Broker finds workaround for appraisal management services

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Brokers frustrated by appraisal management companies may want to take a page out of one professional’s playbook for dealing with lender demands.

“I have let all my lenders know I will not deal with them if I have to use an appraisal ordering system, (and) I have managed to get exemptions from four lenders that insist on [using them],” broker Curtis Glenn wrote on MortgageBrokerNews.ca. “I have told the lenders I will go somewhere else with the file. I after 21 years as a broker if they do not trust me then I won’t use them. If every broker said no, [these appraisal companies] will go away.”

It’s a tactic that may only work for seasoned, high-efficiency brokers but one more industry players are likely to try as frustration with appraisal dispatch companies grows.

Several brokers have complained about delays and unexplained extra costs when dealing with these companies.

“Up-charging of fees is a big issue,” commenter Michael Rice wrote on MBN. “Insist the [lenders] enter into a one fee for all deals. It eliminates the nickel and diming effect from the appraisal companies.”

The suggestion comes in response to a story about the dwindling number of lenders who allow brokers to select appraisers for deals. Most are now using middleman companies accused of farming out contracts to those appraisers coming in with the lowest bids.

It’s a process that has long frustrated brokers as well as appraisers, who feel their business is being degraded.

“What really they are is a glorified call centre and they swear to the bank that they’re going to send the appraisal to the best fit per job based on approved lists … what they really do is they send it out to the [lowest bidder],” Derek Dupuis, an appraiser with S. Rayner and Associates, told MortgageBrokerNews.ca Tuesday. “They send it out to the appraisal companies that they have managed to sign contracts with for low, low rates. Like rates that we charged in 1992.”
  • Agent on 2015-04-02 11:38:34 AM

    I have done the same- when appraisals go into a bidding war for the file- you don't always get the best result, Many, many times they come in lower, and you have no recourse as you are not allowed to speak to the appraiser- it has been paid for and sent to the lender. One lakefront property came in 100 K lower than any other recent sale- Finally got him up 90k after a week of back and forth. He wasn't happy I called- paid extra as well for his 45 min drive because he picked it up in the que. I understand why lenders went this route but I agree after 20 yrs you better trust me.

  • Laurel on 2015-04-02 12:07:28 PM

    Bravo! I have for the past 15 years developed relationships with 3 local appraisers that know their markets, are efficient, and always give me and my clients excellent service. They are very experienced, accredited senior appraisers. I have taken the steps to request them when forced to order through a service. The frustrating thing is that we pay a higher cost so the service can take their cut, and we are getting the SAME report (with a slower turnaround) that I would get if I ordered it direct. I agree, it is time for lenders to trust their brokers on this. All appraisers are licensed and accredited. I do not see the issue.

  • @kiltedbroker on 2015-04-02 12:16:19 PM

    Just a thought... but what if lenders started to include appraisal options with status account brokers? That might be a way to keep the system in place for brokers who don't do a lot of volume with a certain lender while showing trust to the brokers who send a fair deal of volume.

    So if you are a CEO with Street Capital or a Wizard with First National, you can choose to use the appraisal system or order it directly through a qualified appraiser of your choice.

    That right there could be a great compromise!

  • Rick (Mortgage Mentor) Robertson on 2015-04-02 12:17:25 PM

    Same with me. Not only is the unnecessary cost a factor, but I find the communications systems of the "ordering systems" to be very time consuming and their web based order forms to be inadequate/confusing. I can order, in writing, directly from highly reliable appraisers and get a confirmation back faster than the "management systems" can even generate the request. Today's mortgage approval processes are complex enough without adding additional frustrations to the appraisal component.

