Let The Borrower Pick The Appraiser

[J Grant]

No; I'll keep the like on your post.
I took your post to mean that no matter what facts I present or logic I use to present them, I should really, really, really stay out of these discussions because it doesn't matter. The argument is all about fees.

Whether you want to say the argument is all about fees or not,, fees are of key importance. Why is that something to be ashamed of, or of no consequence? If our fees are cut by lenders or AMC's, reduced fees drive people ouf of the profession or abandon res for commercial, and in a Darwinian survival of the fittest, the "fittest" are those who can work cheap, fast and do whatever out sourcing of short cutting that accompanies that. It is simply not possible to be so much more "efficient" than other appraisers without shortcuts, despite what some claim.

Why is the model of AMC's or lenders taking a cut of the appraisal fee, which is decimating the profession, defended as a sound paradigm? Especially considering what is at stake for each loan, borrower, and investor in the collateral evaluation that anchors the loan.

The minimum standards aspect has been addressed from Denis's comments on it and my comments on it in response.

I do not argue that AMC's should be eliminated or that they don't deserve to make a profit. I think if there is any interest in keeping res lending appraising a viable profession that attracts and retains good people, lenders should pay for the service of appraisal management to the AMC or customer charge if direct, and stop cutting appraiser fees to subsidize the service,

 

[George Hatch]

Lookit, In the past, when times were good the lenders would pile on staff as employees, and then lay them off when the volumes dropped. It's a demonstration of the fact that when times are good even a dumb and inefficient plan will work whereas the bad times will inevitably weed out the weak plans. Way of the world.

If you think about it, appraisers how were working for the banks back then were actually LESS secure than the fee appraisers because they would lose their sole source of income at exactly the wrong time in the business cycle.

That's why you rarely see appraisers who have worked for one lender for 20 years. Outsourcing the entire appraisal process and everything related to it has worked for the lenders precisely because it converts most of their FIXED expenses into VARIABLE expenses that float with the amount of volume they're doing.

The other reason AMCs exist is to provide the veneer of plausible deniability for the decisions the lenders were making WRT the quality and integrity of the appraisals they were using - the firewall role. Back when Broker Select prevailed the lenders not only didn't have to hassle appraisals, they didn't even have to acknowledge their role in accepting trash - they could just blame it all on the outside brokers. Which is exactly what they did when those deals went bad. So when the feds outlawed broker select the lenders turned to their next best bet in firewalls, the AMCs; which still provide a layer of plausible deniability - albeit to the far lower degree.

The AMCs will either succeed at their role of effectively managing all aspects of the appraisal process or they'll fail at it. As I said, we won't be able to fully judge how much or how little trash they dumped into the pool until the tide recedes to reveal it during this next market correction. If the feds get mad at a bunch of losses that the lenders can - and will - attribute to the AMCs the feds may just strip the AMC gambit from the lenders and force them all into direct engagement. Then you'll be dealing directly with bankers, many of whom will be choosing their appraisers based on fees. Frying Pan > Fire.

IRL, it won't be appraisers complaining to the feds about reduced appraisal fees that run the AMCs out of business because - aside from appraisers - nobody else cares what our fees are except to the extent that everyone already thinks we're already grossly overpaid for what we do. No, if the AMCs do somehow get driven into extinction it will be by their own hand and due to their own failures in effectively performing their firewall role. It won't have anything to do with fee splits.

So don't hold your breath. I haven't seen any indications over the last several years that the AMCs have actually been failing at that firewall role at the catastrophic level. They don't need to be perfect at that, they just need to not totally suck at it.

Our economic well being will rest with how well or how poorly we deal with managing the size of our own herd. As fee appraisers we do not thrive based upon what we're given, but upon what we're able to go out and find.

