Hybrid

[DWiley]

I would not work for those fees and if enough appraisers do not work for those fees, then the AMC's would be required to pay a higher fee. However, that is a different issue from whether or not USPAP requires the appraiser to complete the property inspection or whether a property inspection is required at all and I suspect that if $150 was being offered for the inspection and $350 was being offered to do the hybrid desktop a lot of the kvetching about alleged USPAP concerns would disappear in an instant

Ultimately, the appraisers in the market place will establish what is (and is not) an acceptable fee for a “hybrid” report. And, based on the collective history of appraisers and their business acumen, there is legitimate reason for some of the fear. History has shown us that many do not make smart pricing decisions. Just look at the current 2055. The great majority of appraisers price a 2055 service at a significant discount off their 1004 fee, even though the difference in required time is pretty minimal (if done correctly).

Just assume for the sake of argument that the GSEs adopt a form that is basically identical to the current 1004/2055, but with modified certs. How much time would be saved by not inspecting subject and comps? And what percentage of the total time does that represent? The math behind all that is not hard or complicated, but I am just not convinced that very many are thinking that through and pricing accordingly.

If the hybrid takes x% of the time that a 1004 takes, my fee would start (start, mind you) at x% * 1004 fee. How many will do that math, and how many will just lower fees to whatever it takes to get the work? That is the big question.

All the USPAP arguments are just red herrings. From day 1, USPAP has never required the appraiser to inspect, only to collect information on relevant characteristics. The USPAP talk is really just camouflaged fee talk.

 

[hastalavista]

Have already played with desktops; it's a given that they can be USPAP compliant.

You, I and many others accept that as a given. Yet the red herring argument (IMNSO) is that they are not.

Whether customers willing to pay for decent quality of research & analysis...that's a horse of a different feather.
I never had the audacity to make offers as low as the AMCs do on a daily basis.
But, then I figure the other side in the negotiation is knowledgeable, so why insult them with offer they literally cannot afford to take?

You hit it the bullseye (IMO). I argue that regulated institutions are required to match the appraisal/valuation product with the risk. If they determine the risk requires "X", then I simply price what they want based on my assessment of what is involved in providing that product (which includes my personal/professional risk assessment).
I really don't care what the opening bid is. I only care where my bid fits within the bid-pool. If my bid is so outside the box that I don't get any takers, my choices are clear:
1. Do I re-valuate my bid? Of course I do...but I have a floor level which I will not drop below. This is a business and as much as I like what I'm doing (and I do) I'm not going to operate at a loss.
2, Do I change my clientele to focus toward clients who are willing to pay for the services I provide? Yes, that's what I do. You don't want to pay for what I think my services are worth? I'm going to have to find clients that do value my work at the same level as I do.

I'm never insulted by an opening bid.
I take personal chagrin if, after I complete an assignment, the client tells me, they don't think they got what they paid for.

 

[Joe Flacco]

If the hybrid takes x% of the time that a 1004 takes, my fee would start (start, mind you) at x% * 1004 fee. How many will do that math, and how many will just lower fees to whatever it takes to get the work? That is the big question.

It is not a big question at all. You are going to end up with everybody that sucks at appraisal accepting whatever fees they can get.

 

[Joe Flacco]

You, I and many others accept that as a given. Yet the red herring argument (IMNSO) is that they are not.



You hit it the bullseye (IMO). I argue that regulated institutions are required to match the appraisal/valuation product with the risk. If they determine the risk requires "X", then I simply price what they want based on my assessment of what is involved in providing that product (which includes my personal/professional risk assessment).
I really don't care what the opening bid is. I only care where my bid fits within the bid-pool. If my bid is so outside the box that I don't get any takers, my choices are clear:
1. Do I re-valuate my bid? Of course I do...but I have a floor level which I will not drop below. This is a business and as much as I like what I'm doing (and I do) I'm not going to operate at a loss.
2, Do I change my clientele to focus toward clients who are willing to pay for the services I provide? Yes, that's what I do. You don't want to pay for what I think my services are worth? I'm going to have to find clients that do value my work at the same level as I do.

I'm never insulted by an opening bid.
I take personal chagrin if, after I complete an assignment, the client tells me, they don't think they got what they paid for.

I am pretty disappointed that you seem to be a big supporter of this effort. Makes me wonder why.

 

[Joe Flacco]

It's pretty funny that everybody supporting the hybrid are people that do not plan on doing any of them.

 

[hastalavista]

I am pretty disappointed that you seem to be a big supporter of this effort. Makes me wonder why.

Ask me any question you'd like; I'd like appreciate the opportunity to clear up any bewilderment.

And I think there is likely a big difference between what you call "acceptance" and what is implied as "endorsement".

Joe-

I incorrectly used the quotations above (and apologize), so let me correct that:

I think there is likely a big difference between what you call "supporter" and what is implied as "endorsement".

 

[Riick]

These hybrids, IMNSHO, are foolish.
They're lending $300,000 bucks, and are concerned about spending $300-$400-$600 on an appraisal?
$600 would be .02%.

These are ROUNDING ERRORS.

The more I actually consider the situation the more I'm convinced that there's something seriously *wrong* with the people at the top. As much as people in investing tell me the differences are always at the margins, were not talking about a quarter or even an eighth of a percent, again, it's in the realm of 2/100 of a percent.

Why are Lenders willing to blow $5,000...$15,000...$40,000...$90,000 rather than spend an extra few hundred dollars. Is someone irrationally angty at appraisers? Makes no sense.

 

[djd09]

And then on the next thread they will cry appraiser shortage. no kidding.

Collect and verify is USPAP.

We will see how borrowers and the State boards deal with incorrect information on the subject property provided by an unlicensed third party inspector hired by the agent of the lender. hahaha

 

[chad hampton]

I'll be sure to post here the first time I ever see one of these hybrid cheap valuation products come across my desk. Maybe they don't send them to be because they know I wouldn't waste my time with them? My 1004 fees have been going up, and I have more work than I can handle. Who has time for a $50 - 1 page piece of garbage?

I'll do about any product anyone wants me to do, I can make things USPAP complaint and add enough disclaimers to make it not worth the paper it's written on. But I have a base fee that has to be included if you want my signature. And it's a lot more than $50.

Again, every few years there seems to be another thing that is out there meant to scare appraisers. Usually spoken loudest by the folks who couldn't cut in in the self employed world. I'll believe it when it happens. Had I listened to the AVM crowd back in 2002, I'd have missed out on somewhere around $2M in appraisal fees these last 16 years.

 

[Eli]

The fat lady ain’t sung yet. She is still sucking on a lemon. Lawyers will be coming out of the woodwork. Already are in Louisiana.