Why lender's appraisal fee cap is so low?

[chad hampton]

I choose to have the mortgage broker order the appraisal.

You still sure it’s not a manipulated market?

 

[J Grant]

There is no involuntary servitude in America. There are only choices

• If this lender won't offer a mortgage at competitive terms and costs then the borrower will just find another lender who will
• If this AMC won't offer a competitive bundled fee then the lender will just find another AMC who will
• If this appraiser won't bid at a competitive fee then the AMC will just find another appraiser who will
• If this AMC won't offer an acceptable fee then the appraiser will just seek their own alternatives. Elsewhere.

Everyone gets to make their own choices. Nobody gets to make their choice and then cry about it.

BS- first of all, anybody is free to "cry if they want to - who are you to tell people what to feel?

Second of all, this is a rigged competition; it is not a free market - this is imposed fee gouging by a third party by a perk that allows a lender to get free of cost AMC service, so there are grounds for appraisers to speak out about it.

 

[J Grant]

I choose to have the mortgage broker order the appraisal.

You still sure it’s not a manipulated market?

Me too - I choose to do direct lender work ,with perhaps 10-20% of any better pay AMC work as a filler, bu the choice took me years and through savings to regain the ground lost when the HVCC came out - c

 

[J Grant]

There is no involuntary servitude in America. There are only choices

• If this lender won't offer a mortgage at competitive terms and costs then the borrower will just find another lender who will
• If this AMC won't offer a competitive bundled fee then the lender will just find another AMC who will
• If this appraiser won't bid at a competitive fee then the AMC will just find another appraiser who will

The AMCs STILL do not compete at a level similar to other businesses.- the AMC offering a competitive bundled fee just means their bundled fee fits what the lender is charging the borrower - the lender still, most of the time, pays NOTHING as a cost for the AMC service.

If the AMCs had this perk taken away, THEN they would compete for the way every other business has to - based on teh cost they charge tehri customers - THEN we would really see AMC;s compete - I bet that competing would drive down what a lender would pay them to the $75 an order range, if that much.
Personally, I could care less what their charge to the leader would be, as long as it is 100% apart from and not coming out of the appraisal fee.

 

[George Hatch]

You don't seem to want to get it. Any lender could choose to move off from the bundled fee model today if they wanted to. They're not choosing to stick with that model because it's their only alternative or because the AMCs are forcing them to do anything. The lenders are choosing this because they like it. They want it. They won't work with any AMC that doesn't offer it.

I daresay any number of AMCs would probably be happy if appraisal fees were universally fixed at C&R because then they would never have to squabble with appraisers over fees. None of their competitors - also operating off a fixed C&R - would be able to underbid them by paying their appraisers less. The competition between AMCs would be limited to what their own fees were WRT the services they're directly providing.

Except the lenders will never give AMCs the opportunity to go to fixed C&R fees. Not voluntarily. Not unless the govt forces them to do it. Against their will.

And that's the crux of it. As a group, SFR appraisers need govt to give them that which they are largely incapable of getting for themselves from the lenders under the current regulatory restrictions. They need govt intervention into the market for services, to force the lenders to act against their preferences and self-interest. Appraisers need the unearned Special Interest Group entitlement.

 

[djd09]

and our favorite bank still at it.................

Is this PROOF banks are failing fraud victims? Wells Fargo hit by bombshell lawsuit claiming its own system flagged scam but STILL gave customer's life savings to crooks - just weeks after a grandmother lost $150K​

Wells Fargo's fraud system raised the alarm over a dodgy transaction - but the bank allowed it to happen anyway. It now faces a class-action lawuit.

 

[J Grant]

You don't seem to want to get it. Any lender could choose to move off from the bundled fee model today if they wanted to. They're not choosing to stick with that model because it's their only alternative or because the AMCs are forcing them to do anything. The lenders are choosing this because they like it. They want it. They won't work with any AMC that doesn't offer it.

