No College Degree for Cert Generals or Residential Appraisers

[J Grant]

As CGs retire or return to room temperature, there will be so few CGs, the AMC model is going to face a headwind of pushback. So, they will be left either waiting weeks for a local appraiser who will set the fee or ordering from someone like Cushman & Wakefield who are an AMC in addition to having staff appraisers - so how is that going to work?

The AMC model will never gain the kind of traction it had in commercial that it had in residential. The high volume of residential mortgage loans made it profitable; the HUD-bundled fee on residential loans made it attractive for lender clients to outsource their responsibilities. In addition, residential reports on the URAR form use a standardized format, allowing an AMC to "review" a report in minutes using a non-appraiser with a checklist or computer scan, vs. the more time-intensive review a commercial report could need.

 

[Zoe]

I appreciate your accusation that "it didn't occur to me" even though I directly referenced that aspect of it in my prior - which you quoted. You should proceed under the assumption that there's not one single thing about appraising that you are capable of thinking about that I haven't already considered in advance of it occurring to you.

If the discussion is about how much academic + QE is takes to train an appraiser to appraise properties then getting even with the AMCs or protecting our market share are separate issues. Regardless of how evil AMCs and lenders are.

And BTW, the govt didn't create the bundled fee model that the lenders have been patronizing nor is the govt forcing or coercing or encouraging it. To this day the lenders are STILL not required to operate via AMCs. The only thing the govt did was to remove a couple of their previous alternatives for appraisal engagement. The govt DISABLED that option. They didn't ENABLE any of the other options.

The key the govt didn't do is force separation of fees on truth in lending disclosures to borrowers.

The original law was written that appraisal management fees and appraisal fees would be separated on truth in lending disclosures to borrowers.

Lobbyist got involved and got the bill changed to commingle fees.

In turn, it originated a fastest and cheapest mentality from appraisal management companies and a oligopsony type market structure.

However, you are correct George that many banks don't have that mentality and especially if they are carrying the loan in-house. Many banks don't have to worry about commingling of fees and fastest and cheapest because they don't use appraisal management companies (AMCs).

FHA used to be this way when they had their fee panel, but VA don't use appraisal management companies (AMCs).

FHA dismantled their fee panel for some reason. I am sure lobbyist were involved.

VA needed no bailout. FHA needed major bailout.

 

[Zoe]

I'll tell you something you may not believe. Many independent banks which engage appraisers directly needed no bailout. It is true. They were solid. They also engaged their appraisers directly. They didn't use appraisal management companies.

 

[Mark K]

Bert has no clients that want his product.

He won't care. As long as he has an internet forum on which to proclaim his vast knowledge of...something...and to proclaim his inherent superiority over all other appraisers, he'll be happy.

 

[TC]

I'll tell you something you may not believe. Many independent banks which engage appraisers directly needed no bailout. It is true. They were solid. They also engaged their appraisers directly. They didn't use appraisal management companies.

I worked for a ton of those banks.

 

[gregb]

I worked for a ton of those banks.

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[George Hatch]

AI Overview


The largest Appraisal Management Companies (AMCs) like Solidifi or those processing vast volumes (e.g., 18,000/month for TriServ in 2021) generate
tens to hundreds of millions in revenue, keeping healthy margins (22-28% of fees) after paying appraisers, but specific figures for the largest are elusive, though industry data suggests a few giants handle significant market share, with some earning over $50M+ annually while most AMCs are smaller businesses.

My comment: reinforces the fact that it is a small number of AMC's ( above states 13% ) that handle the significant volume.

13% of the (for example) the 211 AMCs with active registrations in Florida comes out to 27 AMCs. That number doesn't come anywhere to indicating that any one of them controls more than 5% of the total of all AMC assignments (inclusive of the 86% which are doing less than $50M/yr). Nor does that number indicate to any market condition that could be fairly called a monopsony or oligopoly.

Besides, appraisal fees still vary by locale and market conditions, which could not happen if only one side of the transaction controlled the fees as per your reasoning.

 

[George Hatch]

During this same time period the lenders' usage of the alternatives to the conventional 1004 have been cutting into the demand for services faster than the supply can contract. Appraisers are chasing a declining demand for appraisal services. And the trend for these lenders is to seek even more productivity per appraiser in order to further suppress the fees. I'm pretty sure that some of these lenders would love to see 30 assignments a week per appraiser (with a 24hr turn) at $100/assignment. If they could get it.

If the supply/demand were in balance the AMCs wouldn't be able to find the "someone else who will" because that someone else would have other options - including other AMCs - that paid better. Principle of Substitution.

 

[Carnivore]

BUT! BUT! It's just not fair!

I have a Theory that the potential changes Like removing barriers to licensing is because we likely have a lot of Baby Boomer Appraisers are retiring and other younger Appraisers our finding better opportunities in the labor market.

Now I have not looked at ASC numbers. In NC the real estate brokers have an inactive status that cost $40. a year OTOH the NC Appraisal board NCAB does not have an inactive status. Meaning you have to take all CE and continue to pay the annual licensing fee. If you don't your done and the only way to re-enter is to go back to the beginning and start all over.

 

[J Grant]

13% of the (for example) the 211 AMCs with active registrations in Florida comes out to 27 AMCs. That number doesn't come anywhere to indicating that any one of them controls more than 5% of the total of all AMC assignments (inclusive of the 86% which are doing less than $50M/yr). Nor does that number indicate to any market condition that could be fairly called a monopsony or oligopoly.

Besides, appraisal fees still vary by locale and market conditions, which could not happen if only one side of the transaction controlled the fees as per your reasoning.

Your efforts to prop up the GSE talking points do not match reality. Did you not read the AI example of a large firm ( Soliidfi ) ordering 18,000 appraisals a month?

it is not simply dividing 27 firms into some imaginary total. The 27 firms order the lion's share of the volume, and each the 86% of the remaining AM "s have much lower volume. Some have none in an area. My personal estimate, having actually worked for AMC's, is that of the 27 examples, fewer than that have the vast volume in an area, which makes sense, since the national AMC s have contracts with the biggest national banks or online lenders. In some cases, the AMC is owned by a lender as a division.

I already addressed that even if appraisal fees vary by locale, it happens that in any locale, the appraisal fees paid by an AMC are much lower than what a lender pays for the same work when no AMC is used. Market conditions need to be extreme to reach a parity of open market supply and demand, and extreme market conditions are not the norm.

The AMC's need not collude to lower fees. They are smarter than that wrt legal. The fact that the narrow channel of demand gives the AMC tremendous leverage serves to accomplish it. Enabled by the Govt perk of the HUD bundled fee. Which gets a pass from those who scream commie if a working person gets a govt crumb.