low quality. “You get what you pay for.”

Low quality appraisals put the lender at a higher risk of making a bad loan.Isn’t it time ALL appraisers and lenders realized that!

Cheap is Expensive!

My comment: well written. Not just a lot of whining and complaining. Explains why it is important to the lender.

CLICK HERE TO READ WHAT OTHER APPRAISERS SAY ABOUT LOW FEES AND POST YOUR COMMENTS ON MY BLOG

Read the full commentary at:
http://appraisersblogs.com/appraisal/the-folly-of-the-200-dollar-appraisal/

 

Appraisal Today newsletter

AMCs – questions about value and revision requests – Poll

Appraiser Poll results
www.Appraisalport.com

How often, if ever, do your lender/AMC clients question your opinion of value? 8/4/14
Almost every report 108 votes 2%
1 out of 10 reports 327 votes 6%
1 out of 20 reports 247 votes 5%
1 out of 30 reports 333 votes 6%
Almost never 3,535 votes 68%
My opinion of value has never been questioned 635 votes 12%

Total Votes: 5,185

———————–

Compared to a year ago, my lender/AMC revision requests have:
7/28/14

Increased significantly 1,053 votes 21%
Increased somewhat 971 votes 19%
Stayed about the same 1,981 votes 39%
Decreased somewhat 661 votes 13%
Decreased significantly 353 votes 7%

Total Votes: 5,019

——————-

On average, how much time do you spend making and delivering requested revisions on any given appraisal? 8/14/14

Under 10 minutes 1,163 votes 24%
10 – 30 minutes 2,323 votes 48%
31 – 60 minutes 875 votes 18%
Over an hour 366 votes 8%
I don’t make revisions 141 votes 3%

Total Votes: 4,868

——————————————

My comment: Good to see that there are not many valuation hassles but, of course, there should be none since that is what AMCs are supposed to do – no valuation pressures!! Interesting revision results, since many appraisers complain they spend lots of time responding to them – 72% are 30 minutes or less. My favorite is No revisions, but only 3%.

Appraisal Today newsletter

8 weird houses!!!

I have written about some of these in the past. CNN has compiled 8 of them, including some I have never heard of!!

Here’s the list:
Pickle Barrel House Museum in Grand Marais, Michigan
Gold Pyramid House in Wadsworth, Illinois
Shoe House in Hellam, Pennsylvania
Winchester Mystery House in San Jose, California
Mary’s Gone Wild Glass House in New Brunswick, North Carolina
One Log House in Garberville, California
Beer Can House in Houston, Texas
House on the Rock in Spring Green, Wisconsin

Click here to read:
http://us.cnn.com/2014/08/11/travel/weird-houses/index.html?sr=fb081114weirdhouses6pStoryGalLink

Appraisal Today newsletter

Appraiser-AMC symbiosis?? Not!!!

An Evolving Symbiotic Relationship Between AMCs and Appraisers  ????
Monday, August 11, 2014, posted on Appraisal Buzz
Scott Pickell – vice president and chief appraiser at LRES

A few quotes:

“As a former appraiser with nearly 30 years of experience and now an executive working at an AMC, I have observed a true evolution in the way appraisers and AMCs work together. The relationship between AMCs and appraisers started off unsteadily but has improved over the years. It has now reached a point of mutual respect.“

“When working as an appraiser, I recall some AMCs treated me as though I was a rookie in the industry despite my 20 years in the field at the time. There was no reason for that. When AMCs treat appraisers with the respect they deserve, appraisers will return that respect and produce better work.“

My comments: Maybe Pickell’s AMC respects appraisers but the way appraisers are treated by most AMCs does not indicate any respect.

Appraising in the U.S. started during the Great Depression when lenders needed appraisals for foreclosures. Until the 1990s, when mortgage brokers took over, lenders somehow managed their appraisals without armies of telephone calls for updates, 10+ page engagement letters, sending broadcast emails trying to get the lowest fees, etc. etc.

Somehow, since HVCC, appraisers are managed as if they were children, who have to be prodded incessantly and corrected to do their appraisals “right” to ever increasing requirements.

Appraisers are seen as barely competent and unreliable, who have to be heavily managed. But, all of this costs a lot of money, as compared with the old lender management of appraisers. Of course, mortgage broker management cost very little, if anything. Who pays for it today? Appraisers and borrowers.

