CU warning messages – grrrr

By on January 27, 2015   /   adjustments, AMCs, appraisal, Appraisal fees, appraisal management company, appraisers, Collateral Underwriter, Fannie, future   /   5 Comments
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A few appraisers are reporting getting CU appraisal warning messages from AMCs. Some AMCs get the messages and and some don’t, depending on the agreement with their lender client.

I sorta believed all the “experts” who said CU would not affect appraisers much, except the many us who do not have market based adjustment support in our work files (which we should have always had). “They” said appraisers’ time for responding to AMC questions will not change. Fannie’s reviewers have been using CU for about two years. Some lenders beta tested it. They all liked it. But, I wonder if it was tested with “boots on the ground” appraisers who actually had to respond to the warnings??

In January I wrote up a long CU article for my paid Appraisal Today newsletter. In the February issue I will have another long article, focusing on the differences between the old and new CU warning messages. They are very different. AMCs with access to lender’s warning messages are sending them to appraisers, such as:

Old message (pre-CU): Condition adjustment for comparable property #<comparable number> appears excessive.
New message(CU): The condition adjustment [for comp #X] is smaller than peer and model adjustments
New (CU): The condition adjustment [for comp #X] is larger than peer and model adjustments.

There are other messages about condition ratings different that peers and model.

I don’t know how our “peers” and The Model made their adjustments or ratings and what they are. I don’t know how to respond as to why mine differ.

Now that appraisers are getting the warnings, they are asking how to respond to them. Who are these peers? What is the model? I have no idea how to respond, except to say “I don’t know who the peers are and how they determined condition or what method they used for their adjustment. I am unable to respond.” How do you know what the condition is really like for comps? There are lots of ways to estimate an adjustment for condition. You can explain what you did. But, who is right? You, peers, or model?

MLS is soo reliable (Not) for estimating comp condition. I don’t think they will like “matched paired sales” on all of your responses for the method you used for adjustments.

Looks like maybe there will have to be some webinars for appraisers, not just underwriters, explaining how to respond.

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Appraisers not getting access to their own data on CU

By on January 27, 2015   /   adjustments, AMCs, appraisal, appraisal management company, appraisers, Collateral Underwriter, Fannie, lender appraisals, Reviews   /   3 Comments
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There is a petition and a letter being circulated about appraisers getting access to CU, particularly the Web interface which lists comps. This is unlikely for many reasons, which I write about in my paid newsletter.

More important (and more likely to occur) is: Why don’t appraisers get access to subject and comp physical characteristics from the CU database, which was provided by appraisers using UAD?

For example, which appraisers are able to measure their comp GLAs? Not many. This data would really help appraisers do better appraisals. We can always look at MLS interior photos and interview agents, buyers, and sellers for other information we need, such as condition. When the MLS listing says “contractor special” or “fixer” that is a good indicator of condition.

The only reason I have heard is that appraisers vary widely and there are too many differences. GLA is a good example. This has has always varied among appraisers. When I used the old CMDC appraiser database in the late 1980s, sometimes there were more than one source of GLA on a property. I have done relocation appraisals since 1986. It was very seldom that the 2 or 3 appraisers have the same GLA. The “rule of thumb” was up to a 5% difference in GLA was ok.

How many appraisers are “fudging” their dimensions to make their GLA match public records and avoid “stips”? Hopefully, CU will change this. Maybe CU will notice how many appraisers just use public records and how many use their own measurements.

I am really hoping that Fannie allows appraisers to get property characteristic information. It will help all of us – Fannie, lenders, AMCs, appraisers, reviewers, etc.

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CU – census tracts, adjustments, "bad apples", etc.

By on January 7, 2015   /   adjustments, AMCs, appraisal, Appraisal fees, appraisal management company, appraisers, Collateral Underwriter, Fannie, forecast, future   /   2 Comments
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There is a lot of misinformation about CU. No one knows what will happen when CU is fully implemented. I speculate myself. I am an appraiser. I have opinions ;>

UAD is mechanical. CU is asking appraisers to think about their appraisals, not how to classify a characteristic.

