Stop Accepting Unreasonable Fees

[NC Appraising]

I just got a request from Hometap for a conventional 1004URAR at $385.00. It's time everyone stopped accepting below market fees. They took it away and placed it somewhere else when I asked for $100 more. What desperate soul is willng to put up with this job for $385???

I had a lot of faith in this profession 15 years ago when I started--I have lost it all over the past 3 years.

Luckily I have another business building and growing that has nothing to do with appraisals. I can't wait for the day I can pull a Terrell Shields and walk away from this.

Mortgage demand is low and AMCs have us by the....they are in control. Dart and Solidifi allegedly has both came out to say that they will not be increasing fees. The you have the appraisal foundation that are flooding the market with fog a mirror appraisers.

No offense, but when you have large firms that can knock out appraisals in 2-4 hours it becomes a volume game. It will get even worse with AI appraisals.
Unfortunately with high volume equates to lower fees.

What's worse, turn times is one of the main factors for getting more orders.

So if an AMC is in use, who is the AMC going with?

They get $600 for an order....they find a churn and burn firm that does them for $300 with a turn time of 2 days.

There are too many firms that are in the business to just make money. They could care less about the profession itself.

Go and protest outside of the appraisal foundation office. They are the ones that are crumbling the profession in the name of ideology with a oversupply of appraisers.

 

[Mark K]

When you buy potatoes (or pick your favorite veggie), do you ask what kind of soil they were raised in, what farmer raised them and in what state, how long they were in sacks during transportation, etc? Maybe a very few care, but most don't. Do these things affect the taste and quality of a potato? Yep. Do you care? Nope.

When I buy eggs, do I care if they are "cage free" or if the bacon is "humanely raised" and then slaughtered? No.

Some appraisers still haven't come to the realization that they are very small cogs in a very large machine and that machine doesn't give the slightest damn about appraisers or the appraisers' professions and expectations or where the number on the report comes from.

The same usual suspects have been making the same complaints for many years expecting the machine to change...it won't. The 'good ol' days' of mortgage appraising are gone for the vast majority of loans. Adapt or die but for God's sake, stop the whining. You've had years to adapt, to change your business model. It's on you if you've been too lazy or stubborn to modify your business.

 

[DWiley]

There is no downward pressure on fees (typically) in a slow volume cycle when no AMC is used.

That is just not true. During most of my time in the field the AMCs were not prevalent. Yet every time business slowed down appraisers in my area started dropping their fees. The lenders didn't have to ask them to, because they did it voluntarily. It was their marketing strategy.

I truly understand why appraisers want an environment where fees are basically guaranteed to be at a certain level and not subject to the rise and fall created by supply and demand. I just do not think that reflects reality, for any business.

 

[TerryRohrer]

This is not a free market supply and demand.

In your screed, you forgot to mention that the vast majority of appraisals conducted for lending are conducted due to a government mandate.

 

[J Grant]

That is just not true. During most of my time in the field the AMCs were not prevalent. Yet every time business slowed down appraisers in my area started dropping their fees. The lenders didn't have to ask them to, because they did it voluntarily. It was their marketing strategy.

I truly understand why appraisers want an environment where fees are basically guaranteed to be at a certain level and not subject to the rise and fall created by supply and demand. I just do not think that reflects reality, for any business.

I do not remember appraisers dropping their fees to lenders or mortgage brokers in slow periods and my friend in California does not remember that either., If C and R went down a bit during a longer slow cycle, it was by a small amount - $375 (at the time ) to $350. Not cut in half as an AMC does. Lenders and Mortgage brokers cannot fee-split with themselves, so they had no incentive to pressure for lower fees. And even if an appraiser offered a low fee to win business, most lenders and mortgage brokers stuck with the appraisers they knew could deliver and do a good job.

And back to the present - the AMCs' push for low fees during a slow volume, the lenders ordering direct do not.

