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Lowest bidder appraisal users

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Willie

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Senior Member
Joined
May 30, 2002
Professional Status
Certified General Appraiser
State
Tennessee
I was reading in a forum discussing military equipment when I stumbled across this:

"""It's like my Vietnam veteran neighbor says his Sargent used to tell him "Remember thick [email protected]@k, your betting your life on equipment made by the lowest bidder!" """

While I never have served in our nation's armed forces, I know exactly what he's saying. I couldn't help but see parallels and think of some of the largest banks and mortgage lenders in the nation betting their mortgage business on appraisals made by the lowest bidder. So often the lowest bidder is the least experienced and least skilled appraiser, but they often get large volumes because of their low bid work.

I wonder how long it will take our AMC management forum crowd to come in and tell us "cost of appraisal has nothing to do with quality"? It really does. To me, I'd prefer self contained reports and 4 figure fees on residential work, but it will not ever happen with regularity.
 
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Lawrence R.

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Mar 27, 2007
Professional Status
Certified General Appraiser
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South Carolina
Cheap ain't good and good ain't cheap. That's how my crazy Uncle Shannon used to say it.

They want appraisals to be commodities, like toilet paper.

Problem is, the aren't getting the product new....:rof:

And as far as the cost argument, emperically they are true. I could do an outstanding job on an appriasal and do it for free.

But I can 't do all of them that way all day long. No professional will.
 
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Terrel L. Shields

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May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
I believe the lack of compensation is one of the major reasons so many appraisers do sloppy work. Further, I don't think it is so much a product of deliberately flawed or inflated work for the sake of pandering to the clients direct requests. The pressure results in a sort of Pavlov's Dog system of payment/training. The appraiser trainee is conditioned to slobber when the bell rings..And the more bells you can ring in one day, the better the food. If the appraiser can survive on $250 a day and can do 4 appraisals a day, then the AMC need not provide him more than $80 or so per report to net him that amount over gas and expenses. And, offering low pay insures the reports are completed quicker, too. A win win for them. Quality was never a consideration.
The appraiser in order to perform at that level consistently attempts to pre-empt the UW's unreasonable demands by insuring the comparables chosen brackets EACH OTHER rather than the subject. The valuation thereof is a secondary consideration except that the harried appraiser will choose the 3 most similar comps that will insure the target price is hit or the valuation is high to reassure the lender they have plenty of equity in the loan and avoid those nasty confrontations over "you ought refund the lenders money....call if you cannot get the value...add a fourth comp.."
 

George W Dodd

Senior Member
Joined
Jul 9, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
Follow the money. Who owns the AMC's? Mostly they are held by Banks or Title Companies looking to increase profit without concern for risk - just like the loans they were making.
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
Company called wife, wanted her to do a 5300 SF home on acreage with barns, etc, for $160. What part of NO don't they understand?
 

TC

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Jan 31, 2002
Professional Status
Certified Residential Appraiser
State
Pennsylvania
When reporters asked Astronaut Alan Shepard what he thought about as he sat atop the Redstone rocket, waiting for liftoff, he had replied, 'The fact that every part of this ship was built by the low bidder.'"


TC
 

Ray Miller

Elite Member
Joined
Feb 20, 2002
Professional Status
Licensed Appraiser
State
Wisconsin
I believe the lack of compensation is one of the major reasons so many appraisers do sloppy work. Further, I don't think it is so much a product of deliberately flawed or inflated work for the sake of pandering to the clients direct requests. The pressure results in a sort of Pavlov's Dog system of payment/training. The appraiser trainee is conditioned to slobber when the bell rings..And the more bells you can ring in one day, the better the food. If the appraiser can survive on $250 a day and can do 4 appraisals a day, then the AMC need not provide him more than $80 or so per report to net him that amount over gas and expenses. And, offering low pay insures the reports are completed quicker, too. A win win for them. Quality was never a consideration.
The appraiser in order to perform at that level consistently attempts to pre-empt the UW's unreasonable demands by insuring the comparables chosen brackets EACH OTHER rather than the subject. The valuation thereof is a secondary consideration except that the harried appraiser will choose the 3 most similar comps that will insure the target price is hit or the valuation is high to reassure the lender they have plenty of equity in the loan and avoid those nasty confrontations over "you ought refund the lenders money....call if you cannot get the value...add a fourth comp.."


Well Said.

I don't think it will ever change, does any one?
 

Bama Bayou

Senior Member
Joined
Oct 19, 2006
Professional Status
Certified General Appraiser
State
Alabama
I think some lenders are starting to look at quality. I got a job today for a narrative on a condo, and not an expensive one. $1200 and they would like it within two weeks. Large bank that owns an AMC. I bid on this job and me thinks that I may have been the only one who responded. I have not done any work for this bank since they went the AMC route, which was about five years ago. They used to be a good client. Curious, no?
 

leelansford

Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
If a licensed appraiser elects to compete in the arena where the lowest fee and the fastest turn-around time are most important to the client, the appraiser will never leave that merry-go-round.
 

Claude From NY

Senior Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
New York
it's a bad process

I have alway though that there was a disservice being perpetrated on the lender/client with this process.

Don't think we are the only ones, writers have the same problem. All you have to do is replace writer with appraiser in the article below.

"A process in which quality, service and professionalism are trumped by 'lowest bidder gets the work' is bad for everyone involved and must surely be reflected in the process and final product."

http://www.writersdigest.com/articles/strait_bidding_war.asp
 
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