For the appraisal profession, I think CU will make us better appraisers by making us take a critical look at adjustments. It will also help get rid of the “bad apples”, including appraisers that “push” values, throw anything into the form to get it out the door, need lots more training and education, etc.

I think Fannie’s main purpose of CU may be to stop appraisers from having low (or high) adjustments, inappropriate comps, using Q/C ratings, etc. to make values higher. That is what they worry about.

Only using comps from within the subject’s census tract is ridiculous and I’m sure CU will not be doing this. It is a good idea to see which census tracts match the neighborhood boundaries that you use. Or, part of Census Tracts. Then you can put the census tracts you use in your appraisal. In some areas census tracts are way out of date due to new construction, plus other problems.

To find census tracts near any property, go to http://www.huduser.org/qct/qctmap.html and type in an address.

I started my business in 1986 and had to put census tract numbers in my appraisals for the first time. I had previously worked for an assessor’s office and had never done a lender appraisal. I used Thomas Brothers Census Tract books to find them. To me, they often represented a reasonable way to delineate all, or part of, a neighborhood. Looking at the current census map for Alameda, CA, my city (population 75,000), it definitely did a good job of defining neighborhoods. However, I usually have to include more than one census tract as there is not enough data to do an appraisal otherwise. It did miss one very important neighborhood where most of Alameda’s large historic homes are located. There is a significant premium for being in this neighborhood. I very, very seldom go out of this neighborhood for comps. I suspect there are issues like this in other geographic areas. I have no idea what area Fannie would use, so I would put an explanation in my appraisal.

The problem is the forms, which were developed for use on tract homes. If you are not appraising a conforming tract home, it is like trying to put square boxes into round holes.

Every appraisal will have a risk score. A high risk score (1.0 to 5.0, where 5.0 is high risk) does not mean an appraisal is “bad”. It may be in an area of declining values or have a negative location problem. Or, not enough comps to provide a reliable value.

Remember that only certain UAD items will be considered by CU for now. If it is not UAD formatted, it will not be looked at. I don’t think Fannie’ use of census tracts will be the issue.

The Big Issue is support for adjustments. I have no idea how to support all the adjustments I make in my appraisals. I know what buyers will pay more, or less, for. But, I don’t know the exact dollar amount.

Regression is just one way to support adjustments, but it will not work for many adjustments, particularly if there are very few sales. Regression is not the only answer. There are many other methods. I will be writing about them in my paid email newsletters.

Regression works very well for time adjustments. Be sure yours are market based, not just from an MC form.

I am seriously considering not making any dollar adjustments when I use form reports for non-lending work, except time adjustments. I never make dollar adjustments on narratives and apartment form reports. My state regulator wants to see support in my files for adjustments.

Just because there is a box does not mean it has to be filled in. Qualitative adjustments are fine. There was a Fannie form developed and used for awhile in the 80s or early 90s that did not use dollar adjustments, only plus or minus signs. I worry about that a lot. The old Fannie 2-4 unit form did not have any adjustment boxes. I really hated when they changed that form to include adjustment boxes and de-emphasize the Income Approach.

No one knows how CU will work out. Will everyone turn down appraisals except for conforming tract homes? Will there be no one to do the tough appraisals and work in rural areas. When appraisers are compared, does the majority opinion win?

Will the days of 24 hour turn times and $200 fees be gone? Will AMCs stop broadcasting all appraisal orders to everyone on their fee panels? Will all appraisers be seen as the same and interchangeable? Or, will appraisers be rated on skills, education and experience? Will fees go up? Will fees be based on difficulty of the appraisal? Will lots of appraisers abandon the lender appraisal ship of fools?

Read the webinar pdfs and look at the maps from the two Fannie Webinars to see what they actually are doing. I spent lots of hours doing this, plus speaking with others about what they thought. Of course, it was for a 12-page article in my paid newsletter. Plus 18 pages of excerpts from Fannie documents and webinars. I probably would not have done it otherwise ;>

Go to www.fanniemae.com/singlefamily/collateral-underwriter and listen to Fannie’s two webinars for underwriters – very good with excellent illustrations and explanations. Plus, read the FAQs. You need to register, but it is very easy and you go directly to the webinar and can return at any time. There are lots of links on the web page for more information.

