Customary and reasonable fees - 90 days

[Mike Kennedy]

C&R non-AMC Fees began July 22, 2010 - NOT 90 days after

The big issue is how the regulators will set the fees. Plus, what fees will be set? Drivebys, desktop appraisals, high end homes, etc.

Here is a quote below from yesterday's email sent by me to 14,000 appraisers. Looks like some appraisers posting here didn't receive the email or understand the 90 day period to set regulations. It can't be enforced now. If you want to check it out yourself, read that section of the act, including implementation.
--------------------------------
Reasonable and customary fees

Here’s what is in the new law:
"Lenders and their agents shall compensate fee appraisers at a rate that is customary and reasonable for appraisal services performed in the market area of the property being appraised. Evidence for such fees may be established by objective third-party information, such as government agency fee schedules, academic studies, and independent private sector surveys. Fee studies shall exclude assignments ordered by known appraisal management companies."

My comments
No one has any idea what will happen. Implementation is scheduled within 90 days. I spoke today with Bob Clark of the California Office of Real Estate Appraisers about enforcement. He is waiting to find out what is happening also. We’re all waiting for something to happen.

There may be some changes already. This week I received a relocation appraisal order that said “We do not dictate fees however we ask that you charge what is typical and customary for the scope of work within your area.”

Ann O'Rourke

Good Article Dave Towne - thank you.

http://appraisalnewsonline.typepad....fees-applicable-to-appraisal-assignments.html

 

[Elliott]

I thought "Praiser" had some perceptive comments:

"I truly believe the AMC's will find a way to keep sticking it to appraisers. At this point no AMC that I am working with is saying anything. My practice continues to sink and the AMC'a are expanding and making millions of dollars for really doing nothing. They cant read the report, keep switching up the state representatives, and work from the standpoint of the appraiser not being able to communicate with similar peers. The business model is to drive down prices, have as many appraisers working against each other as possible, and basically ripping you off.

"I had the president of Equifax tell me that appraisers were out-of-control, overcharging the general public and needed his firm arm of control with regard to management.


Its always interesting to hear title company types carp about appraiser fees when
they are part of the insurance industry that are pleased as punch about their
regulator fee system based on a couple regulators 'setting' their based on costs,
which have declined considerably because of technology and none of that saving
has been passed along to consumers. Title insurance is one of the biggest rip offs
in America.

 

[Caligirl]

"I truly believe the AMC's will find a way to keep sticking it to appraisers. At this point no AMC that I am working with is saying anything. My practice continues to sink and the AMC'a are expanding and making millions of dollars for really doing nothing. They cant read the report, keep switching up the state representatives, and work from the standpoint of the appraiser not being able to communicate with similar peers. The business model is to drive down prices, have as many appraisers working against each other as possible, and basically ripping you off.

The business model is to drive down fees paid to appraisers. There has been no 'savings' of any kind passed to the consumer, who are still paying what comprises a 'full fee' for both the appraisal and the 'services' of the AMC.

 

[Non Sequitur]

My guess as to how the "reasonable and customary" issue will work out. The AMCs will allow appraisers to hang themsleves. In most markets the competition is so fierce all that has to be done is broadcast a "potential" assignment with a request for TAT and fee. I'll bet more times than not the fee quoted will be in the same range as it is now. The industry has to many trainees, fee shop "puppy mills", part timers and appraisers who don't know how to ask for a "reasonable and customary" fee. It only takes one ding-dong to quote $175.

The AMCs aren't just going to give up and roll over. They can't go from skimming $200-$300 per order to a small managemnt fee per order and will find a way to keep the profits coming in.

 

[Elliott]

No oligopoly or oligopsony has ever relinquished its pricing power without a
court order. AMCs aren't altruistic or good Samaritans, they are greedy and
opportunistic.

 

[Non Sequitur]

No oligopoly or oligopsony has ever relinquished its pricing power without a court order.

I agree and only a few are finally speaking up as to what the other 19.99 pages dealing with appraisers/appraisal issues may or may not mean. We were blinded by the fee issue and may have positioned the industry for serious changes.

 

[Caligirl]

The entire concept of setting fees boggles my mind. Can you imagine the government getting involved with setting other fees which are supposed to be based on the complexity of a particular job? Say, setting the fee for all builders for 'a kitchen remodel' based on a range of what other contractors reported for other jobs, as opposed to the individual contractor basing their fee on the particular job at hand.

