Appraisal News and Business Tips

Posts Tagged appraisal fees

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

Low appraisal fees

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/

VA wants fee appraisers!!

VA is A Most Excellent Appraisal Client!!
VA is one of the last lender clients that pays C/R fees with no bidding. Increasingly, even direct lenders are asking for bids, or just cutting appraisal fees.
What is most important to me is that, in direct contrast with most AMCs, VA considers its fee appraisers to be professionals.
You can apply for the VA panel without reading this article, but I have lots of “insider tips” that makes it much easier.
Applying for the VA panel is not like AMCs, other lender clients or FHA. There are specific requirements, such as three reference letters, two of them from appraisers.
There are lots of tips in this article such as:
– How long does it take to get on the panel?
– Sample phrases for reference letters (3 are required)
– Tips on getting on the panel
– Who does the reviews?
Published in the June 2014 issue of the paid Appraisal Today.
To read this article, and many more, subscribe to the paid Appraisal Today!!
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The Big Issue for Appraisal Fees – Consumers are paying more for appraisals if AMCs are used

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.

Appraisal Today newsletter

Video – AMCs – fees, blacklists, etc.

The topics include:
– Major restructuring of residential lender fees since HVCC
– AMC fees and how to make more money
– Consolidation and what it means for appraisers
– What is an AMC
– AMCs since 1969, when LSI started
Note: the fee discussions start at about 14 minutes

I have been writing about AMCs since 1992 in my paid Appraisal Today newsletter. My speaking style is much more informal than my writing style ;>

Phil Crawford, the host, is a certified general appraiser who has been appraising (residential and commercial) for over 15 years. He is a third generation appraiser. He has been doing interviews on a local Cincinnati real estate radio show for a few years. We are a good match!!

To see other radio shows, go to www.voiceofappraisal.com

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My first interview was in April, on Fannie Mae’s exclusionary list. To listen to this interview, and listen to the other shows, go to www.voiceofappraisal.com and scroll down the page to the video “E3: The Fannie Mae List!!”

Topics included:
– Why Fannie is using UAD data
– Fannie and Big Data
– How appraisers get on the black list
– Which appraisers are getting on the black list
– The future of Fannie’s Big Data

AMC fees – going down?

Poll Results – www.appraisalport.com  survey 11/4/13

Have you noticed any change in the fees being paid by AMC’s since the market has slowed?

– No, fees seem about the same as before. 2,618 votes 52%
– Yes, the fees seem to have increased slightly. 464 votes 9%
– Yes, the fees seem to have decreased slightly. 1,419 votes 28%
– Not sure 488 votes 9%
Total Votes: 4,989

My comment: I am forecasting declining AMCs fees because loans have dropped. Keep up with fee changes at www.appraisaladvisor.com  which is now free to all appraisers!!
I have lots of tips on getting higher AMCs in my AMC Special Report – $20 and FREE to paid subscribers!!
go to www.appraisalport.com to take the current survey.

Appraisal Today newsletter

Fewer appraisers in the future – fees and turn time?

In last week’s email I reported these results:

www.appraisalport.com  poll

With few new people currently entering the appraisal profession, do you foresee a shortage of appraisers at some point?

Yes, in the next few years. 2,705 votes 47%

Yes, but it=s probably years down the road. 1,603 votes 28%

No, I don=t think we will see a chronic shortage. 1,137 votes 20%

Not sure. 253 votes 4%

Total votes: 4,818

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This is a followup to that poll

As a follow up, do you think the future shortage of appraisers will affect fees and turn times?

Yes, at some point it will. 3403 vote (70.6%)

No, I don’t think it will have much effect. 663 votes (13.8%)

No, I don’t think we will see a chronic shortage. 528 votes (11%)

Not sure. 224 votes (4.6%)

Total Votes: 4,818

Appraisal Today newsletter

Do your appraisal fees reflect the value of your work product?

www.appraisalport.com survey

Do you think the fees you currently accept are indicative of what your work product is actually worth?

Yes, at least in most cases. (15.2%) 826 votes
Not yet, but they seem to be headed in the right direction. (33.6%) 1,821 votes
No, they would have to increase dramatically to meet the current scope of work. (51.2%) 2,774 votes

Total Votes: 5,421

My comment: My fees have always been too low and I don’t even do any AMC work! I just can’t seem to get my billings up to my $100 per hour minimum. Darn!!!

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