Last month’s January 2015 issue of the paid Appraisal Today newsletter had a 12-page article on CU plus 18 pages of addenda material. The February and subsequent issues will address problems such as how to make adjustments. Click the ad below for more information.

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Fannie's Collateral Underwriter (CU) will make big changes in how we do appraisals starting January 26, 2015 !!

By on December 17, 2014   /   adjustments, appraisal, appraisers, Fannie, future   /   3 Comments
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UAD is annoying and only relates to data consistency, not appraising real estate. Collateral Underwriter, which is regression based, uses UAD data to compare your appraisals to your “peers” and Fannie’s “model”, which is regression based. It also compares the appraisal with previous appraisals you have done where the same comp was used. It compares only what is coded by UAD. In other words, it does not address pools, patios, and other non-UAD data. For example, you use $40 per sq.ft. GLA adjustment. CU compares your adjustment to your peers and to the “model” adjustment and you are different than 4 out of 5 other appraisers and the “model” has a different number.

On the plus side, now underwriters are only getting messages based on “rules”, not actual data. With CU, they will have more information to decide if something needs to be changed. I am sure that a lot of “flakey” appraisers who are not very competent, rush through appraisals too fast to get them done, etc. will be identified. More important, the really bad appraisers who may be competent but choose to use “fake” comps, change comp sales prices to get a higher value, etc. will be found out.

I am working on an article for my January 2015 newsletter on CU and am studying all the Fannie documents plus interviewing industry insiders to see what it means for you. Reading all these Fannie documents is giving me a headache!!

Go to www.fanniemae.com/singlefamily/collateral-underwriter  and listen to Fannie’s two webinars for underwriters (listed under OnDemand eLearning Courses) – very good with excellent illustrations and explanations. You need to register, but it is very easy and you go directly to the webinar and can return at any time. There are lots of links on the web page for more information.

Also listen to Jeff Bradford’s recent webinar athttps://goto.webcasts.com/viewer/event.jsp?ei=1050667 . It starts with the Big Picture of Big Data and discusses CU. It also includes information on his new Redstone report which has adjustment support and other information. Redstone can be attached as an addendum to any forms software you use. You can skip this part, if you want. But, I found it very interesting. Projected pricing is $5-$15 per report, depending on what you need. Jeff is writing an article on the Big Picture of Big Data for the February issue of the paid Appraisal Today.

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Standardizing adjustments?

By on October 29, 2014   /   adjustments, appraisal, appraisers, lender appraisals, Reviews   /   17 Comments
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Channeling Deep Blue Versus Garry Kasparov in Home Valuations – It’s time to standardize how real estate appraisers make their adjustments

Source: Corelogic blog

Excerpts:
It might be time to reengineer the process appraisers use to make adjustments to comparable homes. The current approach does not appear to be defensible.

To investigate this issue, we obtained a set of relocation appraisals from an appraisal management company and conducted our own analysis. (As background, for relocation deals, two or more appraisals are ordered at the same time; and the two appraisers often choose an identical comparable property).

For the experiment, we:
1) Obtained a set of relocation appraisals—two appraisals on each property prepared at roughly the same date for which the appraisers choose an identical comparable.
2) Looked at the adjustments made to that comparable and noted discrepancies in the amount of the adjustments, and even the direction (positive or negative).

It’s time that we re-engineer the process so that appraisers can focus on the things that may benefit from the human element, such as defining the neighborhood and selecting comparables. But for the pieces of the puzzle that need to be standardized, like adjustments to comparables, we should be harnessing the power of our machines. Too much is at stake to maintain the status quo. Appraisers would benefit by being allowed to focus on things they do well; loan applicants would benefit from a less-costly, streamlined process; and lenders would benefit from valuations that were standardized and more reliable.

Read the full article and see how they analyzed the data, with graphs etc. at:
http://www.corelogic.com/blog/authors/michael-g.-bradley/2014/10/channeling-deep-blue-versus-garry-kasparov-in-home-valuations.aspx?WT.mc_id=crlg_131016_0OGMz#.VFERojTF8zr

My comments: of course, it would be very helpful if appraisers had access to all the Big Data being compiled by Fannie and Others. Fannie will be looking at appraiser adjustments but don’t offer any help from their Big Data to appraisers making the adjustments.

