NOT customary and NOT reasonable fees?//TRID??

NOT customary and NOT reasonable fees?
What is reasonable? Let me see… For example, the amount of work to produce the appraisal plus respond to request for more information, updates, etc. increases the time from 5 hours ($70 per hour) to 8 hours ($47.50 per hour),  a 33% decline. Of course that is gross, not considering your expenses. You are able to get the same fee – $350. But, the fee is not reasonable. Calculate this for your typical appraisal fees.
What is customary? Somehow AMCs seem to think that “one price fits all”. Before AMCs took over, appraiser fees varied widely around the country. The Midwest was typically the lowest, around $250. The West Coast (Washington and Oregon) and some East Coast states were higher, around $450. Alaska and Hawaii were much higher. We accepted “standard” fees from our clients as we took the easy appraisals and the hard appraisals, which balanced out. I didn’t ask for a fee increase when a property took more time. If was a high end home or a rural acreage property, the lenders paid higher fees. Or, we scheduled appraisals to reduce driving time. Clients understood that they could not give us all the hard appraisals and appraisals scattered over a wide geographic area.
Now, AMCs have standard fees, but they don’t consider the factors above. Many appraisers have responded by asking for fee increases or just turning down the assignment.
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TRID vs. the current system of AMC ordering appraisals
TRID will make the method above (“one fee for all appraisals”) very difficult for AMCs. Lenders have to provide an appraisal fee within 3 days. AMCs won’t be able to spends days “shopping” for the lowest fee for a tough appraisal. AMCs won’t have time to negotiate with appraisers. Yes, there are options but they delay the loan.
Now, appraisers can quickly accept broadcast orders with the expectation of getting a fee increase. After Oct. 3, that will create problems for lenders and AMCs.
What will happen? How can AMCs tell their lenders what to charge for a specific appraisal (the full cost, including AMC fees) within a few days? Their systems assume all appraisals are the same. I doubt if they have anything set up to distinguish complex rural from a tract home. Can AMCs even quote different fees within a state? I see AMCs making less money because the appraisal fees they pay will increase. Now, they are waiting for appraisers to tell them that the fee has to be higher.
What does this mean for appraisers who work for AMCs? Higher “standard” fees to cut down on appraisers refusing fees? This cuts into AMC profits unless they can get higher fees from their lender clients. But, AMCs compete with other AMCs. Fees are a big factor when a lender selects an AMC.
I have no idea what will happen. I am glad I don’t own an AMC with lots of lender clients. Maybe they will never raise appraisal fees for difficult properties. But, who will do them?
Volume is high now and AMCs have difficulty finding appraisers to do the tough appraisals and FHA appraisals. When volume is low and appraisers need the money, the “one fee for all” is easier for AMCs to use.

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Appraiser shortage – where will AMCs get appraisers?

 On the Path to Extinction? …Not So Fast
Excerpts:
An economic tragedy is unfolding silently across American neighborhoods.
With fewer young careerists joining the residential valuations industry, real estate appraisers foresee a future where lenders and consumers alike face added costs and lengthened real estate delivery timelines due to a shortage of trained appraisers in the residential valuations space.
“The rate of decline in the appraiser population within the U.S. has been averaging between 4 percent and 5 percent,” explained Greg Stephens, Chief Appraiser and SVP of Compliance for Metro-West Appraisal Co. “That number is expected to increase due to the high percentage of practicing appraisers who are in their 60s and 70s and who will either be retiring, dying, or leaving the industry within the next decade.”
“If this trend continues I believe we will see dramatic increases in the cost and time needed for field appraisals. At the same time, I believe we will see increased adoption of other valuation products, including desktop appraisals and other non-appraiser valuation alternatives.”
Michael Floyd, Chief Appraiser and SVP of Compliance for Streetlinks Lender Solutions, blames a complete “lack of incentive” for the dwindling ranks of new appraisers. “With the amount of additional required oversight involved with accompanying an appraiser trainee to every inspection and the liability of being completely responsible for their conclusions, there is simply no discernable ROI to such a relationship,” Floyd added.
Note from article: The Five Star Institute is the parent company of the National Appraisal Congress, MReport, and theMReport.com.
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http://themreport.com/news/secondary-market/09-07-2015/on-the-path-to-extinction-not-so-fast NOTE ON THIS LINK. As of today at 1pm pacific time, it had been hijacked by a spammer and shut down temporarily.
For info on NAC, go to http://nationalappraisalcongress.com Click on Advisor to read their Fall 2014 newsletter with more comments.
My comment: The National Appraisal Congress members are mostly larger AMCs, such as ServiceLink, Proteck, MetroWest, etc. Who will they get for cheap fees to do their appraisals, when they are having problems now? Hmm…. Not me!!

