Union Time?

[djd09]

This is not about only fees. The regulations (regulators) are out of control. Which brings in supply and demand. AI text books must be leaving out the government influence of supply and demand. No cartoons needed. Just picture dodd high-fiving frank after the sweet deal he got from mozillow.

 

[J Grant]

Supply and demand is a factor but it is not the only factor. The reality is that AMC's exploit supply and demand to obtain work at the lowest fees, whereas direct lenders and non AMC/private work view supply and demand to obtain quality work at a fair fee.

Since the focus is on mortgage lender work, look at the difference in fees between AMC's and direct lenders in any given region. Typically, the AMC fee is substantially lower. Why is that the case, when the borrowers are paying equivalent appraisal fees in that region, and supply of appraisers is the same in that region? It is because AMC's have a specific priority in assigning orders ( lower fee). Direct lenders who are not profiting off of lower fees have no incentive to shop by lower fee. As long as what the appraiser charges is covered by what borrower pays, it's good.

To sum up, in any given region there are two sets of fees being paid with same supply number of licensed appraisers present. AMC fees, and direct lender/non AMC fees. The stark difference between the two is apparent . The fact that only in 3 states see AMC rates and direct lender/non AMC rates equivalent, only shows that supply/demand has to reach an extreme imbalance to coerce an AMC to abandon their tactics to hire at low fees. A severe imbalance as the only way to get a fair fee for professionals is not how supply and demand normally works- in most professions, there is normally an ample supply of professionals, yet they still can command a fair fee for service..

It is not healthy for the appraisal profession nor for consumers and users to have the only way AMC's paying a fair fee is for a steep attrition of appraisers occur causing a severe imbalance.

 

[ucbruin]

Supposedly, I cannot confirm, that the AMC phone people get bonuses for obtaining the lowest fees. Do I think that the AMC person offering $300 is low-balling or going after fees that have typically been accepted in an area? Yes, I think that is true. Someone has excepted $300 in that market in the past or maybe $325 but it is now January and they can try to lower the fee and some appraiser wants to pay off their CC bill from Christmas.

Does the AMC phone person (former Taco Bell employee) offer $300 fees in the COW states? I think that would be a waste of time, but I would bet they are offering $500 or $600 or maybe even $700. If phone person calls me offering $200 less than what is typical then I will have little incentive to answer their next phone call or be friendly if I do answer the next call when they are desperate.

No matter how it is sliced or diced, it all comes down to supply and demand.

"Supposedly, I cannot confirm, that the AMC phone people get bonuses for obtaining the lowest fees. Do I think that the AMC person offering $300 is low-balling or going after fees that have typically been accepted in an area? Yes, I think that is true."

As with you, I'm just "supposedlying" here...

If you're correct...
Why would an AMC waste its time calling/sending email/reaching out to anyone other than the appraiser(s) who have in the past accepted "low ball" fees?

Considering the number of posts from appraiser's indignant about being offered low fees...
Who never accept????

 

[bnmappraisal]

Why would an AMC waste its time calling/sending email/reaching out to anyone other than the appraiser(s) who have in the past accepted "low ball" fees?

There are many reasons an AMC would do this. One being they can then show their clients (the lender) that some sort of "due diligence" was done and they weren't just using the "quickest/cheapest"

Another is fish out the outliers - low and high (one guy quotes $800/3 weeks, another quotes $200/24 hrs, but the majority are in the $250-350/5-7 days range as an example)

Another is see how "complex" a property truly may be. For example: Appraisers set fee with the AMC is $400 and they send him over an assignment. Appraiser comes back and says "My fee for this particular property is $700 due to X,Y,Z" AMC, sometimes, will then get fee/tat quotes to see if this particular property warrants said additional fee (many times they are eating the additional cost because many have set fees (based on volume) with their lenders) If X other appraisers come back with similar fees/tat regarding this "complex" property, then the AMC knows it's "complex"

Just a few reasons off the top of my head that I've heard from friends I know at some AMCs

 

[ucbruin]

There are many reasons an AMC would do this. One being they can then show their clients (the lender) that some sort of "due diligence" was done and they weren't just using the "quickest/cheapest"

Another is fish out the outliers - low and high (one guy quotes $800/3 weeks, another quotes $200/24 hrs, but the majority are in the $250-350/5-7 days range as an example)

Another is see how "complex" a property truly may be. For example: Appraisers set fee with the AMC is $400 and they send him over an assignment. Appraiser comes back and says "My fee for this particular property is $700 due to X,Y,Z" AMC, sometimes, will then get fee/tat quotes to see if this particular property warrants said additional fee (many times they are eating the additional cost because many have set fees (based on volume) with their lenders) If X other appraisers come back with similar fees/tat regarding this "complex" property, then the AMC knows it's "complex"

Just a few reasons off the top of my head that I've heard from friends I know at some AMCs

"Just a few reasons off the top of my head that I've heard from friends I know at some AMCs"

Do these particular friends receive a "bonus" for finding an appraiser who will bid and/or accept the lowest fee?

My other question...
Once the AMC has identified the appraisers who accept the lower/lowest fees....
Why would they not reach out to them 1st?
That way the AMC wouldn't p*** off AF member appraisers by reaching out to them...

 

[bnmappraisal]

Supposedly, I cannot confirm, that the AMC phone people get bonuses for obtaining the lowest fees.

I wouldn't doubt this, MCG

Many AMCs give out bonuses. When I was at one, they gave out quarterly bonuses. It wasn't anything crazy, especially since I wasn't mgmt - $100-300. Even once I became a "team lead" I don't believe I ever received anything over $500, if that (it was over 10 yrs ago, so I don't remember the exact amounts, but believe me, I wasn't buying new cars or houses with the bonus $$$)

I don't know if the bonus would be for "obtaining the lowest fees" but I could imagine fees playing a big part in the bonus structure.

