Hybrid Appraisals

[J Grant]

I understand the reasons behind the low fees for appraisers. However, it's hard to deny that technology is reducing the need for certain appraisal tasks. For instance, when someone takes out a $25,000 HELOC with 100% equity in their home, is a full appraisal really necessary? I suspect you're a one-person operation, like many of us. Prior to the mid-90s, it was very challenging to work independently without a staff, a full office, and secretaries. While technology has empowered many of us to operate on our own, it’s also likely to eliminate a significant amount of appraisal work.

Technogloy replacing some appraisals, such as an AVM used for a bank's own refinance or equity loan, is a different animal than the AMC fee push for low due to the fee split.
My objection is that G Hatchs' misleading (IMO ) posts were he blames Technoboy for reducing appraisal fees where an AMC is concerned,

Certainly, alternative products like AVMs have reduced the need for an appraisal in a number of cases.

 

[Zoe]

Technogloy replacing some appraisals, such as an AVM used for a bank's own refinance or equity loan, is a different animal than the AMC fee push for low due to the fee split.
My objection is that G Hatchs' misleading (IMO ) posts were he blames Technoboy for reducing appraisal fees where an AMC is concerned,

Certainly, alternative products like AVMs have reduced the need for an appraisal in a number of cases.

Hatch thinks shallow sometimes. LOL He don't like getting in the deep water.

 

[George Hatch]

Technogloy replacing some appraisals, such as an AVM used for a bank's own refinance or equity loan, is a different animal than the AMC fee push for low due to the fee split.
My objection is that G Hatchs' misleading (IMO ) posts were he blames Technoboy for reducing appraisal fees where an AMC is concerned,

Certainly, alternative products like AVMs have reduced the need for an appraisal in a number of cases.

I'm not shifting blame away from the AMCs for shopping by fee, but (unlike you) I am also not shifting blame away from technology for the extent to which it enables the AMCs to more easily and efficiently shop by fee.

What this debate comes down to is that you and I think the AMC-users and the AMCs will act differently if the govt forces the lenders to separate the bundled fee they pass on to the borrower.

You think the AMC-users will stop expecting the AMCs to deliver the combination at the most competitive price, and that the AMCs will be under no pressure or coercion to shop appraisals by price.​

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I think the AMC-users will continue to expect the AMCs to deliver the combination at the most competitive price, and that the AMCs will continue to be under pressure and coercion to shop appraisals by price.​

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As for what the non-AMC users are doing, they're already acting differently than the AMC-users so they're already not the control group for what happens if the environment changes for the AMC-users.

Separating the bundle in the lender's disclosures does not automatically lead to eliminating the level of competition between the AMCs or eliminating the level of competition between the appraisers on the AMC panels. In a tech-enabled marketplace where it doesn't cost the AMCs extra to pit appraisers against each other, [100 appraisers / 75 assignments] is still going to result in some crab bucket behavior among the crabs. Which can and previously has reversed when its [75 appraisers / 100 assignments].

 

[shrubberyvaluation]

I understand the reasons behind the low fees for appraisers. However, it's hard to deny that technology is reducing the need for certain appraisal tasks. For instance, when someone takes out a $25,000 HELOC with 100% equity in their home, is a full appraisal really necessary? I suspect you're a one-person operation, like many of us. Prior to the mid-90s, it was very challenging to work independently without a staff, a full office, and secretaries. While technology has empowered many of us to operate on our own, it’s also likely to eliminate a significant amount of appraisal work.

In most cases probably not. If the property is worth $10,000 that would be a big issue.

 

[J Grant]

or

I'm not shifting blame away from the AMCs for shopping by fee, but I'm also not shifting blame away from technology for the extent to which it enables the AMCs to more efficiently shop by fee.

What this debate comes down to is that you and I think the AMC-users and the AMCs will act differently if the govt forces the lenders to separate the bundled fee they pass on to the borrower.

