No College Degree for Cert Generals or Residential Appraisers

[Fernando]

Your bad then.

I never cut my fee to compete by undercutting, which was $275 in those days. Most appraisers did not need to cut their fees to compete. The mortgage brokers had the borrower pay for the appraisal so unless the mortgage brokers you worked with were crooks and keeping the $50, why did they care?

What you did is on you, becaue appraisers did not have to cut their fee back then to get work. I never had a mortgage broker ask me to lower my fee and I was not desperate or sleazy enough to lower it to get business. (Were your mortgage broker clients keeping the $50 discount ?) Or did their borrowers pay less for an appraisal?

Back then, if a mortgage broker wanted to compete by reducing fees to a borrower, it was common for the mortgage lender as a loss leader (advertise free appraisal! ) and they would cover the cost of an appraisal. No need for the appraiser to lower their meager $275 fee. The mortgage brokers made thousands and tens of thousands of $ per loan and could easily cover it.

Even the worst mortgage brokers back then that I ever dealt with or any of my appraiser colleagues dealt with were not keeping part of an appraisal fee.

The AMC;s do not shop appraisers by price, the AMCs;s shop by which appraiser offers the lowest bid / low fee returns the most profit to the AMC from the split of the lender pass-through payment made by the borrower for the appraisal. A legal form of pay-to-play. The appraiser who offers an AMC the most kickback via the lower fee from the split gets the work.

I admit when I started appraising and needed to get more work, I gave a $50 "referral fee" back to the mortgage broker.
The mortgage broker specifically told his loan agents to use me.
When I got established and had more mortgage brokers to work with, I told the mortgage broker no more referral fee to him personally thinking he and his office were satisfied with my appraisals.
After that, I got no more appraisal assignments from his office.

 

[George Hatch]

To clarify, post HVCC it is not simply that the demand narrowed from 5000 individual loan officers ordering to 200 AMCs ordering a large portion of the volume. The difference is the AMC;s were not simply shopping by cost, they were shopping by profit back to themselves since their compensation comes from how little they can pay an appraiser.

That is a stark difference to how mortgage brokers or direct order lenders shop, which is by C and R fee, since the lender is not keeping a split as profit ( since they are not a third party). Even the worst of the mortgage brokers pre-HVCC did not keep a portion of the appraisal fee.

The above figures are for example purposes. I am aware that a portion of loans are ordered by lenders or wholesalers with no AMC , but the discussion centers on AMC's on these posts.

Your shopping by cost and not profit is as circular as your price vs value pretzel.

Regardless what label you are using the bottom line is the bottom line. At the lender, at the AMC, at the fee appraiser.

 

[glenn walker]

To clarify, post HVCC it is not simply that the demand narrowed from 5000 individual loan officers ordering to 200 AMCs ordering a large portion of the volume. The difference is the AMC;s were not simply shopping by cost, they were shopping by profit back to themselves since their compensation comes from how little they can pay an appraiser.

That is a stark difference to how mortgage brokers or direct order lenders shop, which is by C and R fee, since the lender is not keeping a split as profit ( since they are not a third party). Even the worst of the mortgage brokers pre-HVCC did not keep a portion of the appraisal fee.

The above figures are for example purposes. I am aware that a portion of loans are ordered by lenders or wholesalers with no AMC , but the discussion centers on AMC's on these posts.

THE THREAD WAS HIJACKED it's title is no college degrees for licensing but as usual you started the AMC Rants and just won't stop even though we all know you have zero influence on the business model being changed.

You have to try and win the argument even if it's of no use to anyone else. Next we're going to your Price Versus Value Rant or Seperation of fees is the fix all. Please get focused on the thread's topic.

 

[George Hatch]

To clarify, post HVCC it is not simply that the demand narrowed from 5000 individual loan officers ordering to 200 AMCs ordering a large portion of the volume. The difference is the AMC;s were not simply shopping by cost, they were shopping by profit back to themselves since their compensation comes from how little they can pay an appraiser.

That is a stark difference to how mortgage brokers or direct order lenders shop, which is by C and R fee, since the lender is not keeping a split as profit ( since they are not a third party). Even the worst of the mortgage brokers pre-HVCC did not keep a portion of the appraisal fee.

The above figures are for example purposes. I am aware that a portion of loans are ordered by lenders or wholesalers with no AMC , but the discussion centers on AMC's on these posts.

It was more like 50,000+ mortgage brokerages, most employing multiple originators. Yeah, aggregating that volume to the smaller number of actual lenders and AMCs was going to increase the efficiency of the marketplace. The commodities markets are so efficient that the pricing is volatile by the day. As a direct result of competition in the market.

If cost was no object to the lenders then why do so many of them persist in patronizing the AMCs? The borrowers are still the ones paying for the appraisals.

I know, I know. You're going to say the AMCs are driving that dynamic and that the lenders have no choice but to do what they're told and submit to the AMCs.

 

[J Grant]

Your shopping by cost and not profit is as circular as your price vs value pretzel.

Regardless what label you are using the bottom line is the bottom line. At the lender, at the AMC, at the fee appraiser.

WRONG. There is a difference between shopping for a professional service by price vst cost. It has nothing to do with the appraisal development, property sale price/Market value topic.

This is a fact:
The lenders who order an appraisal without an AMC shop for an appraiser by COST - their goal is a reasonably similar appraisal cost to what other appraisers charge ( C and R), which is covered by the borrower.