 

[J Grant]

I
So don't hold your breath. I haven't seen any indications over the last several years that the AMCs have actually been failing at that firewall role at the catastrophic level. They don't need to be perfect at that, they just need to not totally suck at it.
Our economic well being will rest with how well or how poorly we deal with managing the size of our own herd. As fee appraisers we do not thrive based upon what we're given, but upon what we're able to go out and find.

So appraisers's minimum standards have to meet or surpass the rigors of USAP as well as satisfy a plethora of regulatory requirements, their minimum standard is not to totally suck. And yet they are now the gatekeepers of the profession. Anyone else think there is something wrong with that?

 

[djd09]

AMCs = great dividers

There is nothing illegal about a work stoppage. The controllers are nervous. What if the appraiser wakes up.

 

[timd354]

nobody else cares what our fees are except to the extent that everyone already thinks we're already grossly overpaid for what we do

That is what most appraisers don't seem to get

 

[djd09]

Grossly underpaid, right?

 

[J Grant]

That's incredible, if"everyone already" think we are "grossly overpaid".?? What led to that conclusion? Appraisers badly need to pool resources and do some PR /create an information website so that members of the public, RE agents, and anyone else can see the breakdown of what we are paid, the hours that go into it, and what it comes out to. AMC or lenders trying to get us to work as cheap as possible ...I suppose they want people to believe we are grossly overpaid to justify what they do?

I agree that not many outside of our own profession cares what we are paid.

 

[Eli]

That's incredible, if"everyone already" think we are "grossly overpaid".?? What led to that conclusion? Appraisers badly need to pool resources and do some PR /create an information website so that members of the public, RE agents, and anyone else can see the breakdown of what we are paid, the hours that go into it, and what it comes out to. AMC or lenders trying to get us to work as cheap as possible ...I suppose they want people to believe we are grossly overpaid to justify what they do?

I agree that not many outside of our own profession cares what we are paid.

And the sad part is most could do much more credible and reliable work if they were paid more because it would bleed into better education and more TIME spent on the job which would benefit everybody.

Even more sad is how prices have driven some of the best from the business.

I don't have a clue what will happen on the college requirement. I think it will be tweaked to help some highly desired professionals, but I hope it don't disappear when the government wants more and more college degrees for professional occupations even if the government helps pay for the education.

I agree with many that is an economic issue. Public trust? Who cares?

Appraisers.

 

[Terrel L. Shields]

the government wants more and more college degrees for professional occupations

Really, or like appraisers, the profession itself argues for licensing and degrees in the vain illusion that it "improves the profession" which is code word for creating an artificial shortage to drive up fees. We currently have bartenders trying to get the state to license them. Do you honestly think they are doing it to "to protect the public" (it's already illegal to serve someone under the influence), so is bad drink mixing a real problem?

 

[Mike Kennedy]

That's incredible, if"everyone already" think we are "grossly overpaid".?? What led to that conclusion? Appraisers badly need to pool resources and do some PR /create an information website so that members of the public, RE agents, and anyone else can see the breakdown of what we are paid, the hours that go into it, and what it comes out to. AMC or lenders trying to get us to work as cheap as possible ...I suppose they want people to believe we are grossly overpaid to justify what they do?

I agree that not many outside of our own profession cares what we are paid.

What lead to that conclusion are the minnows GLEEFULLY and EAGERLY quoting 2-3 TAT at 1990 appraisal fees which result in many cases in a doubling of their gross earnings compared to their apprentice years........(which often extended beyond the 2 year licensing period). Why? their former dupervisors paid them a pittance per inspection/report. To the newly and recently fully licensed and/or certifieds - $200-300 bucks a shot sure beats the hell out of $50-100. Plain and simple - as long as appraisers CHOMP AT THE BIT for fees UNDER 400-500. - lenders and their agents will gladly keep them churning and burning at HALF fee (unadjusted for inflation vs say 1995). Lenders who exclaim "they are overpaid" direct those comments at the Field Appraisers who quote, and sometimes get, $400-500 depending on market location and appraiser-populations in their local markets.