The Appraiser Shortage Myth Part 43

[Eli]

Fair enough. I thought I hit them and you thought I missed them (or paid them second fiddle).

But if the AMC margins are what is squeezing out the funds necessary to support appraiser training, then the cost-plus model (something I'm in favor of) should take that off the table.
Yet, many are still say that won't solve the problem because there are still plenty of appraisers taking low fees regardless of what the AMC makes or loses; their solution is some kind of across-the-board fee increase and that will solve the problem. I don't see why it would? If I get an extra $100 in my pocket for not doing anything differently, why would I do anything differently (like training)? I wouldn't.
But if fees, due to demand, went up to $600+, as an entrepreneur, I'd certainly consider the options of expanding my firm and growing it.

Anyway, at least I think this thread is back on track (and I'll take my share of the blame for derailing it to whatever degree I did).

No I go a step or two further and you know I do.

 

[Evincere]

Where do you get this Fees are higher crap from. Perhaps, with the exception of the COW states Fees have been stagnated at the same amount for years now and in some places, dropping. It's business that has picked up, not fees. We elsewhere are eeking out a living because of current market stability. We are NOT making a killing.

Well before you go about spouting about how high fees are in COW states today you should at least find out what their fees were 4 years ago. I can tell you, save the rushes or complex properties, they are not that much higher today.

 

[Eli]

Denis, there are laws involved here. This is not Kindergarten!

 

[The Warrior Monk]

I'm calling BS on that one. If the borrower does not pay your fee, then why are they charged for an appraisal? That's not far from saying an employer does not provide your pay because they use a payroll service.

I get his point, but there needs to be transparency on this issue. If the appraisal fee noted on the disclosures on the bank docs is not what the appraiser is actually being paid, the appraiser is actually receiving a portion of the appraisal fee. That's a fact. The system really needs to go to cost plus, otherwise there is an incentive to beat the appraiser down on the fee, and to choose an appraiser based on fee.

 

[Eli]

I get his point, but there needs to be transparency on this issue. If the appraisal fee noted on the disclosures on the bank docs is not what the appraiser is actually being paid, the appraiser is actually receiving a portion of the appraisal fee. That's a fact. The system really needs to go to cost plus, otherwise there is an incentive to beat the appraiser down on the fee, and to choose an appraiser based on fee.

It's deeper than that when you look at state laws relative to appraisal practice requiring a license.

Antitrust law is whole different issue.

 

[J Grant]

No doubt that there is a lack of trainees because of low fees. Are there other contributing factors? We still have AMCs that want to have reports turned in within 48 hours. To me that is unacceptable and I wouldn't encourage my kid to work for companies like that. What idiot is going to train a new appraiser when the fees don't at least start with a 4 or 5?

The question is, are the COW state people taking on trainees? Is the business good enough to have their kids carry on the business?

Agree. Fees aside, the intense time pressure and the demoralizing way AMC's treat appraisers contribute.

I did train a few people back in the day (none of whom are now appraising for a variety of reasons) It was a pleasant experience overall, one went on to appraise for 5 years for a bank, till they laid him off in the recession. The other was my sister- it was not for her. The other person set up a successful business ( he was a great guy, did not try to poach my clients, we stayed in touch and would help each other after he went on his own) But he also got wiped out by the recession.

Now, even though I have a few well paying non AMC lender clients, I don't have enough confidence that their work would survive long term seeing how conglomerates are gobbling up banks and credit unions. Even If I could make money off a trainee with AMC work now, which I could if I changed my business model, I wont do it- unless I hated that person .(sarcasm but true)

Its not always about the money ; a field can offer other rewards even if the pay is not great- such as lower pressure working conditions, or a mission purpose, or a bit of fun or creativity to be had, or benefits/secure future- something to attract good people or inspire training for it. I would not recommend or want to bring anybody into the res appraisal field now due to the toxic AMC effect on the business ( and difficulty in finding alternate work with just a res license) .

 

[DWiley]

I get his point, but there needs to be transparency on this issue. If the appraisal fee noted on the disclosures on the bank docs is not what the appraiser is actually being paid, the appraiser is actually receiving a portion of the appraisal fee. That's a fact. The system really needs to go to cost plus, otherwise there is an incentive to beat the appraiser down on the fee, and to choose an appraiser based on fee.

I personally have no problem with cost plus. Most AMCs don't either. But shifting to such a model would not solve the problem that so many appraisers perceive to exist.

 

[J Grant]

I personally have no problem with cost plus. Most AMCs don't either. But shifting to such a model would not solve the problem that so many appraisers perceive to exist.

I believe it would solve the problem, but it is an unknown. Most of us would be willing to take our chances, or at least I would.

 

[The Warrior Monk]

I personally have no problem with cost plus. Most AMCs don't either. But shifting to such a model would not solve the problem that so many appraisers perceive to exist.

I've been noting that point for eons. Ultimately, appraisers get paid what they are worth. But fee separation should exist for transparency and regulatory reasons.

 

[hastalavista]

Denis, there are laws involved here. This is not Kindergarten!

Thanks, Professor!