The AMC shops an appraiser for PROFIT back to them. The AMC gets paid their compensation/profit from a cut of the appraisal fee ( pas thru payment from the lender) If the borrower paid $500 to the lender for an appraisal and the lender pays the AMC $500, the AMC makes more profit if they can find an appraiser to do it for $300 vs having to pay the appraiser $400. The AMC did not shop by cost, they shopped by profit back to them. A legal kickback - a couple of appraisers here admitted to doing back in the day as a "referral fee" to get work.

Note: any kickbacks (for lack of a more PC word )an AMC might pay a lender or that a lender adds $ to charge more to a borrower, I can not comment on. I am giving the straightforward example. In the few states with mandatory breakout of fees, it looks like $500 borrower appraisal fee, $300 appraiser $200 AMC.

 

[George Hatch]

It's your circular logic that is the parallel. Which is why I said it that way.

The appraiser works for profit back to them. Your plumber and your doctor work for profit back to them. Working for profit is not only not immoral, it forms the entire basis for our economic system. That is until those godless socialists get to screwing everything up.

 

[J Grant]

It was more like 50,000+ mortgage brokerages, most employing multiple originators. Yeah, aggregating that volume to the smaller number of actual lenders and AMCs was going to increase the efficiency of the marketplace. The commodities markets are so efficient that the pricing is volatile by the day.

Whether their role is moral or not, AMCs sell to their clients a level of coverage and convenience with which the individual appraisers cannot compete. That's a feature that is worth something to the lenders.

This is white washing it by using neutral words like "efficiency."

Taking a big portion of an appraisal fee as the way an AMC gets compensated, with appraisers having to "kick back" as much as possible by lowering their fee, is profiteering, not efficiency.

I agree the AMCs provide coverage and convenience. In that sense, it might be efficiency. I have no problem with a lender using an AMC. My issue is the lender should pay a COST to use the AMC, the way a lender pays a cost for accounting service, IT service etc . The AMC instead makes its money from a kickback of the split of the appraisal fee. The AMCs are not selling their service - they are GIVING their service free free of cost to the lender, since the AMC gets compensated from a fee split from the vendor. THAT is what gives the AMC its huge market share.

An AMC might keep $200 as a split off a $500 appraisal fee passed through by the lender. It cost the lender nothing; the borrower cut a check for $500 to the lender. Do you really think if a lender had to pay a cost of $200 from their own funds for the AMC service, the lender would pay that much? I bet a lender might pay $75 for processing a regular appraisal order by an AMC, and if they had to pay more, they would form their own panel.

BTWI does not care if a lender passes on an AMC hard cost to a borrower. I just think it is dead wrong for the AMC compensation to come off the back of an appraiser from the split of an appraisal fee ( (govt HUD bundled fee allows it )

 

[J Grant]

It's your circular logic that is the parallel. Which is why I said it that way.

The appraiser works for profit back to them. Your plumber and your doctor work for profit back to them. Working for profit is not only not immoral, it forms the entire basis for our economic system. That is until those godless socialists get to screwing everything up.

It is not circular logic.

Working for profit is not the issue. This is a third party controlling orders and profiting from labor they did not perform ( the appraiser performed the appraisal and did the work ).

Above, if there was a prohibition on who could hire a plumber or doctor, and the big volume of orders now came from a third-party plumbing management company or a Doctor management company. To get work, the doctor or plumber has to kick back part of their profit to the third-party management company.

The doctor or plumber ( or accountant, etc ) all charge their customer a cost for their service, and the provider expects a profit. Same as an appraiser who charges a client for their appraisal service when no AMC is involved.

In contrast, the AMC typically does not charge a cost to its lender customer. The AMC gets a huge market share due to this. The HUD bundeld fee lets the AMC offer free of cost service to banks and lenders, and at the same time lets banks and lenders enjoy the free of cost AMC service since the borrower covers it the appraisal fee. Who is the loser in this? The appraiser, who gets their profit vastly reduced by having to bid low enough to give enough back in the split to compensate the AMC.

 

[glenn walker]

It is not circular logic.

Working for profit is not the issue. This is a third party controlling orders and profiting from labor they did not perform ( the appraiser performed the appraisal and did the work ). Kind of like the old school proteiton racket. Or, as two appraisers here admitting they did it, the plain old kick back which they called a referral fee to get work.

to address the above, it would be as if there was a prohibition on who could hire a plumber or doctor, and the big volume of orders now came from a third-party plumbing management company or a Doctor management company. To get that work, the doctor or plumber has to kick back part of their profit to the third-party management company, which bids out/fee competes the plumbers and doctors on each hire.

CREATE A SEPARATE THREAD ON YOUR TOPIC BECAUSE YOU WON'T STOP AND THIS WILL GO ON FOR A YEAR.

 

[J Grant]

It was more like 50,000+ mortgage brokerages, most employing multiple originators. Yeah, aggregating that volume to the smaller number of actual lenders and AMCs was going to increase the efficiency of the marketplace. The commodities markets are so efficient that the pricing is volatile by the day. As a direct result of competition in the market.

If cost was no object to the lenders then why do so many of them persist in patronizing the AMCs? The borrowers are still the ones paying for the appraisals.

I know, I know. You're going to say the AMCs are driving that dynamic and that the lenders have no choice but to do what they're told and submit to the AMCs.

I never said the AMC's are driving the dynamics and the lenders have no choice but do what they are told. I challenge you to paste/ link to any post I ever made where I said that. (I never did)

I simply state the facts that the lender does not pay a cost to the AMC and gets free of cost to them service (or free service and a kickback? they aint saying ) - free of cost is attractive to a lender who then gets relieved of the admin of running a panel.
Do you honestly fail to understand this? It has been explained numerous times.