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How to stem appraiser "low tide"

By on September 8, 2014   /   appraisal, appraisal management company, appraisers, forecast, future, trainees   /   4 Comments
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By Alan Hummel, Chief Appraiser Forsythe Appraisal

Excerpt:

The topic may seem peculiar at a time when mortgage originations are down from the heyday of the early 2000s, but if the issue isn’t addressed now, a shortage of qualified residential appraisers could have a dampening effect on the mortgage market at precisely the moment when it is trying to regain its past vibrancy.

The decline in the numbers of appraisers entering the profession can be attributed to many factors including (but not limited to): qualifications and licensing requirements, the economics involved in training, and unwillingness on the part of some financial institutions to allow trainee appraisers to perform services. The most significant obstacle for many trainee appraisers is completing the 2,500 hours of required experience to achieve Certified Residential status, after the education component has been completed.

My comment: The only answer is for lenders to allow trainees to “sign on their own”.Hummel proposes a training program. But, I don’t see this happening on a large scale.  Since Fannie and Freddie started loan securitization in the 1970s, the volume of appraisals needed has been very, very cyclical. Before licensing, most appraisers were employees of lenders. Lenders solved the problem by hiring armies of trainees during boom times and then laying them off when volume dropped. Few appraisers are employees of lenders now. Fee appraisers have been expected to train new appraisers. Lenders paid them a salary and experienced salaried appraisers were the supervisors. But, fee appraisers are not set up for it – no time, minimal supervisor training, little economic incentive, etc.

Read the full article at:
http://www.housingwire.com/articles/31233-how-to-stem-appraiser-low-tide

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

By on August 25, 2014   /   AMCs, appraisal, Appraisal fees, appraisal management company, appraisers, blacklist, lender appraisals   /   16 Comments
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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!!

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$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/

 

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Appraiser-AMC symbiosis?? Not!!!

By on August 11, 2014   /   AMCs, appraisal, Appraisal fees, appraisal management company, appraisers   /   11 Comments
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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

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Bracketing – lenders gone wild!!

By on July 29, 2014   /   AMCs, appraisal, Appraisal fees, appraisers, lender appraisals, state appraiser regulators   /   16 Comments
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Filling up an appraisal report with “comps” that “support” adjustments is a hassle for appraisers and often does not contribute to the accuracy and reliability of the subject’s value. Note that the “comps” are sales, but not necessarily comparable sales.

Sure, it often works fine when you are appraising a typical home in a conforming tract with few adjustments. But, what if you work where I do, where most homes were built prior to 1930 and many Victorians were modified over the years? I am hearing about appraisers being asked to use sales from 2-8 years ago for “bracketing”. What if you have an “oddball” home in a conforming tract, such as a home with a large addition or an “inlaw” space?

One of my first appraisal clients was a local lender who still has an appraisal department, is very savvy and treats their fee appraisers as professionals. They specialize in Fannie Mae loans. I recently spoke with an appraiser who does appraisals for them. She said they were asking for “bracketing”, including asking their appraisers to consider using very old sales if necessary.

Why are lenders asking for “bracketing” of adjustments? The same reason we have been hearing since 2008. They don’t want Fannie to require buybacks of the loans they sold to Fannie. They are also worried that Fannie will not buy a loan. I have noticed that lenders are often like sheep. When one does it, or says it should be done, they all do it.

Perhaps they are doing this in order to have some sort of “support” for adjustments. I guess they finally figured out that putting “adjustments done using matched paired sales” in an appraisal doesn’t mean much.

More important, state regulators want to see “support” for adjustments. I don’t know how to “support” all the adjustments in many of my appraisals. I know what buyers will pay more or less for. But, the exact dollar amount can be very difficult to determine. I don’t think it is right to conclude an incorrect value just because I cannot prove the exact dollar amount. Matched paired sales and statistical analysis doesn’t work for many adjustments. Matched paired sales can be manipulated and statistical analysis often does not work due to lack of data.

