I'm not surprised..

[Terrel L. Shields]

t seems to me that IF a lender allowed appraisers to charge different fees for the (essentially) same service, they could possibly be creating a compliance issue with respect to disparate impact...

.appraisers never agreed to some 'set' fee..

The rub, of course, is that the various assignments are DIFFERENT. Why should the fee be the same? What house is exactly like the next one? But the fee? It is supposed to be. Yes, in the 90s we charged pretty much one fee for any secondary market report. But most were cookie cutter homes and the few "big" houses or complex properties were negotiable with the client or would be offset by a small easy assignment. Now those "easy" ones are waivered or hybrid and there are only complex, large, or rural properties to appraise...and still expected to do so as some cheap base price

Why does FNMA complain about poor appraisals? THEY CREATED THEM. They suppress fees via the AMC. And the fee is supposed to be the same we charged in 1997. Gee, all these below are supposed to be valued for the same $350 fee...never mind 4 of the 5 are on large 80+ acre tracts and 2 are lake frontage.

 

[djd09]

hey DW...maybe you could give us a birds eye view of how the unethical stakeholders derive fees

 

[CGinMN]

The real issue is the re-disclosure requirement. If that were changed, things would be very different.

"A changed circumstance for purposes of providing a revised estimate and resetting tolerances is... New information specific to the consumer or transaction that the creditor did not rely on when providing the disclosures. (§ 1026.19(e)(3)(iv)(A)(3))"

Therefore if the lender or AMC relies upon a generic fee sheet for all property types in a state or zip code, and the appraiser provides "new information specific to the transaction" such as information related to the required scope of work for the appraisal assignment, then that would trigger a valid changed circumstance for re-disclosure. Correct?

 

[djd09]

All of the materials for which ServiceLink is seeking in camera treatment areconfidential business documents, such that if they were to become part of the publicrecord, ServiceLink would be significantly harmed in its ability to compete as an AMC.For the reasons discussed in this Motion, ServiceLink requests that this Court afford theConfidential Documents in camera treatment for a period of five years. In support of thisMotion, ServiceLink relies on the Declaration of Danny Wiley, ServiceLink’s ChiefValuation Officer (the “Wiley Declaration”), attached as Exhibit C, which providesadditional details on the documents for which ServiceLink is seeking in cameratreatment.

https://www.ftc.gov/system/files/documents/cases/080119nonpartyservicelinkunopposedmotion595420.pdf

 

[alebrewer]

The rub, of course, is that the various assignments are DIFFERENT. Why should the fee be the same? What house is exactly like the next one? But the fee? It is supposed to be.

Again, the issue is disclosures. Appraisers who work for direct engagement lenders will typically agree to a 'set' fee schedule for basic product mix. Most lenders that I'm aware of, however, accommodate the 'difference' in properties via stated upcharges: upcharge for GLA > 4,000', or upcharge for site size > 2 acres for instance. In this way, the production folks can accurately quote the appraisal fee to the borrower (assuming they've done their homework WRT property DNA), and the appraisers are compensated for assignments that are more challenging based on atypical property characteristics.

 

[Terrel L. Shields]

Appraisers who work for direct engagement lenders will typically agree to a 'set' fee schedule for basic product mix.

Maybe. But all my clients are direct engagement. And zero of them ask what the fee is unless it is extremely complex, and I give an inflated estimate so they don't give the borrower a rude surprise, and I have not given them a new price list in years. Basically, they give the borrower a high estimate I think, and then the borrower is happy that it is less. They know I charge reasonable and it's going to be difficult to estimate the work required for some of their unique properties. Rural commercial warehouse building for an online seller. A lakeside mansion on large acreage. 60-acre tract that joins a highway project. And event barn with associated mini-warehouse. Heck, I would not even know how to estimate the time involve on half these properties. Back when I was doing a lot of poultry farms, I had comps, I had data from the integrators and could estimate the fee simply knowing the integrator (Tyson, George, Simmons, et.) and the style barn (broiler, hen, grand-parent stock.) But I'd be clueless now as all my comps are basically kaput and the data is out of date from the integrators.

And when you are trying to charge on the basis of time, it can be the situation where hours are spent finding a truly comparable property for what seems to be a simple building, or you may find that 800-acre ranch has 3 excellent comps nearby. You never know until you parse the data.

 

[alebrewer]

Maybe. But all my clients are direct engagement. And zero of them ask what the fee is unless it is extremely complex, and I give an inflated estimate so they don't give the borrower a rude surprise, and I have not given them a new price list in years. Basically, they give the borrower a high estimate I think, and then the borrower is happy that it is less. They know I charge reasonable and it's going to be difficult to estimate the work required for some of their unique properties. Rural commercial warehouse building for an online seller. A lakeside mansion on large acreage. 60-acre tract that joins a highway project. And event barn with associated mini-warehouse. Heck, I would not even know how to estimate the time involve on half these properties. Back when I was doing a lot of poultry farms, I had comps, I had data from the integrators and could estimate the fee simply knowing the integrator (Tyson, George, Simmons, et.) and the style barn (broiler, hen, grand-parent stock.) But I'd be clueless now as all my comps are basically kaput and the data is out of date from the integrators.

And when you are trying to charge on the basis of time, it can be the situation where hours are spent finding a truly comparable property for what seems to be a simple building, or you may find that 800-acre ranch has 3 excellent comps nearby. You never know until you parse the data.

There is no doubt that residential 2ndary market appraising is WAY different than commercial - at least WRT engagement and fee stability.

 

[Zoe]

It does not add up because, as is typical with forums and blogs, you are only seeing part of the story. Go back to the example I posted with the fixed fee of $650. What the AMC grosses depends on what the appraiser charges, and there are times when the appraiser charges more than $650, and the gross to the AMC is a gross loss. The AMCs accept that because the agreed upon fixed price is designed to produce an average gross of $X. Appraisers are not posting examples where the appraisal fee exceeded the total fee paid to the AMC, but that happens more often than most appraiser would believe.

As you note, if an AMC made an excessive gross on every order, they would not stay in business - because the lender would just seek a lower cost option. The reality is that on most deals they make around $150-$200, on some they make more, and on some they make less, or even take a gross loss, because the losses will be offset by other orders where they make more.

By the way, most appraisers operate in a similar fashion. Most have a set fee that covers 80% to 90% of assignments. Some of those take longer than others, so what we make on each assignment is highly variable. And, sometimes we do something at a lower fee than it really deserves, because the client is a good one that provides us a lot of work.

They don’t all operate the same Danny.

The bank would just charge the borrower what they want to charge the borrower.

 

[Dublin ohio]

Appraisers who work for direct engagement lenders will typically agree to a 'set' fee schedule for basic product mix. Most lenders that I'm aware of, however, accommodate the 'difference' in properties via stated upcharges: upcharge for GLA > 4,000', or upcharge for site size > 2 acres for instance. In this way, the production folks can accurately quote the appraisal fee to the borrower (assuming they've done their homework WRT property DNA), and the appraisers are compensated for assignments that are more challenging based on atypical property characteristics.

I actually have one lender "owned" AMC that does the above. If they miss the upcharge due to bad info. All I have to do is point it out and they add the upcharge

 

[alebrewer]

I actually have one lender "owned" AMC that does the above. If they miss the upcharge due to bad info. All I have to do is point it out and they add the upcharge

Yep - then the under-disclosure is on the lender's production staff for not doing their homework. Only takes a couple of $100 upcharges for folks to start paying attention...