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5 Year Outlook on the Appraisal Profession? Your Opinions Please

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Highlander416

Member
Joined
Feb 16, 2003
Professional Status
Certified Residential Appraiser
State
Massachusetts
Here is the thing. Ten years ago I finally figured out the conundrum. Back in the day I used to get $350.00 a pop for non-complex assignments and didn't have any stips, complaints or problems. My reports were highly documented, literate and well-supported like a flowing river running through the neighborhood description, trends, cost approach (always whether I was asked or not, couldn't complete a report if I didn't because I relied on it). Then I saw the scope creep but no change in fees. Then in 2008 or whenever it was the **** hit the fan. Couldn't get work, reos were the rage, unbelievable volume. So what did I do. I contacted one of the broker big shots in the area that was getting more foreclosures to put on market than he new what to do with. I told him that I could complete his bpos like nobody's business and I was heads over heels the favorite with the asset managers because I knew what I was doing compared with typical real estate agents. Two weeks into it the broker was my slave. We made a deal that I would get 30% of the listing fee, yes 30%. It was heaven for me pushing the bpos out, easy peasey. I tripled my income I was used to in six months and that lasted for two years. Then it stopped. I went back to the mortgage market and some private attorney stuff and my income plunged again. To me this stuff you guys are talking about is old news. Take Bert for example, who I admire greatly for his technological prowess. I used statistics to a great degree but not to the extent he's talking about. The databases that are being created are humongous, hell they go back 30 years or better. No human is going to be able to compete with this because we can't process 1000 transactions in five minutes within a 5% error rate. It would take me a month to do that, provided I had the database. I honestly don't see the future in the business because once the proper software programs are written the lenders will start using them to the exclusion of appraisers, and yes the reports will be supportable and will be definitive. We will become inspectors only to counter fraud (you know kitchen and bathrooms stripped, blah, blah). You'll get $50 to do the inspection. The attorney stuff will last a little longer as will some of the commercial stuff but the need for volume and speed due to the velocity of money is going to bury this profession and everybody in it. I hate to see you guys going over the same stuff over and over. Time to be proactive, tell the AMCs to go sit on it and start looking at the opportunities out there, they are all around everywhere but you have to get out of the trench to see where they are!
I think it is important to take advantage of the time remaining under the current system. I have no intention of trying to support my family on $50 inspection reports. Why would anyone want to attempt such a thing? For that kind of money, it is better to find a gig with benefits and vacation time. We still have some time left to work on Plan B. I am starting to believe we are in the "end game" as far as lending work goes. I think it is possible that 50% or more of current working appraisers could be forced out or to part time status, perhaps even within the next 2-3 years. I don't think the worst case scenario is guaranteed, but I think the probability is high enough to warrant at least getting a back up plan in place.
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
Once Upon a Time in America there was a stalwart Band of truly independent and objective Humans who proudly called themselves...... Mortgage Appraisers.
 
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WestMichiganCG

Junior Member
Joined
Sep 4, 2014
Professional Status
Certified General Appraiser
State
Michigan
I'm on the commercial side. We've had word that lenders are concerned with the lack of new appraisers coming in and asked if we knew of anyone younger coming in to the profession since our office has two of the younger people in the market. I'm one of the two and am 43. Very few people are coming in, more people are dying or retiring. The amount of appraisals needed is dropping at a similar rate. Until fees start to go up I think people will continue to age out of this profession with the average and median age continuing to rise. I'm guessing the inflection point will hit in the next 5-years. Fees may go up for us for the first time in 10-years. At some point, it might make sense to bring in some newer people. My guess is that as the fees start ticking up, lenders will rely more on computer generated valuations to keep fees down. People are also choosing banks that don't require appraisals over ones that do to save on financing costs so the banks are seeing pressure. Legislation is also a wild card as appraising is seen as the brakes that are being applied to America's economic engine in some circles as opposed to the profession of public trust. I think the near future will have fewer appraisers that will be highly diversified. Specialists will struggle to find enough work to stay employed in the smaller markets. As volumes shrink, scrutiny has seemed to increase. I know people are getting bumped off lists for having an inferior work product. If you're already in the business, are technically savvy, control cost, focus on diversity and choose continuing education that is applicable and can open up other income streams; I think the next 5-years will improve.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
We've had word that lenders are concerned with the lack of new appraisers
I belonged to a group whose director resigned to take another position. We went on a talent search. The second person in the office was an events and media pro, coming out of the Amer. Lung Assoc., she took the position when the ALC closed its local office. I am on the board and suggested we look at promoting that person or, at a minimum, increasing the pay substantially in light of the need for some institutional memory in an office of 4 where 3 people resigned in 18 months. I also said since the economy had revived considerably the pay scale was on the rise and the employees had choices that didn't exist 2009-2014. I was ignored. We got a new director, less than a year in, he has already lost her and another one who had been there barely a year. We are screwed. No one knows anything. All because we didn't give that person a big pay raise or offer her the job as director.