I daresay any number of AMCs would probably be happy if appraisal fees were universally fixed at C&R because then they would never have to squabble with appraisers over fees. None of their competitors - also operating off a fixed C&R - would be able to underbid them by paying their appraisers less. The competition between AMCs would be limited to what their own fees were WRT the services they're directly providing.

Except the lenders will never give AMCs the opportunity to go to fixed C&R fees. Not voluntarily. Not unless the govt forces them to do it. Against their will.

And that's the crux of it. As a group, SFR appraisers need govt to give them that which they are largely incapable of getting for themselves from the lenders under the current regulatory restrictions. They need govt intervention into the market for services, to force the lenders to act against their preferences and self-interest. Appraisers need the unearned Special Interest Group entitlement.

I do get it - why would a lender voluntarily move the bundled fee model when they get FREE service from it? Do you think I am stupid .....that is not even a question.

My point is the AMC service to the lender, which they presently do not pay for, is only free of cost to them because the appraisers compensate the AMC for their fee reduction from the total appraisal fee, and that should not be happening. The fact that it is a legal GOVT perk is a travesty. You do not agree on that point, which is fine.

The conversion is not about fixed C and R fees, none of this would matter if the ACM were not allowed to be compensated from the appraisal fee and instead charged the lender.
I predict that unless the lender could pass the separate AMC cost on to the borrower, they would move away from ACM engagement and go back to direct order as the less costly alternative. foljy

 

[Terrel L. Shields]

When an AMC bid they are competing with other AMCs, so they want to bid low enough to win a contract to provide appraisals for a set fee. If they pay more than the contract will pay them, then they go under. That's why you need a cost-plus structure but banks don't want the AMCs to get a fixed percentage because it means the appraiser dictates the fee and once the appraiser figures that out, they will jack the fee...but of course, there is still the idea that appraisers will bid low to get work and so cost-plus ends up just like any other reverse Dutch Auction, you end up with the lowest paid appraiser getting the work.

 

[J Grant]

When an AMC bid they are competing with other AMCs, so they want to bid low enough to win a contract to provide appraisals for a set fee. If they pay more than the contract will pay them, then they go under. That's why you need a cost-plus structure but banks don't want the AMCs to get a fixed percentage because it means the appraiser dictates the fee and once the appraiser figures that out, they will jack the fee...but of course, there is still the idea that appraisers will bid low to get work and so cost-plus ends up just like any other reverse Dutch Auction, you end up with the lowest paid appraiser getting the work.

we do not need a cost plus structure. We need the appraisal fee removed from the bolded fee so that the AMC takes NOTING from the appraisal fee !!!!

Either than, or cap the AMC % off the bundled fee to max 20% , the current system sees them take as much as 50%, whenever they can get-

 

[George Hatch]

I do get it - why would a lender voluntarily move the bundled fee model when they get FREE service from it? Do you think I am stupid .....that is not even a question.

My point is the AMC service to the lender, which they presently do not pay for, is only free of cost to them because the appraisers compensate the AMC for their fee reduction from the total appraisal fee, and that should not be happening. The fact that it is a legal GOVT perk is a travesty. You do not agree on that point, which is fine.

The conversion is not about fixed C and R fees, none of this would matter if the ACM were not allowed to be compensated from the appraisal fee and instead charged the lender.
I predict that unless the lender could pass the separate AMC cost on to the borrower, they would move away from ACM engagement and go back to direct order as the less costly alternative. foljy

The appraisers don't pay the AMC for anything. The AMC offers work and a certain percentage of appraisers voluntarily accept that work under those terms.

If the AMCs were smarter they'd put their assignments on an E-bay bidding platform, set the bidding for 24 hours and show what the current bid is. Then you'd have nobody else to blame for the fees BUT the competitors.

Or, they could put blocks of assignments together. You are bidding on 5 assignments in this geographic area for this week. The winning bid this week might be higher or lower than it was last week. Depending on market conditions.

TBH, I don't think most appraisers would like the outcome if the AMCs increased the level of disclosure and transparency to that degree.