Hidden home appraisal middlemen have cost homebuyers $12 billion

[J Grant]

Because, had the lender gone directly to the appraiser for that same service, it would have cost them... wait for it... $200. The fact that the AMC took $300 doesn't change the report that the appraiser delivered.

??
It does not COST the lender a cent for an appraisal because the borrower covers the appraisal fee ( typically for lender work )


The borrower covers the appraisal fee; for example, they write a check for $500 to the lender for the appraisal; the borrower covers the cost of the appraisal.

A). If a lender assigns directly, the lender pays the appraiser $500, but the appraisal did not COST the lender anything
B) The lender uses an AMC, and the lender paid the AMC $500, but the appraisal did not COST the lender anything. The AMC kept $300 and found an appraiser vendor to do it for $200

 

[George Hatch]

I should have realized it out sooner, but the ASC tracks these numbers by status, same as they do for appraisers.

https://ASC.gov/AMC/advancedsearch#credentials

 

[alebrewer]

??
It does not COST the lender a cent for an appraisal because the borrower covers the appraisal fee ( typically for lender work )


The borrower covers the appraisal fee; for example, they write a check for $500 to the lender for the appraisal; the borrower covers the cost of the appraisal.

A). If a lender assigns directly, the lender pays the appraiser $500, but the appraisal did not COST the lender anything
B) The lender uses an AMC, and the lender paid the AMC $500, but the appraisal did not COST the lender anything. The AMC kept $300 and found an appraiser vendor to do it for $200

You're missing the point entirely. The point was that - if the appraisal provided by the $200 appraiser is sufficient to meet their needs, then they could have engaged that appraiser directly for $200. Try to get past who is paying for it for a moment. And IF they (whoever it is) paid $500 for a $200 appraisal, then the borrower got screwed because they paid $500 for a $200 appraisal - which the lender determined was sufficient for their needs.

To your (a) point: if the lender assigns directly, they can pay whatever fee they and the appraiser agree to - maybe its $500, maybe it's $350 (as is the case with several lenders I know who do direct engagement).

 

[J Grant]

Maybe so. In the meantime, the number of active AMCs, of which is alleged that a "handful control the market" is a fact which exists IRL somewhere, even if we don't yet know the number.

Let me ask you to exercise some critical thinking: If a lender offers 10 appraisers a substandard fee and all 10 of them reject it, do you think that is an example of those appraisers manipulating the market? Do you think that's an example of collusion or conspiracy? Or is there perhaps an alternate explanation that they are all well informed "sellers" in the market for appraisal services? That their familiarity with the market includes being well informed about the availability of other assignments with more competitive fees?

Because in that hypothetical 100% of them all made the same decision. Now you and I both know an agressive AMC won't just stop at shopping 10 competing vendors. They'll expand their blast to 50 appraisers in the hopes of landing that "one special seller + one special buyer" (aka the one special AMC + one special appraiser).

And the main reason they're able to make their deal is because the internet has enabled them to pit appraisers against each other in the unrelenting competition for their assignments.

Running late on real work lol -

But a LENDER does not offer 0 appeasers a sub standard fee. Lenders are regulated by C and R and they typically offer a standard fee

However, if in your example, all 10 reject it, the appraiser are not manipulating th market, the appriaers are trying to get the fee they want or need.

An AMC can manipulate because the AMC has, for example, 800 appraisal orders a month in a region and has 40 appraisers on their panel, and the AMC will assign the vast majority of the orders only to the 10 appraisers on the panel who give them the lowest fees. The AMC will not unless there is some surge in orders of the other 30 appraised drop dead all at once, the AMC will not assign orders outside of the 10 lower fees on the panel.

 

[J Grant]

You're missing the point entirely. The point was that - if the appraisal provided by the $200 appraiser is sufficient to meet their needs, then they could have engaged that appraiser directly for $200. Try to get past who is paying for it for a moment. And IF they (whoever it is) paid $500 for a $200 appraisal, then the borrower got screwed because they paid $500 for a $200 appraisal - which the lender determined was sufficient for their needs.

To your (a) point: if the lender assigns directly, they can pay whatever fee they and the appraiser agree to - maybe its $500, maybe it's $350 (as is the case with several lenders I know who do direct engagement).

You have no point; as others have commented; engaging with you is a quicksand of nonsense going around in a circle. Sorry to be blunt but I have to get out of the quicksand and do paying work-

 

[George Hatch]

Running late on real work lol -

But a LENDER does not offer 0 appeasers a sub standard fee. Lenders are regulated by C and R and they typically offer a standard fee

However, if in your example, all 10 reject it, the appraiser are not manipulating th market, the appriaers are trying to get the fee they want or need.

An AMC can manipulate because the AMC has, for example, 800 appraisal orders a month in a region and has 40 appraisers on their panel, and the AMC will assign the vast majority of the orders only to the 10 appraisers on the panel who give them the lowest fees. The AMC will not unless there is some surge in orders of the other 30 appraised drop dead all at once, the AMC will not assign orders outside of the 10 lower fees on the panel.

My bad, I should have realized you'd leach onto "lender" as if it makes any difference. No matter. The concept, application and answer all remain the same when it's an AMC blasting the 10 appraisers with the substandard fee. The AMC is still the buyer and the appraisers are still the sellers.
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Anyways and in response to the rest:

So the market participants who are exercising their alternatives are NOT colluding with each other or manipulating the market. They're just acting in their own best interests.

 

[alebrewer]

Sorry to be blunt but I have to get out of the quicksand and do paying work-

If you were sorry to be blunt - you wouldn't have been. Have no fear, though, there is never a need for apology from you, J. I know what to expect when I engage you.

 

[George Hatch]

If you were sorry to be blunt - you wouldn't have been. Have no fear, though, there is never a need for apology from you, J. I know what to expect when I engage you.

You're lucky she didn't accuse you of being anti-appraiser.

 

[Joyce Potts]

I think its bad practice to give an AMC $1000 and go find the cheapest appraiser possible, even if it takes weeks so you, the AMC, can make $800. It is not a good incentive system for anyone but the middleman.

It a free market. It may be bad practice from a moral standpoint, but it's a highly feasible, legal business practice. Until the actual numbers are published as to the average/median AMC vs. Appraiser fee nationwide, all of these speculations about the percentage breakdowns are just that. Speculation.

 

[Joyce Potts]

We would be complaining because the consumer is getting screwed. The appraisers are getting screwed. The rich get richer. If we were unified we could have a massive class action lawsuit against all AMCs and recoup our substantial losses.

What have you done for the industry? When is the last time you put you neck out there for all appraisers? When have you exposed the gouging of the consumer? Met with CFPB, senators, congressman, and Chopra? You haven't. ARCC has. ARCC stands for Appraisal Regulation Compliance Council. It is a great group of like minded individuals who are fighting for the consumer and the profession.

https://appraisersforum.com/forums/threads/appraisal-regulation-compliance-council.238567/​

Lets not forget that the opportunity for the fee breakdown on the closing statement came and went with TRID. Next.