No College Degree for Cert Generals or Residential Appraisers

[George Hatch]

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[J Grant]

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The problem is that most individual appraisers see so little outside of their own appraisals that it is hard to tell.

I do know that many RE agents I meet at inspections complain about far out of area or poor quality AMC appraisals, and I did get a copy of an appraisal two weeks ago from a lender for X reason, the appraisal was so shockingly bad ( appraiser far out of area ) that I almost could not believe it. And overvalued by around 100k on a 600k price point.

Of course, there can be some bad direct order appraisals and some good AMC appraisals as well. But overall in appraisal like anywhere else, one gets what one pays for -

 

[George Hatch]

It appears the pricing trends are entering into decline, and we're going to be seeing some foreclosure activity. Whatever excesses are attributable to the appraisals made at the origination of these loans will come to light for both the direct engagement and AMC appraisals. People are going to be looking for answers. A pattern of "inconclusive" when comparing the two groups to each other will be just as meaningful as patterns of "always" or "never". Whichever pattern arises.

I don't know what stats will emerge. I just know that after 15 years no evidence of AMC-related losses have emerged yet.

 

[Dublin ohio]

College would screen some folks out who simply do not belong in the appraisal. The clueless posts here indicate that. The horrendous reports I have seen indicate it.

You do realize that many of those clueless posts come from appraisers that have a degree. Some of the clueless even brag about having a degree

 

[Terrel L. Shields]

in particular the GSEs, have actively worked to dismantle and neuter the appraisal profession.

I cannot argue with that. The puzzle is one of "sound and fury, and signifying nothing". The bank laws argue that appraisers are not to be chosen solely on turn time and fee, yet we know every AMC operates exclusively upon that premise.

loan officers dislike the AMC system

I find this is more than merely the AMC system. I stopped by to drop off a case of Little Debbies to a bank customer and visited with the 2 ladies that order the appraisals, and their boss who is the one who reviews my work. They introduced me to two of the loan officers - the last loan officer I knew there passed away after a stroke last year. The whole discussion was about the complexity of it all and how they wished they could communicate more with their appraiser-vendors but legal notices were consistent that they needed to keep a separation from same. But are the AMCs really distancing themselves from appraisers or merely favoring the cheap seats even on the most complex of properties?

Only the upper-tier shareholders or top management count.

A point made many years ago was that the loan officers were not party to the decision to use an AMC. That decision was made by the bank board and that board did not ask input from the Loan Dept. and the AMCs marketed directly to them on the virtues of using an AMC without any contrarian view allowed.

We have seen only a trickle of appraisers enter the appraisal license res side of the field despite continual lowering of requirements and many competent appraisers refuse to do AMC work.

The ones leaving the secondary market world seem to maintain their own fee structures and while some may get less work, actually end up apparently making more money. Anyone with any technical degree can find better work. We used to see assessor's appraisers leave to take private licensed work. Today we see CRs and CGs both either working for the assessor or working in the local bank lending department. I know one supervisor appraiser in a Credit Dept who told me she hated dealing with AMCs but because their vendors occasionally were all busy or did not work certain areas they had to use an AMC, especially on jobs that were not in their normal MLS coverage.

The name of the game for a lender is to avoid the gross overvaluation.

Then an AMC is a ****ed poor way to do it.

If a cosmetically perfect looking report concludes to a gross overvalulation then thats going to be a fail WRT the lender operating in good faith. They're users reviewing reports to make a decision about the property, not appraisers reviewing reports to form an opinion of the quality of the report.

Cushman-Wakefield is being sued exactly over the issue of over-valuation as we speak.

Cushman & Wakefield is facing a federal lawsuit filed by StanCorp Mortgage Investors, alleging inflated multifamily property appraisals and misrepresented rent rolls, occupancy levels, and renovation costs. The lawsuit claims that these inflated appraisals led to over $210 million​

I don't know what the answer is to that question.

No one knows but clearly the bank regulators have the power to FORCE banks to REQUIRE the AMCs to not use fee nor turn time as a factor. In fact, simply forcing them to NOT ASK nor allowing competitive BIDDING would go a long way towards restoring reasonable fees to appraisers. If a 12-page report in 1994 was worth $325 on a $152,000 (1994 average) house), then surely to God, a 36-page report in 2026 should be worth $975 on a house worth $462,000 (2025 average home price).

And yes recently I saw a residential report that was on a form and was over 30 pages long. Great charts, etc. 18 photos, etc.

 

[Terrel L. Shields]

What is Customary and Reasonable fees?

C & R seems to rely upon their own fees as C & R. But is that the real "market" for appraisals? Why do appraisers consistently say they get better fees from direct lending banks and private parties? Are they not the market too?

