When Customary Fees Become Unreasonable

[jay trotta]

The fee charged by a Lender to it's borrowers to obtain an appraisal IS the appraisal fee/C & R.

Whether a Lender chooses to discount, or entirely waive, it's usual fee during a special discounted promotion or not - the lender's "usual" fee charged IS " C & R".

100% of the "usual", non-discounted appraisal fee charged to a borrower is earned by an Appraiser (if not a direct employee) who completes and delivers the appraisal report contracted for by the Lender.

Anything less is theft of services.

Then if what your saying is True, (the Appraisal Fee to the Appraiser) should Not Be Tampered with ( an AMC is not an Appraiser completing a report and therefore, should negotiate it's own compensation). Therefore, if the Lender is charging the Borrower a specific Appraisal Fee, is the Lender misleading the Borrower ?

 

[Meandering]

The AMC is supposed to charge a bonafide fee
The appraisers are supposed to be paid a C&R fee that takes it to account the scope of the work, the qualifications and work history of the appraiser and the complexity of the property.

The issue is that a bonafide fee for the "management" of the appraisal should be the same fee across all appraisals for a specific loan type. But AMCs have been gouging appraisers, taking more money when ever an appraiser agrees to a lower fee, without the AMC producing any additional bonafide service for which they can be paid.

Ideally, the bill for the appraisal should look something like:

Appraisal base fee $500
Ocean view Property $50
GLA > 5,000 sf $100
Market Declining $100
Appraiser Designation SRA $100
Loan type Conventional $0
AMC Fee $ 25
Total billed to borrower = $875

Appraisal base fee $500
Subdivision Property $0
GLA 5,000<>1,000 sf = $0
Market Stable $0
Appraiser Designation None $0
Loan type FHA $200
AMC Fee $ 50
Total billed to borrower = $750

Appraisal base fee $500
Large Acreage Property $85
GLA < 1,000 sf = $50
Market Increasing =$0
Appraiser Designation None $0
Loan Type USDA = $100
AMC Fee $ 50
Total billed to borrower = $785

FHA, USDA are a little extra work for the AMCs because they have to make sure if you write there are 3 bathrooms you have pictures of 3 different toilets flushing without cats in them.

Other than that, AMCs are not due a fee increase just because Joey down the street took the assignment for $50 less than you.

Once the AMC bonafide fee is straightened out, then the C&R should not be any problem for appraisers because it allows for complexity, designations, and changes to the base fee as the non AMC market changes the base fees.

.
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[DiverMike]

This thread is exactly why I have no support for unions/guilds. Everyone thinks they are entitled to something.$550 for a simple 1004 that can be written in five hours? $100/hour for simple 1004's? Very few professionals make $100. I like how the proposal talks about plumbers making $130/hour. That $130/hour does not go to the plumber on the job. That $130 also pays for the storefront/office/warehouse, the plumber's van, all the tools, the inventory they carry, the secretary who schedules the appointments.

This idea is almost as ludicrous as the fast food workers wanting $15/hour.

Philosophically, I agreed with you for years. When HVCC was passed and long standing relationships with major banks built on 30 years of hard work and a reputation for integrity became meaningless, I got a real wake up call. It was like a light switch had been thrown that in effect said "Last year, just under $100,000; this year probably 1/4th that [2009]." Like may here, I experimented with the AMC client work model and didn't like it. I then switched my focus to primarily commercial work and non lender SFR work for tax or litigation purposes. The latter was and remains comfortable however even the commercial size is being negatively impacted by large national scope AMCs. Last week on a nominal $1,500 job bid the potential client sent an email back that had a cut and paste article from Zillow of some such silliness "typical appraisal fees range from $300 to $750, for more complex properties". At fifteen hundred he was already getting a bargain!

MICH CG, respectfully, SandPiper gets it. YOU and I are ALREADY being controlled by government forces beyond MOST of our abilities to prevent. First HVCC; then UAD, next CU, now 4000.1 and next month TRID. Fees AMCs think are C&R are $100 lower than I routinely received pre 2009!

For posters that think appraisers should not be paid as much as a plumber or a house painter; or an auto mechanic; respectfully you are unaware of the difference between educated professionals and skilled tradespeople. If you do not believe you are worth $100 or more per hour, then the chances are that you are not. You think the appraiser has no overhead like the plumber does? Have you priced CoStar lately? Clearly you posted prior to reading the proposal or you'd already know it includes provisions for comparable benefits and office overhead.

I will survive whether C&R ever becomes a reality or not. But I will not stay in appraising when USPAP complaint work results in fees that are LOWER than the $15.00 an hour fast food worker.

