The Appraiser Shortage Myth Part 43

[hastalavista]

Research? Surely you jest, uninformed arguments are so much more fun (and a waste of time).

I can but hope.

 

[bnmappraisal]

You set your fee, you review the order and decide if the fee being offered is appropriate. Accept, decline or request an increase. Or do you fret, worry or vet your fees against another for a difference of a few dollars. How many are working for AMCs right now who pretty much offer a standard, consistent acceptable fee. Which may differ from the guy down the street but still be considered their sufficient C&R?

I understand (I think?) what you're saying and I guess it would come down to the lender/AMC side. If they come down to an "avg" fee for a non complex property of (i.e.) $500 then any change by the individual appraiser in that market should be marginal and a wash in their whole volume of assignments?

 

[hastalavista]

Research? Surely you jest, uninformed arguments are so much more fun (and a waste of time).

BTW, I received another survey from Valuation Review (They call that survey the "Voice of the Appraiser" but I don't think it is related to the Phil Crawford's program). Anyway, they were surveying appraisers on a number of issues and one of the questions was in regards to training; current and future/planned training.
The respondents were asked to identify the type of work they do and the region where they worked (I cannot recall if the specific state was required?). But, when published and if appraisers in the COW states are identified, it may give some insight into the question of higher fees in the COW states and any change (current or prospective) in training.

 

[bnmappraisal]

For cost-plus to have a chance at being adopted, appraisal fees have to be removed from the no tolerance bucket. We are talking about the current regulatory environment scheme.

that is not where the issue is in regard to the cost-plus model.

(that happens, BTW, despite the order volume)

I agree with the removal of no tolerance bucket. I think that would offer some more flexibility regarding total fees for an appraisal. But you don't think volume has/plays a role in the reasoning by lenders?

 

[J Grant]

Denis-"The AMC fee can be part of the zero-tolerance bucket. The AMC can bid their service based on the type of work their client requires; their client can shop their services against other AMCs to get their best price. By removing the appraisal fee from the zero-tolerance requirement, there will be no more necessity for the AMC to try to squeeze their fee out of whatever contract fee is set. They get paid for what they do, we get paid for what we do, and the two fees are independent of one another."

Releasing the appraisal fee from the zero tolerance of TRID will not solve the problem of the pushing down of amount paid to appraiser by the AMC. TRID was not in effect till recently, and for years prior AMC's were keeping a large portion of the borrower fee as tehir profit, so I fail to see where releasing appraisal fees from the zero tolerance would change that. ( though I would like to see appraisal fees released from zero tolerance )

Of course lenders dropping use of the AMC is and ordering direct is one solution, and one we do see more of lately. But cost plus, would at least make it transparent,t , upfront, as to what $ of the consumer paid goes to the appraiser (and can still be compliant with TRID zero tolerance considered as one charge total)

The excuse that it would be to difficult to accomplish with TRID because AMC;s are paying appraisers many different fee amounts, ( they pay each appraiser "their " fee ) is hogwash. The regulation is not that an appraiser must be paid "Their " fee, the regulation is to pay C and R.

Lender tells AMC we charge consumers $500 in the area, the breakout is $350 to appraiser, since we pay you $150 under cost plus. Then appraisers can agree to work for $350, or not accept the work . It is legal, is done now, can comply with TRID.

If not enough appraisers sign on to do appraisals at $350 to get orders fulfilled-, lenders are not stupid- they can cut out the AMC at that point, or reduce the amount paid to the AMC to $100, and pay the appraiser $400 ( which is exactly what the AMCs are afraid of)

 

[J Grant]

If it were that easy many would have done it already.

Have you ever actually talked to people in a lending department? In the world of AMCs most appraisers haven't talked to their actual customers in a long time. I have a couple I talk to on a regular basis and they HATE TRID. The paperwork is overwhelming, but hey, some love that onerous bill passed by the past administration.

I am sure lenders hate TRID, but how does that impact the splits regarding what appraisers get paid from an AMC, or whether a lender decides to use an AMCX or not? These same issues with AMC's, cost plus, and fees were in place before TRID.

I don't know a single person that likes TRID, (except the idiots who wrote it), regardless that the past administration green lighted it. I doubt TRID has its desired effect of keeping appraisal costs down to consumers, since the main reason appraisal costs are high is because AMC's add their bloated costs to the appraisal fee for one bundled charge.

Appraisal fees to consumers rose over the past 5 years, while the amount of that fee to appraiser got lowered ; TRID perhaps is a misguided effort to correct the consumer over paying, but of course it did not correct it.

 

[Evincere]

I read it. And I don't dispute what s/he is reporting ($450 SLA, $350 must go to the appraiser).
But riddle me this... What happens if the AMC cannot fill the assignment at $350?

It was never a problem because by virtue of being on the panel the fee to the appraiser was an acceptable C&R from the get go per the Appraiser. The exception was when the property turned out to be complex and a fee increase was requested. And btw, the Appraiser was under NO obligation to accept the order if their schedule didn't accommodate the SOW or TAT . Nor, were they penalized for rejecting an order ....for whatever reason.

 

[Terrel L. Shields]

Anyway, they were surveying appraisers on a number of issues and one of the questions was in regards to training;

I got to Q. 2 & they said they had all the data they needed...next day I get another email..."there is still time to take our survey..." Go figure.

 

[hastalavista]

I agree with the removal of no tolerance bucket. I think that would offer some more flexibility regarding total fees for an appraisal. But you don't think volume has/plays a role in the reasoning by lenders?

Certainly volume is a factor. I volume discounted for a bank back in the day. I volume discount for review services now.
But the volume as leverage would be applied to where it should be applied: with the lender negotiating its fee with the AMC, independent of the appraisal fee.

An AMC needs to gross somewhere between $125 to $165 per order to be profitable (and, when I say profitable, I mean a net 8-12% pre-tax profit).
Lenders will want to pay as little as possible but not so little where they will put the AMC out of business (despite the hopes of many here); why? Because it is still beneficial for a lender to off-load the appraisal management process.
So, AMCs will calculate the potential volume with their client and bid their fee accordingly to that client. But that is distinct and separate from what the appraisal fee is. The two are not correlated.

Obviously, if AMC X charges $140 per assignment and AMC Y charges $130 per assignment, then a lender would likely consider AMC Y to be the better proposition (all other things being the same). But I don't think a lender will necessarily bail over a 8% difference in costs if AMC X is performing to the lender's requirements. The fee is passed on to the borrower. Service would make up the difference in the spread.

 

[hastalavista]

But you don't think volume has/plays a role in the reasoning by lenders?

Just to add...

If I were a big lender, I'd have several AMCs work for me. Some in the same geographic market. I'd do this to keep them competitive among themselves in regard to what they charge me. That would also have the impact of diluting the concentration of any one AMC with any one lender. When you think about this, it is a Business 101 commandment: Thou shalt not have all of thine eggs in one basket!