The Appraiser Shortage Myth Part 43

[J Grant]

DW-They certainly have the same opportunity. The difference is that the AMC has typically pre-screened a large number of appraisers and the lenders typically have not. It is one of the reasons that lenders pay AMCs for their services.

The lender screens appraisers for their panel. There are a limited number of appraisers in every region so "large numbers" is not the issue. In addition, many lenders have a recommendation to their panel or wait list or higher screening level of years of experience or competence .

Lenders PAY the AMC for service? News to me. That would be cost plus . Most AMC's offer FREE service to lenders, (why they capture such a large market share). The AMC profit and overhead comes from the AMC taking a portion of the borrower paid appraisal fee., the lender pays them nothing over and above that. If the lender pays anything at all, let me know how much it is , because a lender paying for an AMC per file apart from the appraisal fee paid by borrower would be cost plus.

 

[J Grant]

They certainly have the same opportunity. The difference is that the AMC has typically pre-screened a large number of appraisers and the lenders typically have not. It is one of the reasons that lenders pay AMCs for their services.

The lender screens appraisers for their panel. There are a limited number of appraisers in every region so "large numbers" is not the issue. In addition, many lenders have a recommendation to their panel or wait list or higher screening level of years of experience or competence .

Lenders PAY the AMC for service? News to me. That would be cost plus . Most AMC's offer FREE service to lenders, (why they capture such a large market share). The AMC profit and overhead comes from the AMC taking a portion of the borrower paid appraisal fee., the lender pays them nothing over and above that. If the lender pays anything at all, let me know how much it is , because a lender paying for an AMC per file apart from the appraisal fee paid by borrower would be cost plus.

 

[Bobby Bucks]

I've never understood the shortage myth, it's actually so simple. Call any hometown bank USA which weathered the bailout buyout and ask them if there is an appraiser shortage and you'll get a chuckle.Call Polyvinyl chloride or Koasterdashian AMC and you'll get a "yes, there is a shortage, it's actually a crisis". The difference of opinion is about $200

 

[J Grant]

DW- As for fee differences, that is on the appraisers. They are the ones selling the service, so they set the price. Just as I do not understand the market prices for some homes - for example, I do not understand why the market value for "modern" highrise units with unfinished concrete floors and open ceilings is often higher than nearby units with wood flooring and finished ceilings - I do not understand the market prices for some appraisal services. But, I don't set those prices; I merely observe and analyze them - just like I do for those condo comps.

More false equivalencies, including putting the fee problem back on the appraiser. The appraiser on res license side has a limited number of buyers who buy in volume, esp those appraisers who lack enough experience or other qualifications to be on direct lender lists, and in some areas there is not a great deal of non AMC work, and private work is limited. Therefore, AMC's with an agenda to engage at lower fees can shape fees in an area, or at least influences which appraisers get to work according to what fee they charge.

While an appraiser "sets" their fee-, if "their " fee is not among the lowest, they will get no or little work from the AMC's (unless there is an extreme shortage-COW states)

Putting the blame back on the appraiser does seem to placate regulators; it does not fool all of us but but we are not the power players. Still it's good for appraisers to understand the dynamics; occasionally a regulator might listen and even if not, state boards can be astute

The market for homes is so different to compare the two is laughable. Where are regulations prohibiting a buyer from choosing a home, or what they can pay such as TRID around appraisal fees? Hundreds of thousands of buyers can make up the pool a seller can reach in a region, with no restriction on who the buyers are, what they pick , or what they pay (other than what they can afford ).

An appraiser observes analyzes market prices of homes, but they are not a participant in those prices ( unless the appraiser is a volume owner/seller/buyer of properties). You on the other hand via your company's position have a direct hand in the prices paid to appraisers by methods of selection and exclusion of appraisers according to fees.

 

[Eli]

D Wiley said; ]G lives in one of the states with a huge supply of appraisers, yet seems to think that that huge supply should have no effect on her fees. That is no more realistic that a builder in 2009 thinking that he/she should still be able to sell houses at the "old" prices despite the fact that the housing market was flooded with inventory. Supply and demand just does not work that way.



One other thing - both AMCs and direct Lenders have access to the same supply of Appraisers.

That's one place it gets sticky with antitrust law. It gets sticky in other places too like appraisal practice without a license.

 

[DWiley]

The appraiser on res license side has a limited number of buyers who buy in volume...

I built a firm around non-lender work. There is far more work available than most appraisers even dream about. What many lack is the ability to really run a business and do the marketing it takes to get that work. Lenders view appraisals as commodities they are required to buy. Anyone who really wants to make money in the appraisal business should focus on those who want appraisals rather than those required to obtain them.

If I asked you what your marketing budget was for 2017, would you have an actual figure that you came up with last year when you were developing your business plan for this year?

 

[J Grant]

I built a firm around non-lender work. There is far more work available than most appraisers even dream about. What many lack is the ability to really run a business and do the marketing it takes to get that work. Lenders view appraisals as commodities they are required to buy. Anyone who really wants to make money in the appraisal business should focus on those who want appraisals rather than those required to obtain them.

If I asked you what your marketing budget was for 2017, would you have an actual figure that you came up with last year when you were developing your business plan for this year?

Danny, while this may be true to some degree, it does not change the issue around lender work, AMC's and fees. And that is the topic, not my business plan or any individual appraiser seeking different work/marketing.

Since you bought it up though- there is a limited amount of work available to just a res license appraiser-if all this amazing other $ non lender work was available, why did you leave it behind to go work for an AMC?

I know res license appraisers who are excellent marketers than I, most hit a wall around what other work is available because the reality is it is limited, there are a few appraisers who develop a niche with litigation or tax assessment but they are few in number, and the work itself limited in quantity.

A res license appraiser can upgrade to St Gen, but the issue always comes back to lender work-why should the better appraisers have to keep leaving behind lender work to go get a St Gen, or other? Take the AMC profit gouging out of the fees, have them charge the lender if lender wants to use them, restore fees back for lending work, stop the bleeding of good appraisers out of lender work.

 

[DWiley]

Danny, while this may be true to some degree, it does not change the issue around lender work, AMC's and fees. And that is the topic, not my business plan or any individual appraiser seeking different work/marketing.

Actually, a lot of the pain that appraiser feel on the issues you cite has to do with being a good business person, and has little or nothing to do with being an appraiser The primary reason that fees are lower than appraiser desire in many areas is the fact that there are a LOT of appraisers who know no other way to market.

 

[Eli]

There are laws involved here. There are laws being broken!

 

[J Grant]

Actually, a lot of the pain that appraiser feel on the issues you cite has to do with being a good business person, and has little or nothing to do with being an appraiser The primary reason that fees are lower than appraiser desire in many areas is the fact that there are a LOT of appraisers who know no other way to market.

You are a broken record, putting the blame back on the appraiser.

How about this, get your fee from the lender for management, stop taking a cut of the borrower paid fee, restore fees back on res lending side. There, I am putting the blame back where it belongs. While appraisers can be faulted for lowering their fees, why are they even being pressured to do so? The AMC as middleman is why. Lenders virtualy never shopped by fees prior to AMC takeover of large volume, as long as what an appraiser charged for an appraisal was within the range of what borrowers were paying. And that is still the case for lenders not using an AMC.