  • Bert on 2015-04-02 12:26:47 PM

    The major justification put forth by lenders for using the appraisal mgmt. companies is supposedly to insert an arms length party into the process and thus avoid broker / appraiser contact & value manipulation. Fine in theory - but what happens in smaller centers where there may only be a few appraisers ? All it takes is a quick phone call to your local appraiser giving them the heads up to watch for it on the system. Then we're right back to broker / appraiser talking about the value ....
    I've had them try to charge clients $50 mileage charges for "out of territory" when the property was 20 minutes outside of the city! The lenders still have approved appraisers lists,
    appraisers still have E&O insurance, so what's the gain in using an appraisal mgmnt company ? Nothing. If enough brokers take the stand that Mr. Glenn has taken, and communicate it loud and clear to the lender's BDMs that they'll NOT send business to them, eventually it will hit the bottom line (the place from which eventually all decisions come) and these companies and their -0- value added "services" will go away.

  • Deryl Fitzgerald; CRA on 2015-04-02 12:28:57 PM

    Been appraising for 45 years. I am now expected to bid on most appraisal orders. I refuse to work for less than I am worth so losing a huge amount of business to candidates who are not even accredited who area working is some cases at half rated fees. I am expected to pay for E&O Insurance at ever increasing rates and expected to work weekends, Sundays and Holidays for 1990 Fee structure with 24 hour TAT.... Glad I'm near retirement. Appraisal business is in the toilet with the way things are run now. Think I'll go to Timmy's and see if there is employment there.

  • James on 2015-04-02 12:55:23 PM

    The only reason why these companies exist is because appraisers chose to join them with whatever carrot they have been told.

    If enough appraisal companies chose not to participate in it (given that they aren't paid more), it would lose relevance.

    Fact...there are lenders who will take reports without going thru these companies. They are the ones I chose to support assuming all else equal.

  • Amber on 2015-04-02 1:03:59 PM

    I think the middlemen companies are ridiculous. They aren't adding a benefit to the consumer nor really the lender. Appraisers carry licenses and are held to a standard just like a broker. If the lenders are that concerned about getting quality reports have an approved list. This way they can control who they are reading reports from but get rid of the middle men. They truly add little value.

  • John B on 2015-04-02 1:17:18 PM

    I certainly agree with most of the comments above.

    I have a particular problem with one of these service providers, that has 3 initials. I have concerns that the company founder also operates an appraisal company "separate" from the appraisal services company.

    It came to a head, a few years ago, when a report came in $80K less than a report only 10 days earlier. Upon investigation I discovered that the earlier report was done by an appraiser on the services list. The president and founder refused to accept this and consult with his member firm. Needless to say I lost the deal, since then I only use them if I really have to. My loss became theirs too!

  • Brad Currie on 2015-04-02 4:03:38 PM

    Excellent article and good comments. One of my pet peeves is the Solidifi's $75 charge for have the appraisal re-addressed to a different lender. Also, the fact I end up picking the appraiser whom I would have sent the order to directly anyways. One appraiser advised me why the lenders like them is they only have to write one cheque to appraisal service company versus many to individual appraisal firms.

  • Rick (Mortgage Mentor) Robertson on 2015-04-02 4:34:22 PM

    Another of my challenges with those systems is situations where it would be best to get an appraisal value/report in order to first determine the LTV and best lender. Using those systems not only makes the process cumbersome but as Brad Currie writes there can be additional (unnecessary) charges to then re-address the report to the suitable lender. That is IF the chosen lender will actually use the same 'service' provider.

  • Joe Broker on 2015-04-02 6:10:53 PM

    Appraisal ordered through Solidify. Wrong lender was inputted. Appraisal company could not correct on their own since the order was placed with Solidify. Solidify required a new order be placed requesting a letter of transmittal. They charged $186.45. This included their management fee of $75.00.
    Now that is really taking advantage of a situation.

  • James on 2015-04-02 7:58:12 PM

    Bottom line...

    Unless the appraisal companies boycott these useless companies, this will only get worse. For brokers, find a lender who can do without it...there are options.

  • Mark Brennan on 2015-04-02 9:51:54 PM

    There are lenders out there who will use Genworth-approved appraisers. As long as they are on Genworth's list, it is fine for them.

    The insurer has likely added that extra level of vetting to satisfy these lenders without using the online services and you can order direct with the appraiser.