The same “barely competent” appraisers are increasing required to provide lots of time consuming information and analyses which often do not contribute to the accuracy or reliability of their opinions of value.

Residential appraisers are often required to “support” all their adjustments. That’s fine if you are doing a conforming tract home. If not, it all goes downhill fast. What’s my answer? Turn down as much as possible anything not a conforming tract home. Or, change your geographic area to one that has a lot of tract homes. Working for AMCs with less hassle can help, but scope creep seems to be affecting all lenders.

Few residential appraisers are willing to do non-lender work. Learn how to do it, including marketing. I have special reports that can tell you about how it differs from non-lender work, and how to get work. This will reduce some of your lender dependency. See my ad above.

FYI, I have a Certified General license. I do a lot of 5+ unit apartment properties. They are easier than 2-4 units and I get much, much higher fees. There are few appraisers who do them in my area. Cert residential are not licensed for it and local commercial appraisers don’t like to do them as they prefer commercial and industrial properties.

Very interesting comment posted on an appraiser chat group by Charles Baker, SRA: (editor addition: A more appropriate comment by Pickell would be) “It’s my job to maximize profits for the company. If you wish to participate as a contractor that’s your choice. But make no mistake, our job is to service the client, reduce costs, boost our bottom line and reward our principals and shareholders. You may wish to participate in those profits by contacting our investor relations department, but don’t expect to get rich as an appraiser. Thank you very much.” I really like this comment as it says what a corporate manager would view the situation.

Link to the full article. http://appraisalbuzz.com/buzz/features/an-evolving-symbiotic-relationship-between-amcs-and-appraisers#sthash.QH5TBFby.dpuf

Appraisal Today newsletter

Fannie looking at adjustment

From AppraisalPort’s monthly newsletter

Author: Steve Costello, who attended the recent Valuation Expo
Excerpts:

“Fannie Mae’s Murphy stated that over the past year, the GSE had been focusing on “quality” and “condition” ratings of comps used in multiple appraisals by the same appraiser and found many cases where the appraiser has changed the quality and/or condition ratings on the same comparable from appraisal to appraisal.  Now, based on the examination of the Uniform Appraisal Dataset (UAD) data, Fannie Mae’s focus for the next 12 months will be on adjustments.  The data indicates that many appraisers are not using proper methodology to make their adjustments.  Murphy stated that some appraisers are still using the old standard $20-$40 per square foot adjustment on properties that are easily valued at $500-$650 per square foot.”

“Murphy explained that Fannie Mae is planning to re-evaluate appraisers based on their adjustments and the GSE will expect appraisers to comment on all adjustments if necessary. And, ‘it will be necessary,’ he said, adding that Fannie has seen a lot of under adjusting. To be safe, appraisers should document their logic and reasoning for making any specific adjustments.”

My comment: The easiest adjustment is time. Fannie got that done by requiring 1004MC. The next easiest adjustment is sq.ft. – very easy and reliable using statistics. Of course, as we all know, unless you are appraising a conforming tract home, it is very, very difficult to “prove” all your adjustments. If you know the local market makes adjustments, they should to considered in your appraisal. State regulators are looking for support for adjustments. I am seriously thinking about not using dollar adjustments for 1-4 unit appraisals. Many years ago there was a Fannie form that just required plus and minus adjustments.

I seldom make any dollar adjustments on my apartment and commercial appraisals except for time adjustments, which are easy to support. I find it very strange that residential appraisals have such a high standard. I guess it is due to the lenders telling appraisers what they have to do. I am so glad I don’t do any residential lender appraisals any more. I never like them telling me how to do my appraisals.

I don’t know how Fannie will evaluate adjustments. I make many of my adjustments on a qualitative basis as I work in an area where most homes were built prior to 1920 and are very dissimilar. I know what my market wants, and doesn’t want. If I am not sure, I ask local real estate agents. Of course, they seldom know the dollar amount.

I wonder how well “bracketing” will work for adjustment support?

click here to read the full newsletter
http://www.appraisalport.com/news_events/newsletter.aspx?id=683bbe16-bc37-4573-a436-6a680b2882e0

Appraisal Today newsletter