Frankly, the AMC market is a captive market which pits experienced appraisers against newbies. And newbies are often financially strapped compared to the more experienced appraiser, so they win bids on turn time and fee both.

But shouldn't these private fees be counted as a freer market? And what about roster appraisers like VA? So, how should the banks fit in?

IMNSHO, your residential loan appraisal should be competing directly with the bank. If the bank can order you direct and you want an excessive fee, say $2,000 for a cookie cutter, then the bank can make the decision to hire an appraiser themselves and set them apart from lending. So, if they can hire an appraiser for $80,000 (then add bonuses, insurance, etc.) and that appraiser can handle their volume at a lower price per appraisal, then the bank would hire appraisers, not 'rent' the fee appraisers. If that appraiser hired can do 5 appraisals a week that is 100 per year or $800 per appraisal (actually more than $80 including insurance, office expenses, software, a computer, etc.) So, how cheap would your pay be to go to work for a bank? We're talking appraisers working 8-5 5 days a week for $30-40k to be competitive with the fee appraises today. And what bank can hire an appraiser for $30,000? No one.

The AMC should not be included in the calculus of C & R. The Weighted Alternative Cost of Capital(appraisers) should be the determination of C & R. And I suspect that if the banks had a choice between paying a fee appraiser $800 or hiring an appraiser to do the job of 80-120 appraisals per year, they'd opt for the fee. As it is they are paying the AMC well to get the job done that they know would cost them a lot more.

 

[J Grant]

It appears the pricing trends are entering into decline, and we're going to be seeing some foreclosure activity. Whatever excesses are attributable to the appraisals made at the origination of these loans will come to light for both the direct engagement and AMC appraisals. People are going to be looking for answers. A pattern of "inconclusive" when comparing the two groups to each other will be just as meaningful as patterns of "always" or "never". Whichever pattern arises.

I don't know what stats will emerge. I just know that after 15 years no evidence of AMC-related losses have emerged yet.

The prices rose so high into the ether from a combination of the AMC firewall failure against value pressure and the WAIVER/value acceptance hitting the sale price (if it fell into the secret GSE AVM range ) .

You have frequently stated that the interest lenders have is to avoid a gross overincumbrance on a loan - what does that mean? Are they willing to tolerate a 15% overvalue? A valuation that is 5% over value every month brings prices up rapidly within a year, and sets the comps used in any valuation, whether an AVM, PBO, or appraisal. If prices are declining now in some areas, it does not mean the AMC system is working; it means prices rose to a level of unaffordability.

WRR the comment that being concerned about markets is not the appraiser's job description, the resulting effect on markets of lack of independence from value pressure, and the AMC profit by gouging fees, driving the competitive tout of mortgage lending reaches a tipping point. I fail to see where the AMC system predation to the point where a steep decline in anyone entering the professon on the mortgage lending side is a good thing. In housing markets, the lack of a viable MV appraisal system in place contributes to prices rising to the point where working Americans and the middle class can not afford homes. 40% or more of my residential purchase buyers are LLC corporations and investors. If one wants to say buyers set the market, these are not residential occupancy buyers.

 

[Terrel L. Shields]

just know that after 15 years no evidence of AMC-related losses have emerged yet.

No liability, hence, no loss... sure.

Are they willing to tolerate a 15% overvalue?

They want the appraisal to cover the loan. Beyond that markets change. What the property is worth 1 year, 10 years down the road, is not reflected in the appraisal value opined here, now, today. So, what does a just-in-time appraisal mean? If we were more conservative with the dollar amount is that what is being asked? Neither shorting nor inflating a value serves our license. The issue should relate to the banks being more conservative by lowering the LTV ratio. Instead of lending 100% plus closing costs or even 94%...THE RISK is taken by the bank and not created by the appraiser. Lower all LTVs to 80%. Allow no bank to lend more. It's called SITG...skin in the game. When a borrower has skin in the game, they are more diligent about paying off that loan. Give me 100% LTV and if the investment doesn't seem worth it, I will just walk. Nothing ventured, nothing gained. Pretty simple concept.

 

[TerryRohrer]

I just know that after 15 years no evidence of AMC-related losses have emerged yet.

Much like the Democrats just know no evidence of voter fraud has emerged. Because no one looked.

 

[Mark K]

If a 12-page report in 1994 was worth $325 on a $152,000 (1994 average) house), then surely to God, a 36-page report in 2026 should be worth $975 on a house worth $462,000 (2025 average home price).

Quite possibly one of the most ridiculous statements made on this forum in a while...OTOH, I have Nando on ignore so I could be wrong.

According to this, a relatively simple $1M appraisal should cost about $2K. Wow.