More AMC and PDC Bull$hit

[sputnam]

Its not a joke and it is not soley our own doing. Blaming AMC fee predation ( allowed by lenders since it offers them free of cost service or $ profit return) - blaming it all on appraisers is gaslighting. I say that as a person who, for the last 6 years, did no AMC work, with the exception of one order, lender-owned AMC, which is cost plus - I mainly did complex, high-value orders for them.

It took me years after the HVCC to find enough direct pay clients, and I had to spend a big chunk of personal savings to make it - not all appraisers can do that, and furthermore, they should not have to. While technically it is true that if appraisers do not accept the low fees, they would get paid more, the extreme imbalance between supply and demand due to the AMC structure of a small number of them controlling a large share of the volume makes normal supply and demand seen elsewhere in business not functional.

The better question is, why aren't the lenders paying the AMC a flat fee for the AMC service that is 100% divorced from the appraisal fee, which should go to the appraiser? ( and does go to the appraiser in direct order work ) At most, if the $ is taken from the appraisal fee to compensate the AMC, it should be capped at a reasonable percent, say 15%. If a lender finds an AMC service is worth more they can pay the AMC over and above that.

We've had this discussion before. AMCs and Lenders are not our nannies. The purpose of any company (and that should include appraisers) is to make a profit for the investors. One of the best ways to increase profit is to lower cost. A well managed company will always buy from the least costly vendor that can met their requirements. IF however, vendors don't settle for less, then the buyers pay more.

It is our fault... although at no time did I say 'solely'. I worked inside a very large AMC for a few years. My direct manager used to say..."If every appraiser was charging $500, we would be paying $500."

 

[J Grant]

Oh, so you don't recall that running gunbattle we had over the use of REO resales back when those sales were driving the pricing trend? Or how it's our responsibility to protect the equity positions of people holding properties, or its our responsibility to inhibit the runaway price creep in an increasing market trend?

That's unfortunate, because I remember.

I very well remember the REO debates (most of them were with Res Guy, some of it with you ) And I never, ever advocated for some kind of "stabilized value". I actually think you are confusing what I said with some of what Res Guy said.

What I did say was that we did not need to always use REO sales for an REO appraisal - they often could be the best comps, but not always. ( he said we needed REO sales for an REO appraisal. I never said it was our responsibility to inhibit runaway price creep -

I said the RESULT of MV appraisals would be to stem extreme volatility, either up or down, in the market. s. Look up the definition of MV - it says what the property SHOULD sell for under certain conditions- typically motivated buyers and sellers acting prudently and in their own best interests, well informed and well advised. That result can be different from, or the same as the way buyers in the market behave. If that is not the case, then why does the definition of MV exist as a set of terms and conditions, including the behaviour and motivation of parties?

I reviewed hundreds of appraisals post-crash 2008-2010 and saw the overvaluation tricks, and some appraisals on the low end of REO doing the reverse.

The most probable price is the definition of Market value. That's not my idea; that is what it says. I have stated that the most probable price means whatever fits the property type and trend, rather than some rote midpoint every time.

I can recall the many past arguments and debates over the years. Most of them were interesting. Replaced by political insults creeping into the board, unfortunately, even in appraisal topics.

 

[George Hatch]

Your track record for interpretive re-imagination is a known quantity. I distinctly remember another point in which we disagreed - the benchmark for "typical" when used to identify both the types and motivations of buyers and sellers. You thought that reference was benchmarked to an external and fixed criteria wheras I thought they were benchmarked to the dataset at hand that these buyers and sellers were using to actually make their decisions. Variable depending on market conditions, not fixed and immutable independent of the market conditions.

The point remains that the GSEs are bankers making banking and investment decisions. Not a Central Planning Kommission for the RE markets as a whole.

 

[J Grant]

Your track record for interpretive re-imagination is a known quantity. I distinctly remember another point in which we disagreed - the benchmark for "typical" when used to identify both the types and motivations of buyers and sellers. You thought that reference was benchmarked to an external and fixed criteria wheras I thought they were benchmarked to the dataset at hand that these buyers and sellers were using to actually make their decisions. Variable depending on market conditions, not fixed and immutable independent of the market conditions.

The point remains that the GSEs are bankers making banking and investment decisions. Not a Central Planning Kommission for the RE markets as a whole.