Market conditions is the easiest adjustment. Square footage and number of bedrooms, lot size, can often be supported statistically. If I spent many, many hours I might be able to “support” some of the other adjustments. But, would my appraisal be more accurate? Does my scope of work agreement with my client include spending 2 weeks or much more on a home appraisal for a loan?

Appraisers should consider what affects value. I worry about appraisers not making adjustments that are indicated by the market because “support” can be very difficult resulting in a less reliable, or inaccurate, value.

I have been thinking about not using any adjustments in my non-lender residential appraisals. Instead I could just use plus or minus signs. Why? I can’t “prove” most of the adjustments for my state regulator. I worry about losing my appraisal license. My clients don’t care about dollar adjustments.

What’s the answer? The only answer I can think of is to carefully pre-screen appraisal requests so you only accept appraisals of conforming homes in conforming tracts.

Should you do bracketing when the sales you use are not comparable? Some appraisers refuse and others do it. In my business, when requested to include information that is not relevant to the value, I always put “Included at client request. Given no weight.” Only you can decide what works best for you.

I am writing an article for the August issue of the paid Appraisal Today about making more money increasing your hourly billing rate. Working in conforming tracts is Number 2 of my primary suggestions.

To subscribe, and increase your hourly billing rate, click on the ad below!!

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Low appraisal fees

By on July 15, 2014   /   AMCs, appraisal, Appraisal fees, appraisers, lender appraisals   /   2 Comments
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Appraisal Fee vs. the Cost of Gas

Excerpt:

Two decades ago, gas cost about a dollar per gallon.  Let’s face it – almost everything (milk, eggs, etc.) was cheaper, including obtaining and maintaining your appraisal license. But surprisingly, one thing that has pretty much stayed the same is the amount you charge for an appraisal. In 1994, the average appraisal fee for a residential property was $320. Today, the average appraisal fee is $350. This is a 9% increase over 20 years, far below the rate of inflation.  In inflationary terms, this means we are currently being paid less than we were 20 years ago.

Let’s compare the average appraisal fee to the cost of gas during the last 20 years. … Gas has increased 239% over 20 years while the amount appraisers collect on average over the last 20 years has increased only 9.375%. This is a pretty scary picture for appraisers.  After factoring in the AMC percentage (25-50%) and our overall higher operating costs, it’s amazing that any of us can survive in this business.

My comment: Interesting analysis. I have been setting my residential non-lender fees based on what borrowers are paying for loan appraisals. I am still slightly under those fees. But, if prospective clients call around, some appraisers are charging much lower fees, even close to typical AMC fees. Why? The same reason many appraisers have always worked for low fees, even prior to hvcc. Fear and Greed. Afraid they will never get another assignment (Fear) and don’t want to turn down any assignments (Greed). This applies to all types of businesses, not just appraising. Remember the Primary Rule of Business – There is Always Someone Cheaper. Sometimes competing on price works out, such as Walmart. But, for most businesses it is a death sprial to the bottom.

Click here to see the graph, read the full commentary and comments, and post your own comments!!
http://www.frea.com/blog/appraisal-fee-vs-cost-gas

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Why You’re Not Charging Enough For Your Work, And How To Change That
Source: Forbes magazine. It’s not just appraisers!!!

Excerpts:

“If you’re making $50,000 or less in your business, it’s not a business, it’s a job, and it’s not a good job either.” … If you were working for someone else, and had to toil for 18 hours a day to make ends meet and still generated less than $50,000, you’d say something would have to change, right?”

4.  Develop stronger boundaries. Start saying “no” to outlandish requests for your time and effort.  Know what your time is worth, and demand respect for that.

6.  Charge 20% more starting today. Just do it.  Then figure out what the right number is within the next few months, and start charging it. You can transition your existing clients to your higher fees in a more gradual way, but new customers and clients need to pay you more, starting now.

Worth reading. Thanks to appraiser John Carlson for posting this most interesting link!!
http://www.forbes.com/sites/kathycaprino/2014/06/28/why-youre-not-charging-enough-for-your-work-and-how-to-change-that/

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