Million $$$ Appraisal for $250.....

[Hiker]

Today I was making the rounds and passing out a few business cards to some local mortgage companies and I stopped by one office close to my house on Ray Road. First words out of this guys mouth was "you can't beat my guys turnaround and fees". Hey, how fast you want them I said?. I can have them to you the next day if you need them that fast. Then the price. He tells me he just had his guy do an appraisal on a $940K home for $250. I told him you get what you pay for. Obviously you found an appraiser that needs to feed his family pretty bad. He then goes on and pulls up the appraisal on his computer to prove to me how competent the appraiser is in his work. Well, I got to see your name and if your reading this shame on you for working so cheap.

 

[kim grant]

You know what Gordon, it's supply and demand. Even here in sunny california we are dealing with an oversupply of appraisers in comparison to the available work and the fees come down in response.

Shame on you, you should know this concept well. And, yes, some of us place a high priority in feeding our families.

--Kim

 

[Hiker]

Why would I know this concept well? I don't work for AMC's and I don't work for minimum wage..

 

[kim grant]

Well, if you are analyzing your real estate markets you surely are aquainted with the concept of how supply and demand affects the marketplace?

But then, maybe not, maybe you skip that step. What makes you think that concept would not apply to a business practice?????

 

[Lee Lansford]

First words out of this guys mouth was "you can't beat my guys turnaround and fees".

Is this the arena in which you wish to compete? OK, not you personally, but others are just drooling at the chance to work fast and work cheap.

There will always be SOMEONE willing to do "it" for less money and also do "it" faster. What the client receives is a "fast cheap" appraisal and if the loan is headed for the secondary market...as long as it isn't THAT blatantly bad an appraisal...some investor will purchase the loan. Or, as one "higher-up" in a position of QC once told me: "someone will want to make the loan and will accept the appraisal".

Appraisers, and their appraisals,...for many buyers of appraisal services...are sort of like bushels of wheat...one being pretty much the same as the other. So, why not "cheap and fast"?

 

[kim grant]

I don't know about being charaterized as being "cheap and fast" Lee but I do know that on the level that I work I cannot sit across from a client in a fee negotiation with a straight face and ignore the marketplace -- clearly the client is aware of the oversupply -- they know their market and if I take the attitude of Gordon I look like a fool for not being able to deduce a simple conclusion of the effect supply and demand on my own marketplace-- what kind of appraiser would that make me?

I wouldn't hire me either if that were the case

--Kim

 

[Elliott]

Gordon,
I'm confused....am I understanding you to say he
did a good job, has a fast turn around, but is charging
a low fee?

 

[The Warrior Monk]

I don't know about being charaterized as being "cheap and fast" Lee but I do know that on the level that I work I cannot sit across from a client in a fee negotiation with a straight face and ignore the marketplace -- clearly the client is aware of the oversupply -- they know their market and if I take the attitude of Gordon I look like a fool for not being able to deduce a simple conclusion of the effect supply and demand on my own marketplace-- what kind of appraiser would that make me?

I wouldn't hire me either if that were the case

--Kim

This post assumes that all appraisers and appraisal are created equal...that is not the case.

If you work in certain arenas, say with AMC's, you get what they pay you. For the most part, they simply need a signature and value approval. Quality and fees be damned.

If you work with clients that actual have a need for appraisal services, and you are more competent than the next person, then you can sit across from someone and quote them your fee, regardless of the fact that the less competent person charges less.

----------------------------------------------------------------------

One of my favorite stories relating to this was a few years ago a MB had to order two appraisals for a multimillion-dollar oceanfront property. They chose us because we were the only other appraisers locally on the lender's (a private bank's) approved list. The first appraiser charge $1,000, we charged $2,000.

The MB had a fit, says he never heard of such a high fee, but had no other option on the fee since he had to use us. The the MB gets the reports. He calls us freaking out because the reports have major discrepancies. The other appraiser missed so many obvious things it was ridiculous. My associate calls up the MB and says "now you know why we charge more; you get what you pay for."

 

[Pamela Crowley (Florida)]

IMO, those that will work cheap degrade the appraisal industry - and their work product is most often additional evidence of that degradation.

 

[Doug in NC]

What bothers me is that MANY appraisers don't understand the concept of liability. This factor doesn't seem to figure into their appraisal pricing at all. I suppose appraisers have given in to the lenders' line of thinking that all appraisers and appraisals are basically equal, so why price one more than another.

:excl: Business tip: You appraisers doing $million+ valuations for $250, make sure your E&O policies are up to date.