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Cost Plus Model?

Are you in favor of a cost plus model in market structure on real estate appraisal services?


  • Total voters
    21
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Eli

Elite Member
Joined
May 12, 2007
Professional Status
Certified General Appraiser
State
Tennessee
Are you in favor of a cost plus model in market structure on real estate appraisal services?

And why?
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
Mortgage Loan Consumers have been deluded into believing the "appraisal fee" they pay is actually paid to the Appraiser who appraises their existing home or potential new purchase.

Estate Appraisal Fee is paid by the Estate via representative directly to the Appraiser.
Trust Appraisal Fee same as above.
Divorce Appraisal Fee same.
Pre-Listing Appraisal Fee paid by owner direct - ditto.
Asset Management Appraisal Fee, double ditto.
10-20 years ago - Res. Mortgage appraisal fee either paid directly by owner or by lender - 90-100% paid to Appraiser.

Flash forward 2008 >>> no longer the case.
 
Last edited:

timd354

Elite Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
Are you in favor of a cost plus model in market structure on real estate appraisal services?

And why?
I voted yes but am under no delusion that the adoption of a cost-plus model will lead to higher fees for appraisers. Like it not, most borrowers could not care less whether appraisers are paid well and only care about which lender is offering the best combination of the lowest interest rate and lowest total fees.
 
Last edited:

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
I voted yes but am under no delusion that the adoption of a cost-plus model will lead to higher fees for appraisers. Like it not, most borrowers could less less whether appraisers are paid well and only care about which lender is offering the best combination of the lowest interest rate and lowest total fees.

I'll take my chances with borrowers vs the AMC fee split model. .

pre HVCC ( change to volume ordering shift to AMC 's ) borrowers had no problem paying what C and R was at the time. Though borrowers want a fair charge, they do not have the powerful incentive to drive down fees to lowest levels since they do not profit from those fees,. Borrowers as a diverse group also lack the consolidated focus to obtain lowest fees.
 
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Reactions: Eli

Eli

Elite Member
Joined
May 12, 2007
Professional Status
Certified General Appraiser
State
Tennessee
A cost plus would force separation of fees. Everybody says they are in favor of that, but are they really?
 

Bobby Bucks

Elite Member
Joined
Jan 27, 2002
Professional Status
Real Estate Agent or Broker
State
North Dakota
Like it not, most borrowers could less less whether appraisers are paid well and only care about which lender is offering the best combination of the lowest interest rate and lowest total fees.
I totally agree, I've never heard of a borrower asking what percent of the fee the appraiser got which is listed on the HUD 1 statement. :)
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
I totally agree, I've never heard of a borrower asking if the appraiser got 100% of the fee listed on the HUD 1 statement. :)

Actually, borrowers often ask me to reveal "my" fee, and seem puzzled by the overall fee they are paying..they are aware something is "off" , but cant' identify it ( the whole point of the deception). When appraisal fees are separated out by law on the appraisal it is already too late...AFTER the borrower has written their check at application, what are they going to do about it now?

The blending of the fees allows for a lot of manipulation and profit diversion on the AMC/lender side, which is the very reason they do not take steps to change it to cost plus.

I am not under the illusion borrower's main goal in life is seeing appraisers get paid high fees. However, most borrowers are decent people, they may be distrustful of bank/lender integrity ( Wells Fargo recent scandal credit card fraud, the banks' history in the housing market debacle) and I believe most borrowers, if they were fully informed about fee splits and the importance they play in selection of apprisaer (lower fees) and where their money goes, would rather see fees separated out, and a reasonable fee paid to appraiser so they could do a good job, rather than a chunk paid into the ether of management and a low fee paid to an rushing, pumping out volume low bid appraiser being the chosen professional for their most important asset purchase or loan.
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
Every player I know who is in some decision-making capacity with an AMC is in favor of the cost plus model.
It has no downsides as far as an operational or business model.

The current regulatory model makes it nearly impossible to achieve for transactions covered under TRID and Dodd-Frank.

When C&R was first proposed, anyone with a long enough memory will recall that I posted exhaustively on why a cost plus model would be ideal.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
D-"The current regulatory model makes it nearly impossible to achieve for transactions covered under TRID and Dodd-Frank."

In your view , why? (good post btw)
 
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