Appraising is like a minimum wage job.

[George Hatch]

Okay, so you think there won't ever be a market among any of the direct lenders for such a hands-free bidding system. No possibility of a MercuryPlus. No RIMS-Advantage. Appraisers can completely disregard the potential effect of a more transparent marketplace for appraisal services.

Problem solved, right?

 

[J Grant]

Okay, so you think there won't ever be a market among any of the direct lenders for such a hands-free bidding system. No possibility of a MercuryPlus. No RIMS-Advantage. Appraisers can completely disregard the potential effect of a more transparent marketplace for appraisal services.

Problem solved, right?

In my opinion, there would not be a market for it with lenders for use in GSE noncomplex loans, but it could be a need or want for the app for non-GSE loans and commercial orders.- though they already have plenty of tech and methods for soliciting bids. A lender and an AMC both have plenty of means to obtain bids or quotes quickly. A lender who uses C and R for their normal work will ask for bids on a high-value or complex order, which they usually get fulfilled within a few hours - but if anyone wants to try to sell a real-time or live bid app to them, go for it.

 

[Zoe]

Okay, so you think there won't ever be a market among any of the direct lenders for such a hands-free bidding system. No possibility of a MercuryPlus. No RIMS-Advantage. Appraisers can completely disregard the potential effect of a more transparent marketplace for appraisal services.

Problem solved, right?

I agree, but I am telling you point blank George, it would create intense competition between AMCs if fees were separated on truth in lending disclosures. It would be way worse than competition that exist between appraisers due to market power on price which is a direct result of market structure that AMCs created.

That is also why I tell appraisers they should try to find a lender client that will engage them directly or any other client that will engage them directly with no AMCs involved.

Market structure power is created when the market structure allows the buyer or seller to have market power on price.

If AMC fees were separated on truth in lending disclosures, it would create huge competition on price between AMCs. It would change the whole market structure.

 

[Zoe]

In my opinion, there would not be a market for it with lenders for use in GSE noncomplex loans, but it could be a need or want for the app for non-GSE loans and commercial orders.- though they already have plenty of tech and methods for soliciting bids. A lender and an AMC both have plenty of means to obtain bids or quotes quickly. A lender who uses C and R for their normal work will ask for bids on a high-value or complex order, which they usually get fulfilled within a few hours - but if anyone wants to try to sell a real-time or live bid app to them, go for it.

Okay, but that market structure is different from the AMC/APPRAISER market structure.

Like you say, Lender would have to absorb costs to employ the app you refer to if all fees were separated on truth in lending disclosures.

There would be competition between the apps if it were disclosed on truth in lending disclosures. It is market structure.

 

[Zoe]

Let's just stay with fastest and cheapest protocol. Watch what happens.

Market structure is at heart of the problem. That law on separation of fees on truth in lending disclosures did not get changed at last minute due to honest people.

 

[J Grant]

Lenders and AMCs;s have a different agendas wrt appraisals (or other forms of valuations)

Whether they engage an AMC or not, the lender uses the appraisal as part of the loan approval package. The borrower covers the appraisal fee, the amount of the fee just needs to be similar to what others are charging ( C and R) - lender typically uses a yearly C and R survey and bases the fee for their panel in a region on it, for simplicity's sake in quoting to borrowers ( for regular noncomplex orders)

The AMC does not use the appraisal to make a loan. It is not an end user for an appraisal; it manages the process and, in a unique twist, does not charge the customer (a lender or bank); instead, the AMC gets compensated from a split of the borrower-paid fee that the lender passes to them. The AMC has a tremendous incentive to get a low $ bid or fee on each order because that split of the borrower-paid appraisal fee is what compensates the AMC

While lenders want to keep costs down, they already have appraisal-related costs under control. Their problem is lack of loan volume, and their interest is expanding the number of loans they can make. Come up with an app that helps them expand their loan business, and they'll be all over it.

 

[Terrel L. Shields]

(from Fannie) "Lenders must use appraisers that

1. have the requisite knowledge required to perform a professional quality appraisal for the specifi geographic location and particular property type; and
2. have the requisite knowledge about, and access to, the necessary and appropriate data sources for th area in which the appraisal assignment is located.
3. must ensure that an appraiser has demonstrated the ability to perform high-quality appraisals before using an appraiser’s services. The quality of an appraiser’s work is a key criterion that must be used in determining which appraiser the lender (or its authorized agent) uses for its assignments. The requirement for an appraiser to produce a high-quality work product must always outweigh fee or turnaround time considerations

Appraisers that are not familiar with specific real estate markets may not have adequate information available
to perform a reliable appraisal. Although the Uniform Standards of Professional Appraisal Practice (USPAP)
allows an appraiser that does not have the appropriate knowledge and experience to accept an appraisal
assignment by providing procedures with which the appraiser can complete the assignment, Fannie Mae does
not allow the USPAP flexibility."
And AMCs NEVER LET QUALITY OUTWEIGH FEE AND TURN TIME.

You keep lumping AMC's and lenders together,

Lenders are responsible for the actions of the AMC - in theory, of course...

 

[Zoe]

FTR, that's also a bold faced lie. WRT C&R I have always said the feds came down on the wrong side of that debate and that they should go back to the original intent of C&R. What I haven't done is mindlessly assume that C&R itself will result in a benchmark that is completely isolated from the effects of competition in the market. You also need to stop saying I'm somehow happy about appraisers getting starved for fees because that's an outright lie, too. Just because I can see it doesn't mean I advocate for it or am happy about it.

Your reimagination game is not serving you well. .

I have told you Sir time and time again if appraisal fees were separated on truth in lending disclosures it would drive almost all AMCs out of business.

The reason?

Let me answer: Competition between AMCs.

 

[Zoe]

@DWiley worked for an AMC I worked for a long time.

He knows what I am saying is true if fees were separated between AMC and APPRAISER on truth in lending disclosures.

The reason is because if fees were separated,................. it would change the whole market structure.

How did the separation of fees rule get changed at last minute?

Too confusing perhaps to borrowers? Cough...........Cough..........Cough........

 

[Zoe]

George you don't want to play me Sir.