  • Mel on 2015-04-03 10:57:01 AM

    The biggest problem is that they pad their fees. I spoke to one appraiser (who I have known for 30 years) who did a deal for NAS and we figured out they have padded his fee by $150.

  • Appraiser on 2015-04-05 10:23:14 AM

    Appraisal management companies (AMC's) are not going anywhere soon, I'm afraid. They are completely dominating the business and the volume of orders is truly astounding. Yes, they're cheap.

    By far the most business comes from the BIG 6 banks, with very little volume (less than 5%) from brokers. The vast majority of business requiring appraisals today is HELOC's.

    Boycotting the AMC's is a waste of time if you think it will have any effect at all.

  • James on 2015-04-05 10:48:33 AM

    RE: boycotting AMCs waste of time...
    1. No stats to suggest that AMCs dominance with banks should apply with brokers. IF all non bank lenders decide to quit on AMC...it doesn't matter what banks wants to do. IF all top tier appraisers decide to quit on AMC...it doesn't matter what banks would do (the "chance" of earning more business is the carrot being dangled to the appraisers for them to stay).
    2. Brokers can use lenders who don't require them to use AMCs

    This is the exact thinking that AMCs would want you to think so that you would be lulled into learned helplessness.

    Brokers, non bank lenders, and appraisers just need to understand that AMC isn't necessarily good for the industry and take action instead of having the mentality to just give up and roll over.

    AMC's = waste of time and $$

  • James on 2015-04-05 10:57:06 AM

    @appraiser...

    BTW, AMCs are not and logically never going to be cheaper than ordering direct. They have to skim a cut of the order, hence...by logical default they aren't cheaper.

    Check it out yourself...I can order one for $280 plus tax. Same report will cost the client $320 via AMC. Client goes thru a pain in the ass payment process and get charged extra for the useless exercise. Tell me....how is that good?


  • Appraiser on 2015-04-05 1:04:40 PM

    @ James: When I wrote that the AMC's are cheap, I meant miserly toward appraisers. They pay $125 per order and haven't raised that fee in 11 years. The AMC takes the rest.

    However, the volume is out of this world. Many of us are completing in excess of 100 orders per month for the last 5 years in a row! Last November I did 167 orders. Yes, it was 7 days a week and 12-14 hours per day, but when you're self-employed you only eat what you kill.

    Mortgage appraisers who are not hooked up with the AMC's are struggling. Sure I could charge $280 or $320 per order on my own, but there is almost no business out there that isn't controlled by NAS, Soldifi, FNF or Brookfield RPS. They have every big lender under contract.

  • Old West Coaster on 2015-04-05 6:11:00 PM

    @Appraiser: I am amazed that you did 167 appraisals in 30 days, especially considering the challenges of doing them through AMC's. Pre-AMC day's, I could occasionally do 5/day, but now with all the extra details required in the AMC reports and/or using the proprietary AMC appraisal software, if I do 2 a day, I'm exhausted. In my area, there are no project tracts of houses, all the houses are different and each has to be measured, sketched, and the area calculated individually. I average 25/mo and my income is about 1/3 of what it was in pre-AMC days. Mind you, I only work 50-60 hrs/wk.
    Regarding boycotting AMC's work, unfortunately when your business of 25+ years was built up by servicing the big 5 banks directly, replacing that is a huge challenge. The AMC's came in under the radar and swiped our clients and our profits. We are now getting more work from brokers who have made arrangements with some lenders who allow the appraiser to submit appraisals directly to the lender with a copy to the broker. It is a much more preferable way to work, since we get the request quicker, we get into the property quicker, and the report gets done quicker (on appraisal software that is much more appraiser-friendly) - and we get paid quicker. Typically we get about $100 more per appraisal going this route, which is still less expensive than the AMC route, from what we understand from several brokers. AMC's have more or less demolished the quality appraisal, in favour of the mass produced appraisal.
    We seem to be getting more purchase appraisals these days. The big banks seem to be going back to ordering more appraisals rather than relying on the AVM's they seemed to favour for several years. We even get to do appraisals on properties that we had previously appraised several years ago, before the AMC's started collecting our data into their databases so they could generate the AVM's for the banks. Maybe the banks could see that sooner or later there would be no work for appraisers and no more appraisers to do appraisals when they really need them - like on unusual properties, foreclosures, acreages, or new construction.

