Poll: Will you trade fee for volume in a slow market?

[George Hatch]

I am allowed to observe that I can not think of any other profession where their own members agitate to remove entire sections of work away so profiteers can do it instead.AVM's and hybrids and PDC collections are making money when those products are removed from the apparisl pipeline. The companies and people who do those alternate products are not doing it for charity.


It is not just about a product because some other valuation products might be viable - it is about the role of the appraiser -in GSE-backed mortgage lending. Or other types of decisions. The appraiser is an independent third party with no stake in the outcome. A lender submtiing a value in a WAIVER has a stake in the outcome. As do the entities who greenlight a waiver because they want to see the loan pipeline flow without the speedbump of a"deal killer" appraisal done.

The more appraisers are marginalized or quit or spend most of their time at desks instead of being out in the market or observing a subject property, the more control other parties, companies, and entities, often with a conflict of interest, gain over the valuation process.

Citation or example needed. Because I don't think any of those "you're not doing GSE appraisals" individuals are guilty of that. Certainly not me or Terrel or anyone else here on this forum.

Noting that from a lender's perspective they don't think they are getting any value-add by choosing an conventional 1004 over its alternatives when the LTVs are that low is just an objective observation. It's not a form of advocacy or anti-appraiser agitation.

 

[J Grant]

That is a stupid lie. I don't do secondary market. I do appraise houses for non-FNMA lenders. So, I don't have to play the Fanniespeak game. So, then explain to me why there is such a wide pricing on basically identical construction of spec homes - these are not custom builds. They are sold after built for the most part and much of the difference in price revolves around timing, selection, and the skill of the sales staff. They are installing the same commodity items, same cheap vinyl windows, same siding, same roofing from the same roof contractors, and same appliances from the same sources. And they offer the same $3,500 seller concession.

I did not lie. You have said many times here ou do not do GSE work. (which is the bulk of work for cookie-cutter houses )

You are welcome to express your opinion that AI or AVM can do this work, as well as appraisers. I gave my opinion. Your opinion happens to undermine the profession. I commented on that as well. Nothing persona, but IMO people might want to consider the ramifications. Teh other side sure thinks fo their own best interest when they claim, right or wrong, their alternate products can replace appraisals!

 

[J Grant]

Citation or example needed. Because I don't think any of those "you're not doing GSE appraisals" individuals are guilty of that. Certainly not me or Terrel or anyone else here on this forum.

Noting that from a lender's perspective they don't think they are getting any value-add by choosing an conventional 1004 over its alternatives when the LTVs are that low is just an objective observation. It's not a form of advocacy or anti-appraiser agitation.

You have mentioned the lender's perspective numerous times, and I agree. From their perspective of making a profit, of course, they feel that way.

However, the lenders are not loaning their own money on GSE loans and the lender has no stake in a WAIVER value being right or wrong. They are off th hook wrt reps and warranties fo the efalue with waiver

We, the people, we, the taxpayers, are liable for the bailout or buyback of a GSE loan. Therefore, IMO, the lender should not have the decision about the valuation - it sis the fox guarding the hen house.

 

[TerryRohrer]

lenders are not loaning their own money on GSE loans

"An important note: GSEs do not lend money to the public. They make money and create credit by purchasing and reselling loans, guaranteeing principal and interest on mortgage securities for a fee, and extending credit to lenders."

Understanding GSE Mortgages: An Explainer for Homebuyers

Learn about GSE mortgages in 2024. These government-sponsored enterprises play a pivotal role in the U.S. housing market. Learn how they impact mortgage rates and more.

www.businessinsider.com

 

[Terrel L. Shields]

You have said many times here ou do not do GSE work. (which is the bulk of work for cookie-cutter houses )

You do not have a clue who finances "cookie cutters". A big part of my valuations has been for builders who use the houses as collateral to start the next house. The first occupant is rarely the first borrower on a property when you are talking about small builders. Horton, et al are not financing their houses one at a time. But a whole lot of contractor-builders are. They usually have no more than 2 or 3 homes going at a time. In small towns, Horton isn't going to be there. Toll Bro don't build there. Lennar is not there. They are in big cities.

