(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.
community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.