  • Unidentified Broker on 2015-04-05 6:47:36 PM

    It is very easy to manipulate the system with Solidifi and NAS to still get the appraisal request in the hands of your appraiser, which at that time he/she can offer you the service you require. Even if the appraisers name does not show as the process is to remain anonymous. If you ask around your office, I am sure you will find someone that knows how to do this, it has been done for years and is not a secret. I was shown how to do it by one of the reps for one of the companies mentioned in this blog. It isn't tough to do.

  • Appraiser on 2015-04-06 9:14:34 AM

    @ Old West Coaster. Thankfully, I work in a suburban area in the GTA with thousands of cookie-cutter homes, most of which I have the builder's floor plans for, which I have been collecting for 3 decades. Also, TD Canada Trust has been ordering a ton of drive-by's lately. In the month where I completed 167 orders, 80 were drive-by's.

    Also I find the software (CLICKFORMS) on which I do the majority of my work, very user friendly and fast. My territory is relatively compact and holds approx. 350,000 people, so I can hit multiple appointments in a short period of time.

    Let's face it, much of the info. can be pre-filled on the forms and I use customized templates to speed up the process. With so much info. now available at our fingertips from MPAC, Geowarehouse and the local real estate board, I can do most of the research from my desk, before inspecting the property and snapping photos. Incidentally, I might do a handful of mortgage broker deals per month.

    I suppose it depends on where you work to some degree, but the notion that mortgage brokers have enough clout to significantly influence the AMC's business model (in the GTA at least) is highly doubtful.

  • Lender on 2015-04-06 1:04:09 PM

    I lend across 5 provinces. There are 50 appraisers on my approved appraiser list.

    Without an AMC, how should I keep each individual appraisal office apprised of my company's appraisal requirements? I've tried sending a quarterly update, but this consumes a great deal of my time and appraisers rarely acknowledge receipt of the document. My loan instructions tell the broker to have the appraisal made out in the name of my company (the lender) but 67% of the time (actual, tracked metric) I do not receive the report in my company's name and it is deficient on several requirements because the broker never told the appraiser who the report was for, so the appraiser could not include my company's requirements. When I ask for the requirements, the appraiser charges a fee and the broker gets angry.

    I want a system that works for everybody. Who's got a workable solution?

  • steve on 2015-04-06 1:12:56 PM

    I use NAS; I hate that they want an email for the client to pay...
    I hate the unreasonable upcharges for duplex, out of town, acreage etc. If the appraiser wants an extra $50 then NAS wants $100. A recent appraisal came in at $550 NAS price where a duplicate appraisal, same location costs $350 appraiser direct.

  • Old West Coaster on 2015-04-06 2:19:55 PM

    @steve
    As an appraiser, I can understand the unreasonable surcharges added by the AMC's to the extra costs the appraiser charges - especially when the AMC's are only an intermediary.
    Extra charges for duplexes don't really cover the extra time involved in doing these appraisals. Usually it involves dealing with and arranging appointments with two sets of tenants and trying to get into both sides on the same appointment, otherwise it is two appointments. In my area, few duplexes are similar or in similar locations, and there are few sales, hence there is extra time involved in finding and adjusting the comps. Some duplexes have unauthorized basement suites, so that makes it even more time consuming. Acreages are a similar situation to duplexes, in that they take extra time to inspect, find and adjust comps.
    Extra charges for high end/executive style residences are also more time consuming to do. Often there are 30-40 sides to measure and multiple angles, overhangs, and hidden areas under the slope of a roof on second storeys that you can't see from the ground, so you have to measure inside and try to figure out where the outside walls are.
    It would be nice if everything was a four sided rectangle on a crawl space, with a detached single garage, but my area those kinds of properties are few and far between.
    As far as travel goes, appraisers generally don't get paid for their time when they charge travel, they only get a standard $0.50/km to cover the vehicle expense.
    @Lender:
    AMC's do have some benefits for the appraiser also, but the AMC's are not an aid to most appraisers. They foster unhealthy fee competition among appraisers, especially when there is slow market and low volume of appraisal requests. I have had to pare expenses down to minimal levels in order to survive and do without updating my vehicle for many years. Most appraisers will tell you that they are working for fees that they used to charge 10-15 years ago, and there is no mechanism in AMC's models for any future fee increases for appraisers. Appraisal fees are not like commissions that go up with inflation. The fee appraisal business is basically a buggy-whip industry, unless some changes happen. Also, the majority of fee appraisers are getting to the point in their lives when they will be retiring - unless they are on the "Freedom 75 Plan". When these senior appraisers do retire there will be a huge shortage of qualifies appraisers to handle all the appraisal work. At that point, demand will overcome supply and the few remaining younger appraisers will be justified in either working for non-AMC lenders only or boosting their fees $200 or $300 just to balance the equation. I don't know what the solution will be, but sooner or later one will be needed.

