After The Shake-Out --- Raising Fees

[Alison Swain]

It seems appropriate to me that we should begin to think about where we, as appraisers, should re-enter the lending process once all new regulations are in place, appraisers are vindicated (as we're beginning to see with the collapse of IndyMac and the revelation of their shady practices) and we are mandated to be the "policeman" (along with the underwriter, let's hope) of the deal. A major factor to consider has to be a dramatic increases in fees. Consider how undervalued we've been both in pay and respect, it seems entirely appropriate to consider a hike of 50% over the "typical" fee a starting point.

Now, I realize all the dynamics involved --- supply and demand, etc. But I'm talking about after the shake-out, when all is said and done and mortgage brokers and lenders are just beginning to wake up to the "new normal."

Your views? How shall we go about accomplishing this?

 

[RSW]

I agree. But, I don't think we will ever be able to get a 50% increase in our fees. I hope I am wrong!

 

[Alison Swain]

Calculate it out. It's really not that large of a number, especially when you consider real estate agents' commissions, loan officer/MB commissions, origination fees.

If we stick to our guns, are precise in our timing and can hang together, we can make it happen.

 

[Mr Rex]

If the "shake out" takes 2 or 3 years and drives about half of the exiasting appraisers out of business permanently, your idea might have merit.

 

[Offshore]

Keep in mind there is a “minimum wage” fee of sorts which is dictated by whatever a trainee located 2 hours from a supervisor is willing to work for. The AMCs know this and turn a blind eye to the signature page. That fee indirectly affects anyone performing mortgage lending work.

 

[c w d]

Alison, residential lending is never going to pay our fees that will allow us anything but a marginal living, not when there are $40 alternatives. The reality is that when everything does "shake out" we'll still have a congress that is sympathetic to corporations with very powerful lobbies. Gas prices are going to continue to skyrocket as we pass the peak of possible production in a world with growing demand. Residential lending is going to utilize alternatives to a greater extent. Even now in light of this banking crisis I've heard senators talking up the point that "...and we need to reduce the cost to the borrow for these services..." in reference the costs of the loan process to the consumer. This tells me the residential appraisal's day is numbered as a matter of a singular income stream for an appraiser.

The key to raising one's fees is to increase one's qualifications, become a general appraiser and sell one's soul to make value in order to have clients. Residential appraisals will become part of one's overall business but, not one's sole business in this new market. As we are seeing now the appraisals we're getting more and more of as our normal appraisals are for oddball homes or in markets with little information from which an AVM can aggregate and develop a value. And even then the lenders have BPO's that they can utilize.

 

[The Warrior Monk]

The main problem with certain market segments is that the standard for entry is the minimum qualifications; i.e., a license or certification. As long as that situation exists, fees in that arena are not going to increase significantly.

 

[Joker]

Don't struggle to be at the bottom of the fee structure, set your fees at the top of it. Residential appraisal fees for lending purposes start at $500. You want one, you pay. You don't want one, I'll do something else with my time and resources I have invested.

If everyone adopted my attitude about it, there would be higher fees and I would end up doing more residential appraisals for lending purposes. At that point, I may set my fees at $700.

 

[xmrevned]

Fees will not increase substantially until a physical inspection is required for every loan. There is legislation in Congress that seems to support this, but aholes like Dodd will make sure that appraisers are punished by making it mandatory that we all become bonded. That way he can keep his friends at C____-tree-wide happy and they will continue to give him great deals on his mortgage and fund his re-election campaign.

 

[Mountain Man]

In order to get higher fees, you've got to increase your own knowledge, professionalism, and abilities. I can not believe some of the most basic questions posted. Most all of which are easily answered by researching good published AI material, or by taking an advanced class to learn more.

You've also got to learn the differences between USPAP, Fannie, and FHA rules. There are big differences depending on the scope of work... know the rules to better serve your clients and help them decide or understand.

If you turn down every funky job that comes across your desk, you'll never grow past cookie cutter, form filling Fannie work. Of course the hard part is... as your abilities and knowledge grows, so will your client list. Some clients don't want anything other than a minimum standard, that's free market. That's why there were buyers for a Yugo (remember those tin cans on wheels from the 80's?), but there are also buyers for the Mercedes. One of the hardest things to do is tell a client that you no longer want their business, because you have to go out and market to find new clients. But that's a necessity to grow past drinking milk out of a bottle.

Finally, until the mind set is changed to make appraising a profession once again, rather than a vocation advertised on bad late night TV, things will never change. You would not believe some of the resumes that have come across my desk... 02 a doorman and valet, 03 a "researcher" for an "investment club", 04 took internet correspondence courses to become a registered appraiser while still a valet... can I be your commercial trainee? You've got to be kidding me!!?? Where's the education? Where's any real, real estate experience? Where's your dang spell check button??