It is all about the money. There is no real money for most of us. AMCs treat the urban, suburban and remote rural appraisers all alike and so rural appraisers have ceased training anyone, and feel no obligation to serve the needs of the lenders who are shafting them by using a clueless AMC. I hope every one of those banks have issues finding anyone until they start compensating appraisers with sufficient wages to be competitive with other professions of equal skill. And I suspect that should be thinking in terms of the same fee they now pay the AMC - something well north of $500...and for rural property closer to $1,000. If our typical $300 for the typical house here that was worth $60,000 in 1993 then that same house is now worth $180,000, then why isn't $900 the right fee now?

 
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ucbruin

Elite Member
Joined
Mar 11, 2014
Professional Status
Certified Residential Appraiser
State
Massachusetts
"It is all about the money. There is no real money for most of us. AMCs treat the urban, suburban and remote rural appraisers all alike and so rural appraisers have ceased training anyone, and feel no obligation to serve the needs of the lenders who are shafting them by using a clueless AMC."

Appraisers set their fees....

Why don't these slackers just raise their fees?....

Suggest they move to OH or MI where appraisers set their fees....
 

gregb

Elite Member
Gold Supporting Member
Joined
Sep 3, 2011
Professional Status
Certified General Appraiser
State
California
My memory is that appraisers only set their fees in Colorado, Oregon and South Dakota, otherwise they are determined by the AMC's.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
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My memory is that appraisers only set their fees in Colorado, Oregon and South Dakota, otherwise they are determined by the AMC's.
Appraisers "setting their fees" has a different context with AMC's, since the AMC is not a normal client ordering just to get an appraisal done, the AMC selects to get the appraisal done AND make most profit they can, which means paying an appraiser the lowest possible. That added profit selector is not present in direct client work. Sure, an appraiser can set whatever fee they want, but if they get no work at that fee, it is meaningless. The fact that fees are higher in only a few COW states or select/rural areas with AMC orders shows that ...as far as future of appraisals, both res and commercial are under pressure from data alternatives and AI..
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
The only appraisals for lenders where you 'set your fee' are subjects that are so specialized or complex that only a few appraisers nationwide can do them. Even then you don't always get a huge fee. I do a lot of pro bono or expenses only appraisals for the elderly who are on their way to the rest home under Medicaid. The last one was the state of Colorado insisting upon an appraisal for mineral rights that were worth no more than $1,000. It, is unacceptable for me personally, to charge a fee that is more than the value of the mineral rights.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
The only appraisals for lenders where you 'set your fee' are subjects that are so specialized or complex that only a few appraisers nationwide can do them. Even then you don't always get a huge fee. I do a lot of pro bono or expenses only appraisals for the elderly who are on their way to the rest home under Medicaid. The last one was the state of Colorado insisting upon an appraisal for mineral rights that were worth no more than $1,000. It, is unacceptable for me personally, to charge a fee that is more than the value of the mineral rights.
The appraiser "sets the fee" for regular lender work is spin from AMC;s who evade paying C and R by bleating "Not our fault we paid $200, the appraiser set their fee! " -which ignores the fact that 10 other available competent appraisers also set their fee- at a $300 range and thus were not awarded the order )

Regular ( non complex) lender work the standard for appraisal fees is C and R, not "the appraiser set their fee". That is because in lender mortgage work, the lenders quote set fees to borrowers based on surveys and C and R/what their competitors charge borrowers. Appraisers realize this and if they want to do lender work, agree to the C and R fee levels the lender charges the borrower. The only issue then is when an AMC is in the middle, how little of that will reach the appraiser - under the guise of " the appraiser set their fee" .
 

WestMichiganCG

Junior Member
Joined
Sep 4, 2014
Professional Status
Certified General Appraiser
State
Michigan
I set my fees with a goal of staying busy. There is not excess profit that allows us to bring in other people. "Just raise fees" is making a lot of assumptions. If we raise fees too high we don't get the job, there is someone else who will do the work for cheaper or the work may stay in-house at the bank. I'm seeing the younger appraisers in their 40's moving to banks, assessing departments and transportation departments to do mortgage, assessing and right-of-way work. I've had people ask me for a job but I don't have enough to keep them busy and I also don't want to move to a bigger office with the volatility associated with this profession.
 
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