Strategies for raising fees

[J Grant]

It's a direct quote from the appraiser who completed the first 3.6 report. Like it or not THAT is what is making the rounds online.

So what, one appraiser suggested it? If people are stupid enough to believe that because it is "making the rounds online": Then they deserve the forever low fees they make on the AMC side?

 

[Zoe]

The market structure changed when Joan and her buddies got the final rule on separation of appraisal management companies and appraisal fees combined on truth in lending disclosures. I lost much respect for HUD allowing it to happen on truth in lending disclosures to borrowers.

The final excuse said it would be too confusing to borrowers. That makes me want to puke. Me and Joan went round and round and round about this on this forum.

The final excuse Joan gave is it would be too confusing to borrowers to have appraisal management company fees and APPRAISAL fees separated on truth in lending disclosures.

That is horse crap.

I was fortunate to get on VA panel but it has no bearing on them.. I do get some really rough assignments and sometimes negotiate with lender to get fee increased. Most of the time I just accept VA fee schedule.

The times I have negotiated with lender and veteran. The lender says fine.

See on VA appraisal assignment, the VA/lender is the client.

With an AMC/lender, the lender is the client only.

Big banks got the rule changed at last minute for commingling of Appraisal/AMC fees.

Many banks still engage appraiser directly with no AMC involved. There is no commingling of fees in that instance on truth in lending disclosures.

Fastest and cheapest?

 

[Zoe]

I will digress. I have been on VA panel a long time. I have never had lender come back to me on negotiation of fee increase. I explain why and lender says okay.

Like I said, I have only requested a few times.

 

[Zoe]

Lender has certain parameters on truth in lending disclosures. They have limits. Appraisal fees are minor in variances they can use. If you increase fees by a few hundred to the lender? It will pass in tolerance in truth in lending disclosures.

They cannot vary much from good faith estimate on truth in lending disclosures but appraisal is minor factor.

OTOH, if you go outside the guidelines on their tolerance levels. Lender can give new good faith estimate to borrower on closing costs.

 

[Overimprovement]

This thread dances around the real issue. Setting the fee for which WE will do a particular job for a particular client is MICRO economics. We totally control that. That is free market. Raise fees until you start losing the clients/work that you like, then back down to where you were. Simple.

But the MACRO economic side of the equation says we will not impact overall fees. Unless you are one of a few appraisers in a county, it is the group which will set the competitive market rate. And with the proliferation of national firms and AMCs taking more and more control of the industry, the appraisers against whom you are competing are increasingly not even local. That is sad, but reality.

Not one single AMC or direct lender gives two turds about how much longer it takes Jane Doe to complete a report. Even one's 'best' clients. I had so many good bank clients move to AMCs in my last 2-3 years it was staggering. I predict that trend will continue. Most of the time, the orders simply stopped coming in. Those were mostly clients I had personally sourced in brick and mortar branches, speaking with presidents and VPs of lending through the years. Tough to lose those to AMCs.

Know your BANTA--"Best alternative to a negotiated agreement". If you NEED to keep clients to put food on the table, you can still negotiate, but eventually you will have to settle for what the going market rate is unless you find different clients. If (as was the case for me), you have a fallback career or income source, you can be more aggressive in not accepting fees below your preferred threshold. When my incoming flow of work at my minimum fee dropped below my family's daily nutritional content needs, I decided to exit the industry. Didn't want to, but again, I had a decent BANTA. I understand not everyone does.

If one happens to live in a lower populated area, or has rural work available, the odds of getting better fees increase. But if you compete with 150 other appraisers, including large national puppy mills, good luck.

 

[J Grant]

This thread dances around the real issue. Setting the fee for which WE will do a particular job for a particular client is MICRO economics. We totally control that. That is free market. Raise fees until you start losing the clients/work that you like, then back down to where you were. Simple.

Regulated lender work, including direct order, is NOT a free market !! Free market means no constraint on the customer/buyer end. That makes supply and demand have an equilibrium, and the result is C and R fees. Compare fees of tax prep, IT support, or plumbers etc - their rates tend to be similar ( C and R) with a few at the high or low end.e

With GSE/regulated loans, the consumer/borrower is not allowed to select the appraiser. I am not advocating that they do, simply pointing out how that narrows the # on the demand end and how demand and supply is now out of whack. .
But prior to HVCC, individual loan officers could select the appraiser. That ended with the HVCC and greatly narrowed the demand side. At the same time, due to regulatory changes AND the free of cost service, a govt perk of bundled fee gave the stakeholders, the demand side narrowed AND shifted in large volume to the AMC's

The AMC does not shop simply by cost or similar C and R fees of appraisers; it is like a super predator, shopping as a wholesaler to lower the individual appraisers' fee as much as possible. Thus, the appraisers working for AMCs face additional pressures.