 

[KenAZ]

The entire concept of setting fees boggles my mind. Can you imagine the government getting involved with setting other fees which are supposed to be based on the complexity of a particular job? Say, setting the fee for all builders for 'a kitchen remodel' based on a range of what other contractors reported for other jobs, as opposed to the individual contractor basing their fee on the particular job at hand.

Before HVCC, there was no need to regulate fees. When an Oligopoly is created, then the government has to step in. A monopoly or oligopily is not free market, and they always have to be regulated. If goverment never stepped in, then just about all land in the USA would now be owned by the railroads and phone long distance charges would be $5 per minute for land lines.

The problem was the definition. People were paying reasonable and customary fees for appraisals. This was getting skimmed by non-appraiser AMC's that we did not even like or want to use. The new law does not set the fees, all it does is mandate that this oligopoly pay the same as those that are not paid by an oligopoly.

The other option would have been to either just outlaw AMC's, or force them to divide into hundreds of smaller AMC's that would have to compete with each other. (Just like what happened to the phone companies)

 

[NC Appraising]

The entire concept of setting fees boggles my mind. Can you imagine the government getting involved with setting other fees which are supposed to be based on the complexity of a particular job? Say, setting the fee for all builders for 'a kitchen remodel' based on a range of what other contractors reported for other jobs, as opposed to the individual contractor basing their fee on the particular job at hand.

First, yes to what Ken said: "When an Oligopoly is created". It's a different ballgame now, with mostly inexperienced NEWBIES at the driving wheel.

Can you please quote where it says that the lender or government will set the fee's or that every fee will be the same for every assignment?


I currently have some lenders that pay me $300 per report, and some that pay me $400 a report. Do you really think that they both will have to pay me what $325?

Both lenders are paying me "customary and reasonable fees".

Do you really believe that the same "customary and reasonable" fee will apply to a 100K home in a cookie cutter subdivision and a million lake front home? No.



Finally, lets be frank, and I'll be reasonable. 80% of the appraisal fees that I have surveyed or came across in the past 5 years have averaged $325.00. It's no big secret. I think it's safe to say before the HVCC most clients just sent over an order for 325-375, and we took it 90% of the time. Everyone knew what we charged.


Want some SURVEYS, HERE YOU GO AMC's:

http://www.ourfamilyplace.com/homebuyer/appraisal.html
http://www.mortgagenewsdaily.com/3162005_Home_Appraisal.asp
*** http://www.dslreports.com/forum/r21590010-Average-Real-Estate-Appraisal-Cost ******

http://library.hsh.com/read_article-hsh.asp?row_id=34
In June 2006, 79% of the lenders in our survey charged an up-front appraisal fee. The average amount charged was $331.
In June 2005, 75.7% of lenders surveyed charged an appraisal fee. The average amount charged was $318.
In December 2004, 78% of lenders surveyed charged an appraisal fee. The average amount charged was $315.
In June 2004, 77% of lenders surveyed charged an appraisal fee. The average amount charged was $314.
In December 2003, 81.1% of lenders surveyed charged an appraisal fee. The average amount charged was $310.
In June 2003, 85.4% of lenders surveyed charged an appraisal fee. The average amount charged was $309.
In September 2002, 81.4% of lenders surveyed charged an appraisal fee. The average amount charged was $309.
In February 2002, 80.6% of lenders surveyed this fee; the average amount was $310.
In September 2001, 86.1% of lenders surveyed this fee; the average amount was $312.
In September 2000, 81.4% of lenders charged this fee; the average amount was $305.


http://www.federalreserve.gov/pubs/settlement/default.htm
Appraisal fee
Lenders want to be sure that the purchased property is worth at least as much as the loan amount. An appraisal pays for a determination of the value of the home and lot you want to purchase or refinance. Some lenders and brokers include the appraisal fee in the application fee; you can ask the lender for a copy of the appraisal. If you are refinancing and have a recent appraisal of the property, some lenders may waive the requirement for a new appraisal.
Estimated cost: $263 to $444
Median cost: $292

 

[Joyce Potts]

Haven't had a chance to read through this thread, but has this been posted?

The person who forwarded this to me suggests appraisers have been led to the slaughter house with no real exit.

Thanks a lot Temple Grandin!

http://www.globalresearch.ca/index.php?context=VA&aid=20422