PS-anyone that thinks they complete great five hour "simple 1004's" that are FULLY USPAP compliant, I invite you to send me one (redacted) for review. I'm talking start to finish from the time the order is proposed until final delivery. Five hours? Sure. Two questions: Did you actually DO a highest and best use analysis; or assume it to be SFR? How about those land values? Extracted; or from land sale comparables? Called parties involved in the transaction; left messages and received return calls from ALL of them in only five hours?

Folks, some people are so set in their ways that no change is possible. My posts are not directed toward them.

Socialism? Hardly. Im a center right republican and introduce myself as a Free enterprise, LEVEL PLAYING FIELD, pro business REPUBLICAN union organizer when I speak publicly. Awkward, in a solid democrat state. I don't advocate personal OR corporate welfare. Especially when that corporate welfare in the form of backroom political deals takes money from MY pocket, as it does ALL appraisers. Come join me. Mike Ford (714) 366 9404 or mike@mfford.com

The only REAL issue is do we keep the de facto $250 to $350 Bank & AMC dictated minimum "C&R" fees or do we at least bump it up to around $585+-?

 

[DiverMike]

This thread is exactly why I have no support for unions/guilds. Everyone thinks they are entitled to something.$550 for a simple 1004 that can be written in five hours? $100/hour for simple 1004's? Very few professionals make $100. I like how the proposal talks about plumbers making $130/hour. That $130/hour does not go to the plumber on the job. That $130 also pays for the storefront/office/warehouse, the plumber's van, all the tools, the inventory they carry, the secretary who schedules the appointments.

This idea is almost as ludicrous as the fast food workers wanting $15/hour.

Philosophically, I agreed with you for years. When HVCC was passed and long standing relationships with major banks built on 30 years of hard work and a reputation for integrity became meaningless, I got a real wake up call. It was like a light switch had been thrown that in effect said "Last year, just under $100,000; this year probably 1/4th that [2009]." Like may here, I experimented with the AMC client work model and didn't like it. I then switched my focus to primarily commercial work and non lender SFR work for tax or litigation purposes. The latter was and remains comfortable however even the commercial size is being negatively impacted by large national scope AMCs. Last week on a nominal $1,500 job bid the potential client sent an email back that had a cut and paste article from Zillow of some such silliness "typical appraisal fees range from $300 to $750, for more complex properties". At fifteen hundred he was already getting a bargain!

MICH CG, respectfully, SandPiper gets it. YOU and I are ALREADY being controlled by government forces beyond MOST of our abilities to prevent. First HVCC; then UAD, next CU, now 4000.1 and next month TRID. Fees AMCs think are C&R are $100 lower than I routinely received pre 2009!

For posters that think appraisers should not be paid as much as a plumber or a house painter; or an auto mechanic; respectfully you are unaware of the difference between educated professionals and skilled tradespeople. If you do not believe you are worth $100 or more per hour, then the chances are that you are not. You think the appraiser has no overhead like the plumber does? Have you priced CoStar lately? Clearly you posted prior to reading the proposal or you'd already know it includes provisions for comparable benefits and office overhead.

I will survive whether C&R ever becomes a reality or not. But I will not stay in appraising when USPAP complaint work results in fees that are LOWER than the $15.00 an hour fast food worker.

PS-anyone that thinks they complete great five hour "simple 1004's" that are FULLY USPAP compliant, I invite you to send me one (redacted) for review. I'm talking start to finish from the time the order is proposed until final delivery. Five hours? Sure. Three questions: Did you actually DO a highest and best use analysis; or assume it to be SFR? How about those land values? Extracted; or from land sale comparables? Called parties involved in the transaction; left messages and received return calls from ALL of them in only five hours?

Folks, some people are so set in their ways that no change is possible. My posts are not directed toward them.

Socialism? Hardly. Im a center right republican and introduce myself as a Free enterprise, LEVEL PLAYING FIELD, pro business REPUBLICAN union organizer when I speak publicly. Awkward, in a solid democrat state. I don't advocate personal OR corporate welfare. Especially when that corporate welfare in the form of backroom political deals takes money from MY pocket, as it does ALL appraisers. Come join me. Mike Ford (714) 366 9404 or mike@mfford.com

The only REAL issue is do we keep the de facto $250 to $350 Bank & AMC dictated minimum "C&R" fees or do we at least bump it up to around $585+-?

 

[J Grant]

Right now the AMC's feel "entitled" to get $200 an hour for their contribution of busy work. Why are they entitled to it? Applying the word "entitlement" to wages and fees is a RW political ploy.

It's like a see saw...low fees or wages to those who do the work means more money flows to the few at the top, in this case AMC or lender upper management/owners.

Appraisers asking for a fair minimum fee due to the unique nature of regulations around the lending side of the business is what is being proposed. Appraisers are free not to take lender work if they hate the idea being paid a decent minimum fee so much of course, just as they are free to not take lender work now at low AMC rates. And this base fee would not affect the fees of any other work where appraisers can charge what they want such as complex res, non lender res, commercial or private .

