The Appraiser Shortage Myth Part 43

[hastalavista]

I have no idea where your optimism comes from, since fee erosion by AMC's is ramping up, not down, everywhere but the COW states which is an unhealthy example of a profession driven down to an extreme shortage as the only way to get leverage. On what is your belief in some market based positive solution based on (especially since at the same time you defend the select by low fee model)

(my bold)

For the record, I don't defend any fee-point model (high or low). I'm fine with appraisers setting their own fees, like I do.

My entire position is simple. And I've said it many times.
I've bolded your "low fee model" because you consistently equate low fee with low quality; therefore, a low-fee appraiser must be inferior to a higher (full, fair, etc.) fee appraiser.
Just as George Hatch makes the argument, "Show me where a college degree equates to a quality appraiser" I can make the same argument, "Show me where a low fee equates to a low-quality appraisal." I'm confident that I can show you (if I didn't have confidentiality to worry about) that the correlation between fee and quality is not as strong as you may think. I've seen some low-fee appraisals that were stellar; I've seen high-fee appraisals that were trash.

You want a higher fee and more reasonable turn-time? Then all one has to do is to have the banking regulators audit the lenders for appraisal quality. I guarantee you if the lenders were audited for appraisal quality and they were found wanting, they would take immediate to improve that. Immediate steps. And, if it turned out that the reason the quality was deficient was because they were paying low-bid appraisers who couldn't do a quality job, those low-bid appraisers would not be engaged. And if, as a result, those who could produce the required appraisal reports to the minimum quality standards cost more and took longer, then the lenders would pay more and wait longer.
They do that now in the COW states due to supply and demand; and borrowers are still borrowing, right? So the mortgage process isn't as fee sensitive when low fees are not an alternative.
Quality enforcement is a restraint on supply. If you cannot meet the standard, you don't get the work. If so many of these low fees appraisers are actually doing substandard work, then they will be shut out and the supply of appraisers who can meet the standards will be reduced. Those appraisers can bid what they think is fair given the quality requirement. The lenders will pay.

Simple solution that has all the necessary pieces already in place (lenders are regularly audited as it is; so the ability to add an appraisal-quality to the audit can be fit within the existing audit framework). You don't need a new law or regulation; plenty of existing regulations on the books. All you need is to initiate the program. A MRA (Matter Requiring Attention) in an audit report will get the attention of the lender very quickly.

 

[TRESinc]

That is why I call people like Tres Inc shills. Whether from naivete or intent, he ( and others like him), ignore the fact that the regulations and policies of govt at all levels are exploited to the max by AMC /affiliated lenders, yet it is taboo for appraisers to ask for a measure of the same-if an appraiser does it, it is anti free market, or commie, or socialist. The AMC's love that, keep the appraisers divided /arguing , while the AMC's sit on policy committees, state boards, lobby to change regulation, influence legislation and pay attorneys to ensure they can skirt C and R in the gray area of legality

ya. it would be much better for me to go around whining and complaining and spouting off how i am entitled to get more money simply because i think i deserve it. unlike you i do things to improve my situation instead of crying and hoping that someone else comes along to save me and posting that anyone who doesn't think exactly the same way i do is a "shill" for the "other side".

i think i'll start a gofundme or something like that for you so you can get all the free tissues you need.

 

[The Warrior Monk]

That might make sense except for one small detail - the areas with shortage have the highest fees in the country. Fees with four digits (fees to the appraiser) are common in those areas. We pay them every day.

I'm curious as to how "shortage" is defined. The work is still getting done at the appropriate fee.

What seems to be occurring is that "shortage" is being defined as "less appraisers and higher fees" relative to the other areas of the county. IMHO, that is not necessary a shortage.

 

[bnmappraisal]

I have no idea where your optimism comes from, since fee erosion by AMC's

I'll tell you where MY optimism comes from. Personally, I've been gearing away from the AMCs that want to pay $#*t (ACT to be one of them and Servicelink to name another) and want the 48 hr TAT. No, it's not always easy and there has been a slight bit of luck involved, but even that "luck" came from referrals by people (agents) I've worked with who respected and appreciated my service. I still do some AMC work, but have a few decent direct clients. It's nice doing 1/3 of the work for the same $$$ as the "volume guarantee" The AMCs I work with pay and treat me as a professional, so I don't mind working with them. That being said:

YOU have final say over what you are paid for an order, no one else. that's the beauty of being an independent appraiser!