Regulated lender appraisals are NOT any business. It is not correct to compare it to a free market like any other business or even like the appraisal business outside of regulated lending. Regulated lending does not allow the borrower customer to choose the appraiser, and does not allow a loan officer to pick the appraiser. This greatly narrows the buyer pool. The private work and commercial side typically does allow the borrower or anybody to order an appraisal. Thus, while an appraiser might bid on a commercial order or be asked to provide a fee to an attorney for estate work, the customers just want a reasonable fee; they can not profit by splitting the apprasial fee the way a third-party AMC does.

The AMC has a specific profit-to-them incentive to drive the appraiser's portion of the appraisal fee as low as they can. And they have tremendous leverage to do that because of their large share of the loan order volume.

One would think a simple reform to the system might be pursued?

 

[chad hampton]

This is a heavily regulated industry and appraising in particular is a massively manipulated market. Traditional laws of supply and demand that we all learned in college economics really don’t apply.

If fees drop during the slow time, that would’ve been reflected in the customary and reasonable fee studies that have been performed.

For those of you that do VA work, have those fees dropped in the last four years with decline in loan numbers? I really don’t know, perhaps they have?

How about the combined appraisal fee that borrowers pay, have they dropped in the last four years?

Customary and reasonable laws were written to preserve public trust. I realize that phrase doesn’t mean much anymore, and that’s part of the problem.

 

[J Grant]

That is just not true. During most of my time in the field the AMCs were not prevalent. Yet every time business slowed down appraisers in my area started dropping their fees. The lenders didn't have to ask them to, because they did it voluntarily. It was their marketing strategy.

I truly understand why appraisers want an environment where fees are basically guaranteed to be at a certain level and not subject to the rise and fall created by supply and demand. I just do not think that reflects reality, for any business.

This relates only to the regulated lender portion of appraisal, not the general appraisal business.

Protection of fees is simple to obtain for regulated lending; cap the % an AMC can keep from the appraisal fee. If a lender wants ot pay them more, do so out of pocket.

Because of the specific prohibitions about who can select the appraiser, supply and demand are badly skewed in regulated lending due to a narrow portion of AMC buyers who have a third-party profit interest in keeping as much as they can of the appraisal fee. The lawsuits in the courts now for consumers are not just about fee breakout of disclosures; they address the egregious amounts the AMCs keep. The lawsuit calls it "unjust enrichment"

Even with no AMC keeping a portion, appraiser fees are so modest that using them used to have a large split go to provide income for AMCs is not what the HUD bundled fee was meant to do.

 

[ddnma]

That is just not true. During most of my time in the field the AMCs were not prevalent. Yet every time business slowed down appraisers in my area started dropping their fees. The lenders didn't have to ask them to, because they did it voluntarily. It was their marketing strategy.

I truly understand why appraisers want an environment where fees are basically guaranteed to be at a certain level and not subject to the rise and fall created by supply and demand. I just do not think that reflects reality, for any business.

not my experience- never lowered my fees (nor did any appraisers I knew at the time) in slow times going back to the early 90's

 

[Zoe]

That is just not true. During most of my time in the field the AMCs were not prevalent. Yet every time business slowed down appraisers in my area started dropping their fees. The lenders didn't have to ask them to, because they did it voluntarily. It was their marketing strategy.

I truly understand why appraisers want an environment where fees are basically guaranteed to be at a certain level and not subject to the rise and fall created by supply and demand. I just do not think that reflects reality, for any business.

That didn't happen with all lenders if you were directly engaged with the lender and long term relationship. The lender would hire you even if your fee was higher because the lender trusted you.

Same way today. Lender didn't want fastest and cheapest. They want someone they trust.

If you didn't have clients like that Danny, I feel sorry for you.

 

[Zoe]

Actually I probably would have left businsess long time ago if I didn't have clients that hired me not based on fee. They hired me because they trusted me. It was not fastest and cheapest.