 

[Michigan CG]

................For posters that think appraisers should not be paid as much as a plumber or a house painter; or an auto mechanic; ................. You think the appraiser has no overhead like the plumber does? Have you priced CoStar lately? Clearly you posted prior to reading the proposal or you'd already know it includes provisions for comparable benefits and office overhead................
.................. Did you actually DO a highest and best use analysis; or assume it to be SFR? How about those land values? Extracted; or from land sale comparables? Called parties involved in the transaction; left messages and received return calls from ALL of them in only five hours?

Folks, some people are so set in their ways that no change is possible. My posts are not directed toward them............

The only REAL issue is do we keep the de facto $250 to $350 Bank & AMC dictated minimum "C&R" fees or do we at least bump it up to around $585+-?

-The union plumber here makes about $33/hour, same for the mechanic.
-I read your entire proposal.
-Highest and best use, my duplex I did yesterday has a two page Highest and Best Use.
-My land sale database has over 200 sales in it for my county.
-For a six comp residential report I typically get ahold of five of the six listing Realtors.
-I have never worked for a fee that starts with a "2".

Your proposal sets a minimum fee for everyone including those who were never even taught to look up zoning, were taught to check the YES box on Highest and Best Use and have a canned comment for everything. Your "minimum" fee would become not only the minimum but the maximum and it would give no one incentive to be the better appraiser.

If fees in your area are still in the $250 range then you have a simple over-supply of appraisers which will be cured by natural market forces.

The AMC model has to change, it cannot survive as it is. Artificially manipulating fees is not the answer.

 

[sandpiperapp]

The AMC model has to change, it cannot survive as it is. Artificially manipulating fees is not the answer.

Artificially manipulating the fees has worked for the AMC model.

Mich CG, I admire your fierce independence and strong values on the truly American notion of power of the individual and fair treatment to all. The shame of it is, that the AMCs and lenders are not playing by those rules.

 

[ucbruin]

Your proposal sets a minimum fee for everyone including those who were never even taught to look up zoning, were taught to check the YES box on Highest and Best Use and have a canned comment for everything. Your "minimum" fee would become not only the minimum but the maximum and it would give no one incentive to be the better appraiser.

If fees in your area are still in the $250 range then you have a simple over-supply of appraisers which will be cured by natural market forces.

The AMC model has to change, it cannot survive as it is. Artificially manipulating fees is not the answer.

I respect your consistency on this topic.

Look at it from a different angle.....instead of raising the fees for the less accomplished appraiser(s), it prevents the lowering of fees for the more accomplished appraiser(s).

From what I glean from your posts over the past 18 months, a minimum fee would have zero impact on your business model.

 

[ucbruin]

Philosophically, I agreed with you for years. When HVCC was passed and long standing relationships with major banks built on 30 years of hard work and a reputation for integrity became meaningless, I got a real wake up call. It was like a light switch had been thrown that in effect said "Last year, just under $100,000; this year probably 1/4th that [2009]."

"Philosophically, I agreed with you for years"......"I got a real wake up call."

Such is life.....when reality bumps up to philosophy.

We all get some type of wake up call(s), be it in business, family life, health, retirement, etc.

A higher than lower minimum fee would be great!!!!!

 

[J Grant]

Your proposal sets a minimum fee for everyone including those who were never even taught to look up zoning, were taught to check the YES box on Highest and Best Use and have a canned comment for everything.

The form fillers would get less work or no work, because right now they compete by offering low fees, they would lose that competitive advantage .

our "minimum" fee would become not only the minimum but the maximum and it would give no one incentive to be the better appraiser.

Where do you get that assumption from? This is a minimum fee for standard work in regulated lender segment of the market, it does not apply to complex work, non lender work, commercial work, etc. Right now the low fees in play drag other fees down with them. A higher min base would elevate other fees .


This is a MINUMUM fee for certain segment of work.
It would not apply to other segment and if apparisers have philosphical objections to receiving fair min pay such as VA panel now gets they can choose not to do this work ..

If fees in your area are still in the $250 range then you have a simple over-supply of appraisers which will be cured by natural market forces.

There are less appraisers than prior the AMC model and the fees are lower due to market manipulation. Not everything is attributable to simple supply and demand. Controlling market share allows clients to manipulate fees and award to low bidders.

The AMC model has to change, it cannot survive as it is. Artificially manipulating fees is not the answer.

Right now the AMC's are the ones artificially maniuplating fees and the appraisers can not survive. As long as they are allowed to do that but we don't receive the same , (which is what the OP proposes), the AMC model will flourish and appraisers will go broke or leave lending work, then they will complain of a shortage and lower the barrier to get certified or allow trainees to complete reports (which some are already doing), and/or lobby for more automated products.