The Appraiser Shortage Myth Part 43

[J Grant]

Denis, what you consistently ignore is that clients, lenders/banks are supposed to by regulationuse due diligence to select a good appraiser, NOT by low fee, and NOT by 48 hour turn time. In addition to the regulations, an ethical regard for the borrower and tax payer backing and investors would preclude them from doing so .

The good lenders now don't care if an appraiser tries to compete for their work by offering a faster turn time or lower fee. The only ones who promote that are the AMC's and they do so to compete against each other to win lender clients ( since they have nothing else to offer )

A person defending the status quo of the AMC system which skims the profit from appraisal fees rather than charging their lender customer for thr service ends up acting as a shill for that system, even if they dont' intend doing so.

And I am suspect about the motives behind a few of the posters here for taking positions antithetical to the interest of appraisers. You are not one of them, but I think in your zeal to defend what you believe to be a free market model ( which is not the case in res lending due to TRID and numerous other regulations), you end up articulating for AMC profit interests, which come at the expense of appraiser interests.

 

[J Grant]

It doesn't fly in the face of my fist-hand experience of seeing appraisal assignments and bids.
But I suppose counter-examples can be found for nearly everything.

Denis, the experience you report does not jive with majority of that experienced by res appraisers dealing with AMC's,

 

[hastalavista]

Yea, I can buy the supply/demand thing that AMCs cite and is the reality - I am after all an appraiser and I had better comprehend market dynamics - right?. However, the AMCs did not become the players they are through open free-market capitalism, they became big players through government regulation/interaction. Funny how that part of the story gets lost after all these years. The HVCC wiped out years of sales relations appraisers had built over-night with the stroke of a pen. Lenders, not quite understanding the laws and what to do about them, also not wanting to see a single day of down-time in their business model, flocked to the AMCs to solve their problem in the quickest and easiest way possible. Where before jobs were won the old fashioned way, the individual shop competing against the other individual shop who both happened to solicit the same client, the vast bulk of appraisers are now pooled to compete against each other, to a very small group of clients (AMCs). So, AMCs and anyone else can cry fair market all they want, but that really isn't the truth of the matter. Appraisers need to unionize, to consolidate the labor pool exactly the same way it is consolidated against us.

Yours might be the first post I liked that has "union" in it! (I'm no union fan but so what)

I agree with the regulation ensconcing AMCs into the system. I posted extensively about that concern pre- and concurrent with the HVCC.

But I have a slightly different take on the relationship between the Appraiser, the AMCs, and the Lenders. I believe the lenders are 100% happy with the way the current system works. They have an "agent" that handles all the nuts & bolts of the appraisal management process and they can use their leverage as a big-volume client the same way that mortgage brokers or other unsavory clients used to use on appraisers pre-HVCC days.
Look at the arguments that we have on this forum regarding everything from stips, to fees, to turn-times, to [insert the hot topic here]. Almost inevitably the majority of frustration and anger is vented at the AMC. Certainly, some are guilty (Coestar is the poster child) in many cases and sometimes they can be their own worse enemy. But many times, the issues are not originated with the AMCs; they are originated by the lender and the AMCs simply following their orders.

If I were a lender and I wanted to have leverage over the appraisal process, but I was concerned that if I exerted that leverage and was got, I could not think of a better system to create than the current AMC model.

To be clear: I'm not talking all lenders and I'm not talking all AMCs. But I am saying there are enough lenders who are grinding down the AMCs and using their volume leverage to achieve what they couldn't or wouldn't achieve without the AMC.
Are some of the AMCs willing accomplices? Sure. But the mastermind of this scheme isn't the AMC, in my opinion.

 

[hastalavista]

And I am suspect about the motives behind a few of the posters here for taking positions antithetical to the interest of appraisers. You are not one of them, but I think in your zeal to defend what you believe to be a free market model ( which is not the case in res lending due to TRID and numerous other regulations), you end up articulating for AMC profit interests, which come at the expense of appraiser interests.

That would make me an witless stooge rather than a co-conspirator... which I guess is a little less harsh!

We will never agree on this because we view the problem in a fundamentally different way. That's life.
All I can say is that I am optimistic, based on my view and what I perceive the problem to be, that a positive solution is not only possible but achievable.
You may feel the same way about your view. But if your solution includes a mandatory fee, I honestly and sincerely do not see that in the cards.

 

[J Grant]

Yea, I can buy the supply/demand thing that AMCs cite and is the reality - I am after all an appraiser and I had better comprehend market dynamics - right?. However, the AMCs did not become the players they are through open free-market capitalism, they became big players through government regulation/interaction. Funny how that part of the story gets lost after all these years. The HVCC wiped out years of sales relations appraisers had built over-night with the stroke of a pen. Lenders, not quite understanding the laws and what to do about them, also not wanting to see a single day of down-time in their business model, flocked to the AMCs to solve their problem in the quickest and easiest way possible. Where before jobs were won the old fashioned way, the individual shop competing against the other individual shop who both happened to solicit the same client, the vast bulk of appraisers are now pooled to compete against each other, to a very small group of clients (AMCs). So, AMCs and anyone else can cry fair market all they want, but that really isn't the truth of the matter. Appraisers need to unionize, to consolidate the labor pool exactly the same way it is consolidated against us.

