Why lender's appraisal fee cap is so low?

[Terrel L. Shields]

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-

No we need banks and AMCs to be banned from using turn time and fee as a selection tool. The appraiser should be selected from among those qualified to do the work. And then the appraiser tells them what the fee is and a set amount added to that to establish the AMC's share. A normal jobber gets 10-20% in many areas of business.

 

[J Grant]

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.

Are you deliberately being dense? I said the appraisers compensate the AMC by having a part of the fee that normally would go to the appraiser diverted to compensate the AMC - the fact that the appraiser does not cut a check to t"pay" the AMC is beside the point.

In direct lender work (noncomplex), nobody bids for work, and the panel is paid the same C and R fee, yet you completely guarantee that fact, too, after all these years - why is that?

Borrower appraisal paid fee - $600. AMC used, the breakdown is that the appraiser got $400 out of it, the AMC got $200. Did the lender pay a dime in cost ? NO. Did the compensation to the AMC come from teh appraisal fee?YES. Did the appraiser end up with less income from it - YES

The same borrower appraisal fee- $600 direct lender order - appraisers get paid $600. -

 

[George Hatch]

Those assignments don't belong to the appraiser. Once assigned to an AMC they belong to the AMC to control and distribute and manage as per market conditions.

The appraiser pays nothing to anyone; they get paid for what they do as per their own agreement. Or, they don't do the assignment at all. As for direct lender work, what the low volume lenders do is immaterial in a discussion of the economy of scale at which the high volume lenders operate. What your 3-assignment/month credit union is doing is irrelevant by comparison. As evidenced by the fact that those direct lenders only handle a fraction of the business. If it was otherwise then nobody would work for the AMCs and nobody would care what those lenders are doing.

You might think the bundled fee is the problem except that it isn't. Even if an AMC went to cost+plus all that would happen is the appraisers on that panel would still initiate the downward spiral of fees in competition for more work. "I'm not getting enough of your assignments. Can I get more if I reduce my fee?"

The only reason I support breaking the bundled fee model is to shut you (and others) up and force you all to acknowledge that your real problem is still too many heads chasing not enough assignments in an internet-enabled marketplace.

 

[alebrewer]

The probelm is less of the lender cap than it is that the AMC is able to keep $300 of it.

The AMC is only able to keep $300 of it if there are appraisers willing to perform the service for $450...

 

[alebrewer]

In direct lender work (noncomplex), nobody bids for work, and the panel is paid the same C and R fee, yet you completely guarantee that fact, too, after all these years - why is that?

Completely incorrect. In fact, most banks that I'm familiar with broadcast assignments - both commercial and residential - and the winning bid is usually the lowest.

 

[Terrel L. Shields]

Completely incorrect.

Not completely. I've got bank customers over the years who never asked what my fee was. They did not select me over turn time and fee. It has been some 10 years since I quit bidding on work. Pay my fee or go somewhere else. Not a thinking thing.

 

[alebrewer]

Not completely. I've got bank customers over the years who never asked what my fee was. They did not select me over turn time and fee. It has been some 10 years since I quit bidding on work. Pay my fee or go somewhere else. Not a thinking thing.

I also know banks who don't broadcast. You'll note that my post said 'most'. J's statement was a universal - which was, again, completely incorrect.

 

[alebrewer]

Not completely. I've got bank customers over the years who never asked what my fee was. They did not select me over turn time and fee. It has been some 10 years since I quit bidding on work. Pay my fee or go somewhere else. Not a thinking thing.

One of the largest banks in this area that broadcast is Independent Financial. I continue to bid on assignments just to see how low I have to go to get an order. Lost out on a very easy land appraisal with a $250 bid last week... so far, I'm batting 0 with them - but I still play for the fun of it.

 

[Terrel L. Shields]

I really don't know any community bank that does not order their own, and again, not many of the smaller banks use AMCs. The Regionals like Simmons, Arvest, Regions, etc. do use AMCs or bids thru RIMS and I don't work for them. Arvest orders their own unless out of the area and then they use an AMC to fill the order. The credit department orders and reviews the reports and has several appraisers on staff. As one of the bank appraisers for them told me, "I hate AMCs." They often had someone review reports from out of the area. I know I got a call from one once and she was out of Oklahoma City and confessed she had never reviewed a chicken farm appraisal before.

 

[chad hampton]

Can you imagine being such a poorly run business that you have to put work products out for bid that are in the three to $400 range.

I remember when I worked in a city engineering office. Anytime design estimates were under $10k or so, they said just go give it to someone on our approved engineers list. You’re completely wasting your time putting this out for bids. you’ll spend more money than it’s worth.

AMCs are in a lot of trouble right now. Begging staff appraisers to come work for them is their last ditch effort. It will fail. Always does. And it’s getting worse.