However, even with that, there are a finite number of appraisers in any area, and if they raise their fees, the AMCs will pay it. That might result in a loss of work initially, which is why I suggested a strategic way to do it if needed.

PS - the GSE's greenlighting use of PDC collectors is not about technology or efficiency. It effectively increases the supply of those doing appraisal work to benefit the AMC's, by allowing non-licensed people who will work cheaply to do what used to be the inspection portion of an appraisal on a hybrid or be hired to inspect for a Waiver/value acceptance.

 

[TerryRohrer]

This thread dances around the real issue. Setting the fee for which WE will do a particular job for a particular client is MICRO economics. We totally control that. That is free market. Raise fees until you start losing the clients/work that you like, then back down to where you were. Simple.

Regulated lender work, including direct order, is NOT a free market !! Free market means no constraint on the customer/buyer end. That makes supply and demand have an equilibrium, and the result is C and R fees. Compare fees of tax prep, IT support, or plumbers etc - their rates tend to be similar ( C and R) with a few at the high or low end.e

With GSE/regulated loans, the consumer/borrower is not allowed to select the appraiser. I am not advocating that they do, simply pointing out how that narrows the # on the demand end and how demand and supply is now out of whack. .
But prior to HVCC, individual loan officers could select the appraiser. That ended with the HVCC and greatly narrowed the demand side. At the same time, due to regulatory changes AND the free of cost service, a govt perk of bundled fee gave the stakeholders, the demand side narrowed AND shifted in large volume to the AMC's

The AMC does not shop simply by cost or similar C and R fees of appraisers; it is like a super predator, shopping as a wholesaler to lower the individual appraisers' fee as much as possible. Thus, the appraisers working for AMCs face additional pressures.

However, even with that, there are a finite number of appraisers in any area, and if they raise their fees, the AMCs will pay it. That might result in a loss of work initially, which is why I suggested a strategic way to do it if needed.

PS - the GSE's greenlighting use of PDC collectors is not about technology or efficiency. It effectively increases the supply of those doing appraisal work to benefit the AMC's, by allowing non-licensed people who will work cheaply to do what used to be the inspection portion of an appraisal on a hybrid or be hired to inspect for a Waiver/value acceptance.

You don't seem to have much of a grasp on the system within which you work. The customer/buyer in a lending appraisal transaction is the lender or their agent (AMC). The consumer/buyer of appraisals is the lender or their agent. The supply and demand in this slice of the appraisal market is the number of lending transactions conducted, less those transactions that do not require an appraisal. Who chooses the appraiser in a lending transaction requiring an appraisal does not change the supply of, or demand for, lending appraisals.

 

[Overimprovement]

The AMC does not shop simply by cost or similar C and R fees of appraisers; it is like a super predator, shopping as a wholesaler to lower the individual appraisers' fee as much as possible. Thus, the appraisers working for AMCs face additional pressures.

Yes it does. The AMC's goal is the same as yours. To maximize its profits at an acceptable level of work. Who decides that acceptable level of work product? The AMC's clients. If lenders routinely rejected crap reports sourced by the AMC, they would adjust. But for the most part, that has not happened. The GSEs have apparently had no issue buying the mortgages sourced by the lenders using the skippy appraisal reports created by the skippy appraisers selected by the AMCs.

I know your life's mission is to get 100% agreement from all stakeholders that every AMC is evil and must be destroyed. I contend they are simply operating within the framework granted to them by the regulators and their clients, the lenders.

If a local contractor does crappy work, that will quickly circle back as negative word of mouth, bad yelp/google/whatever reviews, and that contractor will have a hard time getting work. Crappy "just meet the number with no support" appraiser work? That seems to be just fine. But it is NOT the AMCs allowing that, it is the regulators, GSEs, state boards, and lenders.

 

[chad hampton]

Is there a new legislation that has repealed the existing customary and reasonable laws that are on the books that spells out in plain English the ways that determine standard appraisal fees?

 

[George Hatch]

Regardless of what labels are being used to describe the market for services, if doesn't alter how the principle of substitution functions. If a client of any type thinks merely holding a license for 5+ years and completing in excess of 1000 appraisal assignments demonstrates sufficient competency for 95% of their assignments then that satisfies their requirement to ascertain competency prior to engagement.

"sloppy" doesn't even prove unqualified or inexperienced. It only proves "lazy".