I DO have final say as far as my fee. Been on the "volume" train ... eff that. I remember being on here and reading posts of $350/$400/$500+ fees while working on a report for $250. I did it b/c I didn't have much of an option and was "feeding my family" but I knew it was not going to last. Taking that "dive" into a fee schedule with a new client with a higher fee ($350 min) and them saying "Oh, ok, no problem" and reading on here that others had similar situations, helped ME to set MY fees for MY company. Fees are higher now, and private work is also a larger portion of my book than a few years ago (about 15-20% this yr vs 0-5% just a few yrs ago)

I enjoy being an independent appraiser for many reasons ... one of which is that I set my fee. I understand it's sometimes "too high" sometimes "too low" but most of the time it just seems ... "just right"

 

[TRESinc]

I DO have final say as far as my fee. Been on the "volume" train ... eff that. I remember being on here and reading posts of $350/$400/$500+ fees while working on a report for $250. I did it b/c I didn't have much of an option and was "feeding my family" but I knew it was not going to last. Taking that "dive" into a fee schedule with a new client with a higher fee ($350 min) and them saying "Oh, ok, no problem" and reading on here that others had similar situations, helped ME to set MY fees for MY company. Fees are higher now, and private work is also a larger portion of my book than a few years ago (about 15-20% this yr vs 0-5% just a few yrs ago)

I enjoy being an independent appraiser for many reasons ... one of which is that I set my fee. I understand it's sometimes "too high" sometimes "too low" but most of the time it just seems ... "just right"

you must a unicorn. according to some on here what you are doing is impossible and there are not nearly enough non-lending clients out there to support appraisers doing exactly what you are doing.

job well done my friend.

 

[J Grant]

Evincere, I like your post but on a personal level disagree-AMC's are masterminds at their business, and why can't capitalism be conducted with a modicum of ethics. Ends justifies the means capitalism in the worst way creates Enron, Bernie Maddoff, insider trading , the Wall ST and lender malfeasance leading to the housing market collapse. Business prior to the 1980's era used to have an innate code of "fairness" regarding workers or ethical sense of to ends justify the means. Once that is gone, you have a system of volatility that rewards fraud, bad actions, and results in large numbers of disenfranchised workers and now professional class is feeling it.

I can respect business /profit and capitalism but when the worst of ends justifies the means, and the rewards go only a very small set at the top with everyone else expendable, you have a society reeling economically and socially. It is not an accident that the USA has a raging Opiod epidemic, high rates of mental illness, homelessness, incarceration. When the system is stacked against them, people crack under the pressure. And that is not to absolve people of personal responsibility for their actions, but look at our society and are you looking into a mirror.

Appraisers, individually and collectively, are collateral damage from the present AMC system, despite the fact some appraisers are making an okay income income on the res lending side, and the 3 COW states are enjoying a cycle of high fees.

Spare the labels of commie, socialist, entitlement, snowflake. lectures about personal responsibility. I've heard it all before on this board. Keep it to yourselves please.- argue the issues not peronality

 

[Deleted member 130081]

(my bold)

For the record, I don't defend any fee-point model (high or low). I'm fine with appraisers setting their own fees, like I do.

My entire position is simple. And I've said it many times.
I've bolded your "low fee model" because you consistently equate low fee with low quality; therefore, a low-fee appraiser must be inferior to a higher (full, fair, etc.) fee appraiser.
Just as George Hatch makes the argument, "Show me where a college degree equates to a quality appraiser" I can make the same argument, "Show me where a low fee equates to a low-quality appraisal." I'm confident that I can show you (if I didn't have confidentiality to worry about) that the correlation between fee and quality is not as strong as you may think. I've seen some low-fee appraisals that were stellar; I've seen high-fee appraisals that were trash.