So, small town builders are building houses on lots that may have been developed by others and might have only 20 or so lots to start with. The builder only buys 2 or 3 lots, then builds or an established builder might buy the lots for a 10-20 lot subdivision and build one at a time. And borrowing the money for each and every one.

 

[George Hatch]

You have mentioned the lender's perspective numerous times, and I agree. From their perspective of making a profit, of course, they feel that way.

However, the lenders are not loaning their own money on GSE loans and the lender has no stake in a WAIVER value being right or wrong. They are off th hook wrt reps and warranties fo the efalue with waiver

We, the people, we, the taxpayers, are liable for the bailout or buyback of a GSE loan. Therefore, IMO, the lender should not have the decision about the valuation - it sis the fox guarding the hen house.

One of the quirks of banking regulation is that the law technically holds the lender accountable for the appraisers they engage and the appraisals they use, as well as how and to what extent they use their respective alternatives.

It is inherently unfair to hold the lenders accountable for these factors without also providing them with the discretion it takes to make their decisions. That means cutting the lenders out of that loop would put everything on the feds.

I can't see that or any version of that ever making it to the floor of the House or Senate for a vote.

The current median for home prices in the U.S. is reported at FRED at $420k. Half above, half below. If there's an RE bust of any extent that median will drop. The deminimus for the *financing transactions* is $400k. The math ain't that tough.

 

[Highlander416]

The freedom of being an independant appraiser is awesome. To make your own schedule is an amazing benefit. That said, if you are already giving up a part of that freedom to a part time retail job of some kind just to stay alive, it might not seem quite as appealing. The question then becomes how long will one have to work that part time job. A few months? A year? How about if life going forward is a split between appraising and that other part time job forever? There is not enough private work for everyone, so I think we will see a lot of appraisers eventually move on to other things. I hope things do turn around on the lending side. Only time will tell.

 

[Mile High Trout]

The initial question is flawed. Risk matters. Complexity matters. The position of the borrower in relation to the mortgage deal being formed matters.

The argument for diminished or discounted fees, especially based on volume, has been diluted to the point of irrelevency by policy changes which have resulted in only high risk or highly leveraged borrowers being the only people whom generate full appraisal requests.

Then one gets into the reliability of the client, if they have rotational assignment, a limited panel, consistent fees, or if the manager is corrupted or compromised by pressure or process.

The only question which matters is;

Will you accept anything less than the borrower paid for the appraisal service?

 

[Mile High Trout]

The freedom of being an independant appraiser is awesome. To make your own schedule is an amazing benefit. That said, if you are already giving up a part of that freedom to a part time retail job of some kind just to stay alive, it might not seem quite as appealing. The question then becomes how long will one have to work that part time job. A few months? A year? How about if life going forward is a split between appraising and that other part time job forever? There is not enough private work for everyone, so I think we will see a lot of appraisers eventually move on to other things. I hope things do turn around on the lending side. Only time will tell.

 

[George Hatch]

The initial question is flawed. Risk matters. Complexity matters. The position of the borrower in relation to the mortgage deal being formed matters.

The argument for diminished or discounted fees, especially based on volume, has been diluted to the point of irrelevency by policy changes which have resulted in only high risk or highly leveraged borrowers being the only people whom generate full appraisal requests.

Then one gets into the reliability of the client, if they have rotational assignment, a limited panel, consistent fees, or if the manager is corrupted or compromised by pressure or process.

The only question which matters is;

Will you accept anything less than the borrower paid for the appraisal service?

I don't know how much more direct I could ask the question. AMC#1 isn't being compared to any other AMC and is referring to the appraiser's base fee. Not all fees for all possible variations such as you are fretting above.

It's a simple question and I am not attempting to steer or influence your opinion. I'm just interested in what that opinion is other than you don't want to work for splits.

Work is slow, there's not enough to go around and you're already a couple months behind in your bills. AMC#1 says the prevailing fee for a 1004 is $400 right now, but you can get more work if you bid $375. Which choice will you make:​