Appraisal News and Business Tips

Posts Tagged appraisal fees

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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Revised FHA Handbook 4000.1 effective 9/14/15. Are you ready for the changes? Get the facts!!

 What you need to know and which FHA documents you need to read!! 
Available in my paid August Appraisal Today August newsletter!!

Many appraisers say they will quit doing FHA appraisals. 
This means less competition for you!!

There is lots of confusion and mis-information about the changes. Some say there is too much required and others say there have not been many changes. What about attic, crawl space, and appliance inspections?

The author, Doug Smith, SRA, interviewed an FHA executive to find out what is really happening.

There are different FHA documents you need to read, not just Handbook 4000.1. It is very confusing, but Doug tells you what information you need and where to get it. He includes:

  • Which guide to use for what, and links to the reference material, including FAQs, Webinars, and SF Housing Appraisal Report and Data Delivery Guide
  • How to keep updated on changes
  • Attic, crawl space, and appliance inspections
  • Energy efficient items contributory value
  • Highest and best use – when all 4 criteria are required
  • FHA – UAD and Fannie guidelines

And lots more information.

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FHA appraisal fees going up after 9/14/15?

Another great survey from www.appraisalport.com !!

7-9-15 fha fees poll.png

My comments: Whether or not there will be increased time (and possible liability issues) required is controversial. Some say there are more requirements, others say not much has changed. My favorite response to the poll is “What changes?” ;>

In the May 2015 paid Appraisal Today June newsletter, Doug Smith’s article discussed the changes: “What’s Up with FHA’s New Manual 4000.1? More Scope Creep? The pluses and minuses of the changes in the manual”. One of the hot topics is about inspecting attic and crawl spaces. For more info on the paid newsletter, click the banner ad below.

FHA Single Family Housing Policy
Handbook (HUD Handbook 4000.1
Information Page Link:
http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/handbook_4000-1

New FHA Appraisal Report and Delivery Guide
It goes step-by-step through the URAR and states what is expected in each section
http://portal.hud.gov/hudportal/documents/huddoc?id=SFH_POLI_APPR_RPT_FIN.PDf
Be sure that any FHA classes you take include this new Guide!!

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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

======================================

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.

—————————-

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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Why have AMCs changed so much since HVCC?

AMCs have been around for a long time. The first AMC, LSI, started in the 1960s. Before HVCC, their market share was an estimated 10-15% of lender residential appraisals. There were relatively few AMCs. Now, there are an estimated over 400-500 AMCs.

I have been writing about AMCs in my paid Appraisal Today newsletter since soon after my first issue in June 1992. In the mid-1990s, when lender business crashed in many areas, some appraisers signed up for AMCs to get work. In those pre-Internet days, often specific forms software and transmission methods were required. Fees were lower than for direct lender work but were stable. There were no broadcast orders, shopping for low fees, or Scope Creep. When business picked up, few appraisers continued to work for them. In my area, there were a few larger appraisal companies who did all the work for specific AMCs.

Then HVCC came and most lenders shifted to AMCs to handle their appraisals. Now AMC market share is estimated at over 80%. Fees varied widely. Residential appraisal fees became sensitive to supply and demand. When business was slow, fees went down. When demand for appraisals is high, such as now, fees went up as many appraisers would not work for low fees. Many appraisers, like other business persons, were afraid to turn down work, even with low fees.

Lenders have always wanted fast turn times, to be more competitive and close their loans. Thus, AMCs push for faster turn times.

When working for direct lenders (and mortgage brokers prior to HVCC) appraisers could establish a reputation for accurate and good quality appraisals with their clients. This is still true today with those clients. However, this is not possible with AMCs who have multiple lender clients and ordering that is not done locally and is done by clerks not appraisers.

The greatest change is in the increasing Scope Creep, which has resulted in longer and longer appraisal reports and replying to many questions about appraisals. Unfortunately, much of the additional information does not affect value or make the appraisals more reliable.

Another significant factor is the widespread use of automated review software, including CU, which means that fewer and fewer licensed appraisers are used for reviews.

Even if you don’t work for AMCs, direct lenders are more “picky” but nothing like AMC requirements. Probably because they only manage appraisals for that lender.

Why has this happened? AMCs work for lenders. Lenders tell the AMCs what they want. I suspect that AMCs with multiple clients combine requests from different lenders into one very long engagement letter/list of requirements.

Everyone I have spoken with, from the lender side, says the recent mortgage crash caused lenders to be more concerned about residential appraisals. The previous crash in the late 1980s, the S&L failures, was caused by commercial property loans. There were some changes made to commercial appraisal requirements, but were minor compared with the changes in residential appraisal requirements post-HVCC.

Mortgage lending is a boom and bust business, starting with Fannie and Freddie in the 1970s. They purchased loans from lenders and made refinancing much easier. When interest rates are low, there are lots of loans. When rates are up, loans decline.

Mortgage lending is also boom and bust regarding risk of defaults. Prior to 2008, since the Great Depression, there had never been property value declines that affected the entire country. Statisticians working for lenders, investors, etc. only looked at their data from the past and did not worry about a national meltdown. So, none predicted it. This is, of course, the minus of using statistical data from the past.

What will happen in the future? We will return to the “typical” days of getting mortgage loans with loosened credit requirements. More and more homeowners will not be “underwater” and will be able to refinance. Will residential appraisal “requirements” loosen? No one knows as we have never had so many requirements that keep increasing. Lenders control the requirements. Until they decide that they are causing too many appraisers to quit, want to speed up their loan approval processes, etc. nothing will change. Residential AMC appraisal fees will continue to be cyclical, depending on supply and demand, similar to commercial appraisal fees as long as AMCs are managing appraisals. The less AMCs pay to appraisers, the higher their profits. Maybe lenders will step in and tell AMCs what they must pay their appraisers.

What about direct lenders? There is some scope creep, but not much as compared with AMCs. They don’t shop for the lowest fee. My advice to appraisers is to work for direct lenders whenever possible. Many appraisers with over 20 years of experience still get most of their work from them. When business is slow, they accept AMC work. Another option is to work for AMCs that work for one, or a few, lenders. Then the requirements will not be from a lot of different lenders.

NOW IS THE VERY BEST TIME TO LOOK FOR NEW NON-AMC CLIENTS. WHEN EVERYONE IS BUSY AND TURNING DOWN WORK!! I HAVE SPECIAL REPORTS, LOTS OF MARKETING TIPS FOR NON-AMC LENDER WORK AND ARTICLES ON NON-LENDER WORK IN MY PAID APPRAISAL TODAY NEWSLETTER. www.appaisaltoday.com

 

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