You want a higher fee and more reasonable turn-time? Then all one has to do is to have the banking regulators audit the lenders for appraisal quality. I guarantee you if the lenders were audited for appraisal quality and they were found wanting, they would take immediate to improve that. Immediate steps. And, if it turned out that the reason the quality was deficient was because they were paying low-bid appraisers who couldn't do a quality job, those low-bid appraisers would not be engaged. And if, as a result, those who could produce the required appraisal reports to the minimum quality standards cost more and took longer, then the lenders would pay more and wait longer.
They do that now in the COW states due to supply and demand; and borrowers are still borrowing, right? So the mortgage process isn't as fee sensitive when low fees are not an alternative.
Quality enforcement is a restraint on supply. If you cannot meet the standard, you don't get the work. If so many of these low fees appraisers are actually doing substandard work, then they will be shut out and the supply of appraisers who can meet the standards will be reduced. Those appraisers can bid what they think is fair given the quality requirement. The lenders will pay.

Simple solution that has all the necessary pieces already in place (lenders are regularly audited as it is; so the ability to add an appraisal-quality to the audit can be fit within the existing audit framework). You don't need a new law or regulation; plenty of existing regulations on the books. All you need is to initiate the program. A MRA (Matter Requiring Attention) in an audit report will get the attention of the lender very quickly.

Uhm...while I normally agree with you or at the very least see where you are coming from, this post is off the chain. Really? The simple solution is to have banking regulators perform an audit? That statement comes straight out of Fantasy Island Denis, it aint ever gonna happen. I have read many posts of yours and I cant believe I am even going to say this, but you are being naïve.

 

[Michigan CG]

I've been gearing away from the AMCs that want to pay $#*t (ACT to be one of them and Servicelink to name another) and want the 48 hr TAT.

Jgrant has hijacked this into her normal tirades that have been stated over and over again.

I want to know why the supposed shortage isn't being cured with the hiring of trainees in those COW states and other states where fees are decent and especially if they are hiring their kids to become appraisers. And my other question is if they aren't, why not?

Part of the quoted is the answer in my opinion. Appraisers don't like working for AMCs and the AMCs are denying that their actions have lead and will lead to further "shortages".

I thought the 48-hour turn time died years ago. Don't the AMCs who still require this realize that reduced turn times reduce appraiser income?

 

[OSU Beavers]

Even in the COW states thing are not all rosy. A few small AMC's managed to waste half my July with unnecessary stips, underwriter called for 1004D final inspections for items not required to fund a conventional loan, incorrect contact information, borrower no shows and cancellations after the inspection. Then they take the full 45 days before mailing me a check. On the other hand, one or two former bank AMC's have been sending me easy, full fee assignments and direct deposit in my account the next week.

I am not hiring any trainees, but based on some of the appraisals I have seen, Skippy has runners out taking pictures for him.

 

[J Grant]

I'll tell you where MY optimism comes from. Personally, I've been gearing away from the AMCs that want to pay $#*t (ACT to be one of them and Servicelink to name another) and want the 48 hr TAT. No, it's not always easy and there has been a slight bit of luck involved, but even that "luck" came from referrals by people (agents) I've worked with who respected and appreciated my service. I still do some AMC work, but have a few decent direct clients. It's nice doing 1/3 of the work for the same $$$ as the "volume guarantee" The AMCs I work with pay and treat me as a professional, so I don't mind working with them. That being said:

I DO have final say as far as my fee. Been on the "volume" train ... eff that. I remember being on here and reading posts of $350/$400/$500+ fees while working on a report for $250. I did it b/c I didn't have much of an option and was "feeding my family" but I knew it was not going to last. Taking that "dive" into a fee schedule with a new client with a higher fee ($350 min) and them saying "Oh, ok, no problem" and reading on here that others had similar situations, helped ME to set MY fees for MY company. Fees are higher now, and private work is also a larger portion of my book than a few years ago (about 15-20% this yr vs 0-5% just a few yrs ago)

I enjoy being an independent appraiser for many reasons ... one of which is that I set my fee. I understand it's sometimes "too high" sometimes "too low" but most of the time it just seems ... "just right"

I applaud you for that.
Personally, I've had a very good past year and have gained a number off full fee clients and have dropped former lower paying AMC work to a large degree . But I don't feel optimistic overall as I see no change on the AMC front regarding fees and what they do often spills over to the better clients-such as the Core Logic take over of Mercury and their offering the full fee order clients an option to fee bid out work.

I hope our optimism triumphs over my pessimism for the business overall.. ...but nobody can deny the constant fee pressure downward and struggle affecting res lending side and it should have been gone yesterday.