 

[J Grant]

I wonder how much AMC volume for vendor panel is sent to appraisal mills such as Forsythe and Metro West? Since they are known for accepting bulk volume AMC work at low fees. So perhaps when an AMC calls with spoken or implied threat that if you X appraiser don't take the order at Y low fee, someone else will...and that someone else is the mill firms ?

 

[bnmappraisal]

Do these particular friends receive a "bonus" for finding an appraiser who will bid and/or accept the lowest fee?

None that I'm aware of. The bonus structure, as well as the assigning structures at many of these AMCs, is very complex. Fees are not the only criteria.

Many of the larger ones look at: time from order comes from lender to time it is assigned; then from assigned to accepted; then from accepted to scheduled; then from scheduled to inspect; from inspect to ... and on and on and on until it is FINALLY delivered to the lender (after any revisions, etc).

These larger AMCs (even the one I worked at - IREP back in the day) the management is constantly running "turn times" for different criteria; it's not just from order assigned until it's back in their office. They have several "turn times" they look at.
So no, I'm not aware of anyone ever getting a bonus b/c of "lowest fee" although, as I said, I could see fees playing a part in the overall structure. I may be wrong

My other question...
Once the AMC has identified the appraisers who accept the lower/lowest fees....
Why would they not reach out to them 1st?
That way the AMC wouldn't p*** off AF member appraisers by reaching out to them...

(my bold) From first hand experience and having talked with one of the mgmt persons at ACT, they do reach out to their "staff" (or volume guarantee or whatever it's called now) appraisers first. If these appraisers are "too busy" or it's more complex they then reach out to the next set of appraisers on the panel for "fee/tat" quotes. I would have an assignment from them come over (when I was doing the volume guarantee) that would be waterfront. I charge more for waterfront properties. I would tell them my fee/tat and sometimes they'd accept, sometimes they'd "reassign" Once I quit the volume guarantee, I realized the assignments dropping off (and thankfully I was able to replace the "volume" for better paying clients) and now the only time I hear from them is for "fee/tat" quotes and it's almost ALWAYS for more complex properties - ones I'm sure the $250 appraisers don't want because ... they know it's not worth their time for $250 (I used to be one of them turning down said complex assignments)

 

[George Hatch]

Supply and demand is a factor but it is not the only factor. The reality is that AMC's exploit supply and demand to obtain work at the lowest fees, whereas direct lenders and non AMC/private work view supply and demand to obtain quality work at a fair fee.

Since the focus is on mortgage lender work, look at the difference in fees between AMC's and direct lenders in any given region. Typically, the AMC fee is substantially lower. Why is that the case, when the borrowers are paying equivalent appraisal fees in that region, and supply of appraisers is the same in that region? It is because AMC's have a specific priority in assigning orders ( lower fee). Direct lenders who are not profiting off of lower fees have no incentive to shop by lower fee. As long as what the appraiser charges is covered by what borrower pays, it's good.

To sum up, in any given region there are two sets of fees being paid with same supply number of licensed appraisers present. AMC fees, and direct lender/non AMC fees. The stark difference between the two is apparent . The fact that only in 3 states see AMC rates and direct lender/non AMC rates equivalent, only shows that supply/demand has to reach an extreme imbalance to coerce an AMC to abandon their tactics to hire at low fees. A severe imbalance as the only way to get a fair fee for professionals is not how supply and demand normally works- in most professions, there is normally an ample supply of professionals, yet they still can command a fair fee for service..

It is not healthy for the appraisal profession nor for consumers and users to have the only way AMC's paying a fair fee is for a steep attrition of appraisers occur causing a severe imbalance.

Of course a buyer will normally take advantage of the law of substitution. How is that fine for oranges and cars and houses but somehow immoral for appraisals?

As for what the borrower pays, IRL appraisal fees are the least of their concern. The spread between the wholesale price the AMCs are paying appraisers and retail price they're charging their customers is the AMCs problem.

And you should HOPE that more of your competition gets starved out so your fees will improve.

Really, the AMCs are in more danger of being starved into extinction than the appraisers.

 

[J Grant]

Of course a buyer will normally take advantage of the law of substitution. How is that fine for oranges and cars and houses but somehow immoral for appraisals?

Because oranges and cars are NOT financed using tax payer backed loans, with an appraisal underpinning the value. So for taxpayer public trust collateral we have a corrupt system using the cheapest and fastest appraisers so that third parties ( AMC's can profit form it. Yes, I think it's imoral, even if it's legal. The AMC's also fail to provide the firewall against lender pressure, they are often complicit in lender pressure about hitting SC price/high Refi $ ( which can be another thread ) so not only are they picking the fastest/cheapest, they also are complicit often times in evading their supposed purpose as a firewall. I find that imoral as well.

There is also a crucial difference between the sales of oranges, cars, or houses to buyers, in that the buyer acts as a normal consumer, free to choose the orange, car, or house, and many buyers choose to pay MORE for higher quality. In appraisal, the borrower paying for the appraisal, , can not act like a normal consumer. They are not allowed to personally choose the appraiser. The appraiser gets chosen for them by the lender or AMC, and if it is an AMC, the choice will be for fast and cheap, eliminating from consideration many good appraisers who the borrower might choose, or who might be better for the order .

As for what the borrower pays, IRL appraisal fees are the least of their concern. The spread between the wholesale price the AMCs are paying appraisers and retail price they're charging their customers is the AMCs problem.

All the more reason to get the AMC's hands out of the fee. Let lender pay an AMC for a service apart from what borrower pays for the appraisal.