That is why I call people like Tres Inc shills. Whether from naivete or intent, he ( and others like him), ignore the fact that the regulations and policies of govt at all levels are exploited to the max by AMC /affiliated lenders, yet it is taboo for appraisers to ask for a measure of the same-if an appraiser does it, it is anti free market, or commie, or socialist. The AMC's love that, keep the appraisers divided /arguing , while the AMC's sit on policy committees, state boards, lobby to change regulation, influence legislation and pay attorneys to ensure they can skirt C and R in the gray area of legality

I dont' know if we can achieve a union, though Id support the effort. At least we can stop fighting among ourselves as to the what/why, and get behind a common cause, if we believe in it, of saving the profession on the res lending side, and that involves fees. If an appraiser defends picking by lowest fees, they are antithetical to appraiser interests, no matter how eloquently they try to argue it by supply and demand or the (unproven, often false ) premise that if all appraisers are equally qualified then what is wrong with low fee winning etc.

 

[bnmappraisal]

To be clear: I'm not talking all lenders and I'm not talking all AMCs. But I am saying there are enough lenders who are grinding down the AMCs and using their volume leverage to achieve what they couldn't or wouldn't achieve without the AMC.

For someone who doesn't work with AMCs ... you D@mn near hit it all on the head, IMO!
Lenders work the AMCs as much as the AMCs work the appraisers

 

[TRESinc]

If your company/ AMC's want to be in appraisal management service business, then charge the lender separately, charge them a rate for your service apart from what borrower pays and apart from what gets paid to the appraiser.

hell jgrant, why don't you follow your own advice? YOU tell your clients how it's going to be and what they must pay you.

wait. crap. that's already the way the system is. YOU have final say over what you are paid for an order, no one else. that's the beauty of being an independent appraiser! now if only the AMCs had the same power with their clients and could dictate which system of payments are used...

 

[J Grant]

That would make me an witless stooge rather than a co-conspirator... which I guess is a little less harsh!

We will never agree on this because we view the problem in a fundamentally different way. That's life.
All I can say is that I am optimistic, based on my view and what I perceive the problem to be, that a positive solution is not only possible but achievable.
You may feel the same way about your view. But if your solution includes a mandatory fee, I honestly and sincerely do not see that in the cards.

I have no idea where your optimism comes from, since fee erosion by AMC's is ramping up, not down, everywhere but the COW states which is an unhealthy example of a profession driven down to an extreme shortage as the only way to get leverage. On what is your belief in some market based positive solution based on (especially since at the same time you defend the select by low fee model)

 

[Deleted member 130081]

Yours might be the first post I liked that has "union" in it! (I'm no union fan but so what)

I agree with the regulation ensconcing AMCs into the system. I posted extensively about that concern pre- and concurrent with the HVCC.

But I have a slightly different take on the relationship between the Appraiser, the AMCs, and the Lenders. I believe the lenders are 100% happy with the way the current system works. They have an "agent" that handles all the nuts & bolts of the appraisal management process and they can use their leverage as a big-volume client the same way that mortgage brokers or other unsavory clients used to use on appraisers pre-HVCC days.
Look at the arguments that we have on this forum regarding everything from stips, to fees, to turn-times, to [insert the hot topic here]. Almost inevitably the majority of frustration and anger is vented at the AMC. Certainly, some are guilty (Coestar is the poster child) in many cases and sometimes they can be their own worse enemy. But many times, the issues are not originated with the AMCs; they are originated by the lender and the AMCs simply following their orders.

If I were a lender and I wanted to have leverage over the appraisal process, but I was concerned that if I exerted that leverage and was got, I could not think of a better system to create than the current AMC model.

To be clear: I'm not talking all lenders and I'm not talking all AMCs. But I am saying there are enough lenders who are grinding down the AMCs and using their volume leverage to achieve what they couldn't or wouldn't achieve without the AMC.
Are some of the AMCs willing accomplices? Sure. But the mastermind of this scheme isn't the AMC, in my opinion.

I agree that AMCs were not the masterminds. In fact I am not mad at a single AMC. In fact I respect and admire their opportunistic and capitalistic ways. But the truth of what they are and how they affect us is still the truth. In other words I aint mad at the snake for being a snake, but the poison is deadly just the same.

Our only reasonable course is to unify. Fight fire with fire. I am not a union lover either, but I am not so jaded on the idea that I dismiss it categorically. Our clients are unifying against us, quite successfully. You argued that appraisers accept the fees and so that makes it all fair. However, how many accept the fees because they lack a career alternative that could be implemented over-night? Again, this did not all come about through open-free market dynamics. This came about through the government inserting a regulation into a previously open-market and turning it all on its head over-night, literally. Accepting the low fees became a matter of no options for survival. That is becoming forgotten and replaced with reasonable and customary. When you really think it through, we will either unify or this industry will continue to be run into the ground - there really is no other outcome. Corelogic just bought the Mercury. They are making moves, we are only complaining. Who do you suppose will get further?

 

[J Grant]

I have no solution and no optimism at this point in time, I think it is hopeless sorry to say. A round Robbin rotation or panels with min fees such as VA would solve it but there is not cohesion in appraisers nor from lenders. AMC's of course want things to stay as they are, and are proposing cheaper/faster/cheaper alternative valuation products; some involving appraisers, some not. The products using appraisers look to be even lower pay and tighter turn times. Unless a larger volume of alternate products need appraiser input...an unknown.

Appraisers themselves have not shown cohesive interest for unionizing nor are enough of them individually able to withstand pressure to compete on fees, or hold out for better pay /lower volume on the hamster on wheel staff track.

I have a few good clients and will ride it out for a couple of more years and then I plan to exit -it might be earlier if even the good clients succumb to fee bidding on Mercury or get sold out to a bigger entity.
Unless a change in administration or states in future take a real interest in appraising and enacting meaningful legislation or enforcement- which if it comes won't be soon enough for me. I do speak out on the issues in case it helps clarify things even a little for even one person. I wish had something more optimistic to offer, but right now, I don,t