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Amazon and AMCs

Amazon and AMCs
You may, or may not, have heard about Amazon’s attitude towards employees – expected to be available 24×7, including holidays, significant health and family problems, etc. I don’t know if this is a bad way to run a company, but they do pay well and it is not bureaucratic. Demanding a lot of employees is not unusual for a tech company also. I do know that many other companies expect their employees to be available on weekends and evenings for emails.
But, I keep hearing from fee appraisers working for AMCs that they are expected to be available 24×7, including holidays. Phones and emails are sent at all times of the day. A quick response is expected. Cell phones ring on weekends and all times of the day and night. Appraisers have difficulty shutting off their phones and/or refuse to buy another phone for personal calls so they can shut off their only cell phone.
But… AMCs don’t pay well and have increasing Scope Creep, as compared with other clients. Why do appraisers put up with this treatment? Low self-esteem (no one else will give them work) or fear of having no business (common with self employed people)?

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The Power of Social Media and Appraisers

A few months ago, an AMC sent out an email to all their appraisers saying it was requiring that they include a copy of their work file with the appraisal.
Within a very short period of time after it was sent, I saw the email posted to a Facebook group. There were 356 comments posted. It soon “went viral” spreading all over the Internet. The AMC backed down.
Within the past week, another AMC sent a very rude email response to an appraiser who declined applying for a staff position at the AMC. I saw it posted on a Facebook group. It also went somewhat viral, although not as widely distributed as the workfile email.
Read more, including the original email, in the very interesting Jonathon Miller’s Housing Notes – August 21 edition.
Click here – it is near the bottom of the page.
What does this mean? In the pre-Internet days, often it would take weeks, or months, for appraisers to find out about FHA and Fannie changes, for example. Now it is available within a few minutes.
What’s the downside for appraisers? Even if you post to a group that requires approval, your postings can be obtained by others. Group members can send them to anyone. This is a definite problem if do court testimony. A while ago an attorney asked me how many appraisals I had done in the past 6 months as I had a broken ankle. How did she know about my ankle? She did not subscribe to the email-only discussion group. She asked another appraiser to check online for anything that might help her case. Other appraisers have reported similar situations.
Remember the Primary Rule, which I learned when I first browser opened the Internet to us all. At that time you assumed it could be published on the front page of the New York Times, Wall Street Journal, etc. Now, it is even worse – it can go all over the Internet. The only communication that I know of that is private is the inside of postal mail envelopes. Government agencies can track what is on the outside, but not the inside without a special court order.

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Facing AMC License Denial, Coester Sues Virginia Board

 

Facing AMC License Denial, Coester Sues Virginia Board
by Isaac Peck, Editor, WorkingRE
Excerpt:
Facing denial of its license to operate an appraisal management company (AMC) in the state of Virginia, the AMC Coester VMS has filed a lawsuit against the Virginia Real Estate Appraiser Board alleging that the Board is engaged in “a conspiracy to restrain and monopolize trade” and is operating in violation of federal antitrust laws.
The suit follows Virginia’s recently passed AMC licensing laws, which set an August 18 deadline for applicants to obtain AMC licensure or cease operations in the state. The Board has issued dozens of AMC licenses but selected Coester for closer examination. On July 15, Coester attended an informal fact-finding conference and addressed several of the Board’s concerns, including Coester’s history of consent orders and settlement agreements in five other states, for alleged violations of state laws: Maryland, North Carolina, Tennessee, Louisiana, and Minnesota. The allegations against Coester in these states include: unlicensed AMC activity, false advertising, failure to pay appraisers on time, failure to pay customary and reasonable fees, failure to respond to requests within the time period specified, failure to submit biannual certification, as well as USPAP violations committed by Brian Coester himself.
Read lots more, and get links to the docouments at:
For lots more info on Coester, just google Coester AMC or brian coester appraiser
My comment: Looks like various state appraisal boards are looking closer at AMCs. Coester recently got into a tiff with the Louisiana State Board, which was resolved. I am so glad California has never had an appraisal board!! (Gov.  Schwartzenegger wanted to cut costs back then.) Too many possible conflicts of interest… The issues seems to be mostly about fees. I am also not comfortable about appraisal state boards regulating appraisal fees. They should focus on what is important – USPAP.