  • Old West Coaster on 2015-04-06 2:20:26 PM

    @steve
    As an appraiser, I can understand the unreasonable surcharges added by the AMC's to the extra costs the appraiser charges - especially when the AMC's are only an intermediary.
    Extra charges for duplexes don't really cover the extra time involved in doing these appraisals. Usually it involves dealing with and arranging appointments with two sets of tenants and trying to get into both sides on the same appointment, otherwise it is two appointments. In my area, few duplexes are similar or in similar locations, and there are few sales, hence there is extra time involved in finding and adjusting the comps. Some duplexes have unauthorized basement suites, so that makes it even more time consuming. Acreages are a similar situation to duplexes, in that they take extra time to inspect, find and adjust comps.
    Extra charges for high end/executive style residences are also more time consuming to do. Often there are 30-40 sides to measure and multiple angles, overhangs, and hidden areas under the slope of a roof on second storeys that you can't see from the ground, so you have to measure inside and try to figure out where the outside walls are.
    It would be nice if everything was a four sided rectangle on a crawl space, with a detached single garage, but my area those kinds of properties are few and far between.
    As far as travel goes, appraisers generally don't get paid for their time when they charge travel, they only get a standard $0.50/km to cover the vehicle expense.
    @Lender:
    AMC's do have some benefits for the appraiser also, but the AMC's are not an aid to most appraisers. They foster unhealthy fee competition among appraisers, especially when there is slow market and low volume of appraisal requests. I have had to pare expenses down to minimal levels in order to survive and do without updating my vehicle for many years. Most appraisers will tell you that they are working for fees that they used to charge 10-15 years ago, and there is no mechanism in AMC's models for any future fee increases for appraisers. Appraisal fees are not like commissions that go up with inflation. The fee appraisal business is basically a buggy-whip industry, unless some changes happen. Also, the majority of fee appraisers are getting to the point in their lives when they will be retiring - unless they are on the "Freedom 75 Plan". When these senior appraisers do retire there will be a huge shortage of qualifies appraisers to handle all the appraisal work. At that point, demand will overcome supply and the few remaining younger appraisers will be justified in either working for non-AMC lenders only or boosting their fees $200 or $300 just to balance the equation. I don't know what the solution will be, but sooner or later one will be needed.

  • Rod on 2015-04-08 12:35:05 PM

    Dealing with solidifi on one now 1st request comes back with a fee increase request from 360 to 520 (travel time). Cancelled as I felt 180 was way over the top fro travel time unless driving from 10 hours away to do the inspection (wonder how that would turn out).
    Cancelled and 2nd request goes out to another firm, comes back for request of delivery change , no problem. Two days later a fee change request comes back and guess what, for exactly the amount my client was asked to pay by solidifi for the first request.
    Have it on hold and going back to the lender to tell them I will move the app to another lender that allows me to select from their approved list.

  • Tammie on 2015-04-09 8:01:25 AM

    From an appraiser ; Looking through the comments above, I'd like to clarify a little.