I keep asking you to look up the old posts and link or paste the things you accuse me of saying, because I know if you do that, you will not find it. I believe you interpreted things from the debates as being different from what I actually stated.

I never, ever said that the benchmark for typical (actually, it is typically motivated) was an external and fixed criterion. What I DID say was that in an appraisal, the benchmark for typically motivated is spelled out in the terms and conditions in the MV definition. That is why an MV definition-based appraisal opinion might produce a different $ amount than the raw price.

 

[George Hatch]

I keep asking you to look up the old posts and link or paste the things you accuse me of saying, because I know if you do that, you will not find it. I believe you interpreted things from the debates as being different from what I actually stated.

I never, ever said that the benchmark for typical (actually, it is typically motivated) was an external and fixed criterion. What I DID say was that in an appraisal, the benchmark for typically motivated is spelled out in the terms and conditions in the MV definition. That is why an MV definition-based appraisal opinion might produce a different $ amount than the raw price.

Thank you for affirming my observation. Again. The definition of MV does NOT spell out any arbitrary specifics for what is/isn't typical.

 

[J Grant]

Thank you for affirming my observation. Again. The definition of MV does NOT spell out any arbitrary specifics for what is/isn't typical.

I never said it did. What I did say, is that some appraisers are ignoring the MV definition of typically motivated, such as well-informed and well-advised. And acting in one's own best interest. Is a buyer overpaying by 18% in a bidding war on a mediocre property, acting prudently, well advised, or well informed? Does a bidding war create undue stimuli? These are the issues MV brings up. It is easier not to address them. Which is what the GSEs are doing in value acceptance: they do not perform AMV-based appraisal or MV-based valuation. Problem solved.

They use data analytics as some kind of control it seems on the lender estimates - what does that mean? IDK- other than it works for their purpose. The Fannie statement says the value acceptance $ amount is not the market value of the property.

 

[J Grant]

We've had this discussion before. AMCs and Lenders are not our nannies. The purpose of any company (and that should include appraisers) is to make a profit for the investors. One of the best ways to increase profit is to lower cost. A well managed company will always buy from the least costly vendor that can met their requirements. IF however, vendors don't settle for less, then the buyers pay more.

It is our fault... although at no time did I say 'solely'. I worked inside a very large AMC for a few years. My direct manager used to say..."If every appraiser was charging $500, we would be paying $500."

The AMC is a wholesale buyer of appraisal services - they are not simply looking for a lower cost. They are looking for the lowest cost so they can make a profit over it with the remaining fee split of what the borrower paid

A lender or loan wholesaler on the other hand is a retail buyer of appraisals - their end use is to use the appraisal to UW a loan - the lenders profit comes from making loans,not from up charging on apparsials (which they are not allowed to do - only a third party is allowed to upcharge on the HUD- which is why when a lender owns an AMC, it is a thrid party set up umbrella company with its own name )

 

[George Hatch]

I never said it did. What I did say, is that some appraisers are ignoring the MV definition of typically motivated, such as well-informed and well-advised. And acting in one's own best interest. Is a buyer overpaying by 18% in a bidding war on a mediocre property, acting prudently, well advised, or well informed? Does a bidding war create undue stimuli? These are the issues MV brings up. It is easier not to address them. Which is what the GSEs are doing in value acceptance: they do not perform AMV-based appraisal or MV-based valuation. Problem solved.

They use data analytics as some kind of control it seems on the lender estimates - what does that mean? IDK- other than it works for their purpose. The Fannie statement says the value acceptance $ amount is not the market value of the property.

"typically motivated" compared to what? That's where you and I have always disagreed. If it's even possible for what's typical to vary by property type, by locale, by year or even time of year then that possibility stands as proof of the idea that "typical" is always relational, not fixed.

My previous point stands untouched. Actually, it stands as being reaffirmed.

 

[Tom D]

Back to original post. One of the biggest non AMC lenders has always told me that they hate bi ** appraisal. They said it always took longer, and cost more than them ordering it directly. When fannie said they could go that route, they switched it back to a 1004. They also hated dealing with an AMC when it was bi **. My direct lenders still have no idea about what the 3.6 looks like, or involves. They will go with wavers anytime they can avoid the new 3.6 when it hits them.

 

[George Hatch]

So there you have it. If the appraisal requirements of the GSE pipelines prove too cumbersome for these lenders then some of them might seek their other alternatives.