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Are you or your firm planning on any hiring trainees within the next 5 years?

Are you or your firm planning on any hiring trainees within the next 5 years?

 

My comment: I wonder what the response would be if lenders allowed trainees to sign on their own… remember the mortgage broker days? I sure wish there was a survey on trainee commercial appraisers as I see lots of them where I am. I am hearing that it is back to the “old days” when fee appraisers only hired relatives (because most appraisers were staff appraisers at lenders).

 

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AMC/lender now accepts trainees signing on appraisal reports

Be sure to check your state’s requirements, as they vary widely among the states.

This is the first one I know of. Maybe they have been reading my free emails where I suggest this is the only solution to the appraiser shortage, now and in the future, that can start immediately. FYI, Red Sky is owned/affilated with U.S. Bank

Excerpts from an email (Appraiser Partner News) sent to appraisers on its panel June 11, 2015

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Supervisory Appraiser Change

Upon review, Red Sky Risk Services, LLC has refined its expectations regarding the involvement of appraiser trainees. Important to note, the following change DOES NOT override specific state statute(s) or appraiser training requirements.

Effective immediately, Red Sky is no longer requiring supervisory appraisers to be physically present with trainee appraisers at all subject property inspections and driving comparable sales.

My comment: There is a short additional list of specific requirements. But, they are nothing new – Supervisor to review report, responsible for report, etc.

 

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Are You a Tier 1 or Tier 2 Appraiser?

by Richard Hagar, SRA

Excerpt:

Nordstrom or Walmart? Mercedes or Yugo? Are you a Tier 1 or Tier 2 appraiser? Appraisers have two different business models to choose from.

I have seen that many lenders classify appraisers into two or three different tiers based on their perception of the quality of your product. Which tier are you? The amount of business you have and the amount you are paid is very likely based on how lenders classify you.

There is a lot of appraisal business right now and lenders are begging for high-quality appraisals. Many firms are buried in business, quoting three-plus weeks out in turn time, with high fees; here in the Northwest we are earning $550 for a standard home. If your company is not busy or you are making far less than this, here are some tips.

My comment: Appraiser tiers have been around for a long time. They were used when I started my appraisal business in 1986. In the past, they were referred to as “preferred” or “private banking”, etc. Prior to HVCC they were often used for high dollar properties. After HVCC, lenders placed the appraisal orders directly, not through AMCs they used.

Read the full article. Worth reading!!

http://www.workingre.com/tier-1-tier-2-appraiser/

 

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Appraiser shortage – for AMCs (Appraisal Management Companies), not other clients

Appraiser shortage – for AMCs, not other clients

There is a significant shortage of appraisers willing to work for AMCs with low fees and escalating Scope Creep.

AMCs whose business model is based on low fees to appraisers are having difficulty finding anyone willing to accept their appraisals. They keep calling and calling trying to find someone to work for their low fees.

Direct lenders or the few “good” AMCs are not experiencing an appraiser shortage. Appraisers who work for them turn down AMC work.

 

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Appraisals-how long to write/how many per week

On average, how long does it take you to complete a 1004 interior inspection appraisal report including inspection time (excluding driving time)?

Another Very Interesting poll from www.appraisalport.com

 My comment: I have been hearing about scope creep causing increased appraisal report writeup times but now there is some data. Significantly increased, and still increasing from pre-AMC days. My non-lender report writing time has not changed from since before HVCC. Appraisalport is a lender portal, so I guess there are some appraisers that write fast and others that write slow. Or, maybe it depends on your clients. AMCs tend to combine requirements of multiple lenders into very long lists of requirements.

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On average, how many “interior inspection” appraisals reported on a 1004 do you normally produce in a week?

My comments: Starting with a conforming tract home close to your office, the time increases, depending on driving time, use of an assistant and client requirements.

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