    First, the reason appraisals ordered through AMC's are typically of lower quality is because the AMC deliberately broadcasts the order out and the appraiser with the cheapest fee that responds first wins. This, in order for the AMC to keep a larger portion of what the consumer pays for the appraisal.

    As for the appraiser that is completing 167 reports per month which equals 5.57 reports PER DAY, 7 DAYS A WEEK.....this just makes my point. No SINGLE appraiser can perform that many appraisals in that time frame unless they are cutting corners.

    Before AMC's....lenders actually had their own appraisal ordering departments or person, and the lender paid the cost of maintaining that system. The truth is, ANY AND ALL COSTS associated with an AMC should be paid by the lender as a cost of their doing business. The BORROWER/ CONSUMER should NOT have to pay the cost thinking it's part of the appraisal fee that the appraiser is receiving, and the APPRAISER should not have their fee negotiated DOWN by the AMC in order to put more money in the AMC's pocket.

    My comments;
    **To Rick (Mortgage Mentor) Robertson ;
    It is againt USPAP, the Standards that ALL appraisers must adhere, established in 1989, to "re-address" an appraisal. If the incorrect lender was included in a report, you can blame that on the AMC that ordered it. THEY are the ones who include in their assignment what information they want in the client / lender fields.

    This question comes up on a regular basis for appraisers....this will clarify it for everyone; Per USPAP Standards;

    Appraiser Question; Can I readdress a report, or change the name of the client, but otherwise give the same report to another client?

    No.

    It is improper to “readdress” a report to another client for three significant reasons. First, simply changing the name of the client and then forwarding the “readdressed” report to the second client does not change the first appraiser-client relationship. An appraiser-client relationship, once established, is cast in stone and cannot be changed. Typically, the reason the second party wants to be named as “client” is that they want the appraiser-client relationship, and all the rights and obligations thereof, to be between them and the appraiser. The only way to accomplish this is for a new appraiser-client relationship to be established. In short, the only way to be named as “client” in the report is to actually be a client. “Client” is defined in USPAP as the party (or parties) who engage an appraiser in a specific assignment. To be named as the client in a report, one must have been the party who engaged the appraiser.


    **To James who commented;
    "The only reason why these companies exist is because appraisers chose to join them with whatever carrot they have been told.

    If enough appraisal companies chose not to participate in it (given that they aren't paid more), it would lose relevance."

    AMC's came into being as a result of HVCC in 2007, implemented by New York’s Attorney General (at the time) Andrew Cuomo. You can thank HIM. Then as Dodd-Frank took effect, signed into federal law by President Barack Obama on July 21, 2010, it outlined Appraiser Independence Requirements. LENDERS are the ones who CHOOSE to use AMC's in order to make it easier for them to adhere by these requirements. Trust me....I know of NO APPRAISERS that love AMC's. Now that they are in existence, we are forced to deal with them because the LENDERS will not put their own appraisal ordering department in place, in order to meet Dodd-Frank requirements for appraiser independence.

    There is NO CARROT being placed in front of appraisers by AMC's. In fact it's just the opposite. We are more at odds with them than real estate brokers. Put yourself in the appraiser's place a moment; How would you as a realtor like it, if a 3rd party was between you and a listing client? Their job only involved letting sellers and realtors sign up with them.Then they matched up the parties. They contacted the realtor and said "We have a client in your area with a possible listing. Now, you must sell this house in 30 days and we are offering you a 2% commission. And by the way, the client thinks they are paying you 5% but we are keeping the difference as our fee."

    Now.....welcome to the world of appraisers getting work through AMC's.

    Many appraiser's have retired or quit as a result of this process. Our numbers are down significantly and no new appraisers are coming into our profession.

    LENDERS need to step up and take responsibility for the use of AMC's and what they are doing to our industry.

    That's my 2 cents.....the rest of you carry on with your discussion. :)

  • Tim on 2015-04-13 6:53:06 AM

    Well Tammie that's a little more than 2 cent, more like a quarter. But you are totally correct about everything you said.

