I see residential appraisals completed in upper-to-high end markets on a regular basis. The fees range from sub-$500 to $1,500+. The turn-times range from 3-days to 3-weeks. The client does not have a set fee or set turn-time. They ask for the appraisers to bid. The appraisers have all been qualified to be on the panel. This is direct engagement.
It is the appraiser who is setting the fees and turn times. Those who bid low want or need the work; those who bid high don't want or need the work. Low bid does not always get the assignment but turn-time
can be a consideration. For especially complex or atypical assignments, those who have shown the ability to do that work are the ones that those bids are sent out to; usually, they bid higher and take longer but there is still a wide range in fees/turn-times.
For a fact, if one had no other work, one could do many of these in 3-days (they are all qualified and competent appraisers).
I work in an over-supplied market (high supply of appraisers relative to the demand for mortgage appraisal services). The In my example, fee/turn-time dynamic I see above has nothing to do with AMCs.
The clients I work for do not have open panels; the number of appraisers is relatively constant. The supply-demand dynamic works within a direct-lender, smaller fee panel dynamic. Why is it not surprising that in a larger pool of appraisers, that dynamic exerts even more downward pressure on fees and turn time?
It isn't the client who is setting the fees and turn times (except for VA). It is the competitive dynamic of the appraisers. In COW states, the supply of appraisers is low relative to the demand. Everywhere else, the supply is either in balance or appraiser-supply heavy relative to the demand.
Like it or not, without recognizing the fundamental components of what sets the appraisal fee (a willing appraiser who accepts the job at that price), any attempt to increase the fee is flawed. Flawed because no one other than appraisers will buy off on the concept that fees have to be higher to sustain our profession. They won't buy off on it because there are plenty of willing appraisers to take those lower fees. If all states were COW states, then fees would be higher. Not because anyone recognizes how important the appraiser role is and that the appraisers, therefore, should be paid more. But because of the same dynamic: supply and demand (not enough appraisers relative to the demand for mortgage appraisals).
If I send out a bid to 10 appraisers, and 5 bid between $250 to $300, and the rest are at $400+/-, and the price at $300 meets the minimum standards, how is it that I (as the purchaser of the service sent out to bid), by awarding the assignment to the lower-end of the bid-range, am controlling the fees?
That was a rhetorical question (so no need to answer): because the answer is, "I'm not setting the fees. I have 5 appraisers who are willing to take the work at a price less than the other 5; it is those 5 appraisers who are setting the fees."
It really is that simple... whether we like it or not.
I am convinced of the following: Most appraisers (including the ones on the Forum) do understand that if appraisers stopped taking lower fees, than fees would rise. But, they are frustrated because of the inability to motivate enough appraisers to bid higher. So, while they understand the reason for the low-fee dynamic they are feel powerless to do anything about it other than trying to create a regulatory framework that would increase the fees regardless of the underlying supply/demand dynamic.
I don't think a regulatory framework to increase fees is in the cards (though a lot of others do... and are hanging their hats on it happening). If I'm correct (i.e.,
it ain't going to happen by regulation) then the frustration levels for some will only grow. An unhealthy condition and not conducive to professional and personal satisfaction.