You think the AMC-users will stop expecting the AMCs to deliver the combination at the most competitive price, and that the AMCs will be under no pressure or coercion to shop appraisals by price.​

​

I think the AMC-users will continue to expect the AMCs to deliver the combination at the most competitive price, and that the AMCs will continue to be under pressure and coercion to shop appraisals by price.​

​

As for what the non-AMC users are doing, they're already acting differently than the AMC-users so they're already not the control group for what happens if the environment changes for the AMC-users.

Please understand I am not referencing the Govt SEPARATE THE BUNDLED FEE.

How many times must I say it, the game changer would be ELIMINATE THE BUNDLED FEE for appraisals, or cap the amount an add-on fee to an appraisal can be. At one time there used to be verbiate about the mount of add on fees vs the essential service fee ( such as the appraisal ) that verbiage is no longer on the HUD as far as I know - part of teh erosion of protection for appraisers, which is why myself and others cauton newbies against entering the field with a res license - wish it were different but at least thry were warned.

 

[George Hatch]

The only way to ELIMINATE it is to legally prohibit it. Same with capping it. The AMC-users will never submit to that voluntarily. So yes, you need govt to do that for you. There is literally no other way it will happen.

Now don't get me wrong. I have no moral or intellectual objections to beseeching govt to give fee appraisers the unearned protection of their business interests. If you can win that discussion against your opposition then you deserve the spiff. I want you to win but TBH I don't see how it's possible. With that said, I'm much prefer to be wrong about your chances than to be right about them.

 

[J Grant]

The only way to ELIMINATE it is to legally prohibit it. Same with capping it. The AMC-users will never submit to that voluntarily.

Exactly my point.
Either regulatory action or a lawsuit - who knows, maybe one day I will have the energy to explore it. Seems anti-trust competitive that the AMC's enjoy a huge market advantage by their ability to offer a free of cost service to lenders on the backs of appraisers via the bundled fee split - idk why folks who object to govt perks are fine with this one -

Regardless, it is a big uphill battle and may not ever happen, but at least the truth should be out there that the AMCs dominate because of their huge government perk bundled fee advantage to offer free of hard cost to lenders - rather than the appraisers fault or the fault of technology.

 

[George Hatch]

Logic is fundamental. Banking regulations which prevent lenders from using 3rd party appraisals is a prohibition. Not a permission. Or a perk. This here is America so that's how our laws work. That which is not prohibited is otherwise permissible.

 

[J Grant]

Logic is fundamental. Banking regulations which prevent lenders from using 3rd party appraisals is a prohibition. Not a permission. Or a perk. This here is America so that's how our laws work. That which is not prohibited is otherwise permissible.

Can you read?
I did not say prohibit lenders from using 3rd party appraisals !!

I said, regulation should probit the compensation to the third party via the bundled fee -that is a regulatory decision, just as now it is a regulatory decision that the third party can get compensated by the fee slpit of a bundled fee.

The bundled fee was originally intended to cover small miscellaneous charges ( and the verbiage was add on charges be proportionate to the contribution to the essential service, such as appraisal or title search ) That verbiage is gone far I can tell - one assumes to benefit third party interest. No other business in America that I am aware of gets that kind of enormous a govt perk.t

I thought you were against that kind of thing.

 

[Surf Cat]

Eliminate AIR and AMC's and go back to mortgage brokers.....even borrowers to select and order directly from appraisers.

Yes, lenders would be responsible for appraisers again as they should be. Underwriters have enough of our data to check the validity of the report via CU and AVM's. Once the report is accepted, the lender sends the Borrower's check to the appraiser.

If the lender finds the appraisal report blatantly insufficient, pushed in value, undervalued, devoid of appraisal methodologies and common sense and the appraiser can't remedy it, they don't get paid.

This way....pushing for a certain value would waste the mortgage broker's, Realtor's, borrower's time. They would need the experienced, Geo competent, highly skilled, appraiser as opposed to the number hitting dregs that the AMC's prey upon.

The regulations that are supposed to prevent conflicts of interest and ensure impartiality......enhance it....