    Lenders should use portals like the mercury network. You should also only do business with AMCs that have a cost plus model. That is the appraiser is paid $350 and the AMC is paid $75. This eliminates the AMC ability to skim fees. One fee does not fit all properties. A $350 for a normal residential appraisal would be acceptable. But how about a 5000 sf beach front property. This fee should be more like $1200 due to the time and difficulty level.

  • Fred Rowland on 2015-04-16 10:45:14 PM

    Appraisal Management Companies serve no legitimate or useful purpose. As a result of AMC's the public is charged more for an appraisal, the appraiser is paid less and the AMC profits handsomely. As an appraiser I can absolutely confirm that AMC’s do not hunt for the best appraiser. They hunt for the lowest fee so they can add more and more profit to their margin. Throughout the nation virtually every state is reporting a dwindling in the number of appraisers because appraisers can no longer earn a living wage. Good appraisers are being pulled away from this profession on a daily basis by jobs that are much, much more financially rewarding. I personally know a person who is a very good appraiser and has been appraising for more than 20 years who recently applied for and is receiving California Food Stamps because they earn so little they now qualify for Food Stamps. They have also gone on Medi-Cal (California’s version of Medicare for people under 65 who earn too little to qualify for Obama’s Affordable Care Act). How sad is that? An appraiser needing Food Stamps and Medi-Cal because as a full time working appraiser they cannot otherwise exist! What is next? Full time working appraisers on Welfare? I cannot wait until the next twist in this odyssey arrives which will be raising the de minimis from $250,000 to ??? because there are too few appraisers. First they pay appraisers so little they cannot earn a decent living so they leave the profession and then they raise the de minimis because there are too few appraisers. Why not just cut to the chase and quit requiring appraisals at all? Put all of us to death right away and simply base the loan on how much the borrower says their property is worth? What could possibly go wrong?

  • Sagar Deshpande on 2015-10-15 4:12:58 AM

    Just a thought, Would brokers be held liable if the account turns into an NPA, debts are not repaid and lender has no option but to auction the property and in due course, the property fetches much less than bank dues? WOuld brokers be willing to bear the consequences, like in some parts, paying the bank the net difference of distress sale value accrued by the property and net bank debts inclusive of processing & legal charges?

  • Nonya Business on 2015-10-23 2:14:32 PM

    “Up-charging of fees is a big issue,” commenter Michael Rice wrote on MBN. “Insist the [lenders] enter into a one fee for all deals. It eliminates the nickel and diming effect from the appraisal companies.”

    Asinine statement. What he perceives to be "nickel and diming" from appraisal companies is a result of the appraisal management companies. There is so much pressure to lower the fees we charge to the AMC (mind you, these aren't the fees the AMC charges the client) that a base rate is set at essentially the bare minimum that you need to make per job, assuming that the job is going to be a standard appraisal. That way, you actually get jobs from the AMC, who despite what they will tell customers, tend to focus on how low your price is, not the level of expertise and experience. For any jobs that will take substantially more effort or time to complete (acreage properties, waterfront, true executive style homes, etc.) you put in a fee increase so that you aren't losing money in order to complete the job. Even worse, every few months we'll get calls from the AMCs we do work for, informing us that our "fees are a little out of line for our areas", and suggesting that in order to maintain our current volume of work we should consider a fee reduction.

    The decline in fees due to appraisal management companies is insane. I personally have witnessed an over 40% reduction in average fees for residential homes in just the last 5 years. At the same time, I've not seen any evidence that the end cost to clients is cheaper through an AMC, which leads me to speculate on where that extra 40% is going.

    It's getting to the point that it's no longer worth it to be an appraiser. I have one kid just out of school in my firm, and I pity him for shelling out the cash for the also insane education requirements (20+ courses, required degree, years of schooling, continuing education, while a realtor only needs a single course?), only to enter a field with fees in a race to the bottom. The appraisal institute needs to find a way to fix this ASAP, or they might be seeing a sharp reduction in their revenue from membership dues.

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