We're Back To The Beginning

[Rick Stillman]

The lenders do it because they can. They can because they have the upper hand with both the AMCs and the appraisers. What the AMCs want and what the appraisers want is immaterial because - with the exception of the COW type markets - it's mostly a buyer's market for what we do.

Here's what I would do if I was working on your side of the fence with the property types that are amenable to it: I would re-order my process so that 80% or more of the appraisal report was already complete prior to my inspection. I'd have the neighborhood and market segment and site analyses and most of the Cost Approach finished; all the commentary about adjustment factors, site zoning, HBU - all of it finished. I'd have the most 7-8 likely sales comps gridded and ready to adjust before I set foot onsite. Perform the inspection and do the diagram in my car while onsite, drive my comps, pick my most similar for the report and make whatever mods were necessary. Package it when I got back to the office and upload on the same day.

I'd plan to do no more than 1/day and I'd turn down work unless I was sure I could handle it in my process.

No updates, no rushing to meet deadlines. I'd be killing my competition on the service side because most of them aren't taking full advantage of everything they can do prior to the inspection. .

Great minds think alike George. I love your plan, and tried to do exactly what you describe.

And then reality struck. This month alone, four homes with massive additions that added 4-5 hundred square feet. Three homes in really great condition, or pathetic condition. In these 8-9 cases, any research would be worthless. Let's round that up to ten for easy math. 3 hours "predoing" a report times 10 is way too much time to lose. Sure there are times it does work out, but too many times it doesn't. I've been burned too many times, so I do it "the hard way" from now on.

I do the next best thing. I try to search comps right after the appraisal is complete, and at least do the field work of taking all my pictures so I don't have to come back. Many times it is an hour drive to return if I have to, and then another hour to go back home. If I spend an hour taking comp pictures, that's three hours destroyed out of the day. That happens a lot. Yesterday, in fact. I have no way around it, I just do the best I can at the time and most of the time that works, but not all the time.

Good plan though. I wish it was that simple.

 

[J Grant]

It's not that simple and not achievable unless someone is data dumping and sending runners. Therefore it is not a good plan.

I wish my dentist could drill my teeth and fill in 5 minutes but he insists on taking an hour. Becaue an hour is what is needed to do it right.

Maybe what defines a profession is bottom line the ability to say NO. As in no , a credible appraisal can not be done in one day turn time, no, I am not going to "push value" another 5k, no, I will not do an appraisal for ridiculous low fee. As Nancy Reagan famously said...

How about this simple plan, stop being desperate , whether that be under bidding or running like a nut job to hand in possibly shoddy work at warp speed. Do a good job in a reasonable but client expected time frame. That's pretty much all they want.

 

[Bob Ipock]

So after 10+ years of talk and complaining on this forum, what has changed? It seems to me there is more talk and complaining than in the past. If there is a course of action or plan I would like to see it. The banks are loving it, the AMCs are loving it, nothing illegal has been proven and Congress is not going to upset the apple cart unless the banking lobby tells them too. I suppose the AMC issue/problem will continue to be discussed until there are no more appraisals/appraisers to manage.

 

[Willie]

....

 

[J Grant]

So after 10+ yeas of talk and complaining on this forum, what has changed? It seems to me there is more talk and complaining than in the past. If there is a course of action or plan I would like to see it. The banks are loving it, the AMCs are loving it, nothing illegal has been proven and Congress is not going to upset the apple cart unless the banking lobby tells them tot I suppose the AMC issue/problem will continue to be discussed until there are no more appraisals/appraisers to manage.

Perhaps things would be much worse if we had not talked about it. Immediately post HVCC , the AMC;s offered fees as low as $175 for URAR . They might still be that low if appraisers did not talk about it here and elswhere. I recall it was a struggle to get them back up to the $300 and above mark for AMC work in this area, ( and others) but over time, it happened.

 

[Michigan CG]

not everyone has the ability to produce a higher quality report no matter the fee offered. i have reviewed some reports where the appraiser was paid a damn good fee ..................and the report was pure crap. too many appraisers rely on canned statements and general commentary and an apparent lack of research ability. simply raising the fees would not produce higher quality reports.

In the one mentor system many do not know what a quality report would look like and would not have the ability to produce it.

 

[Michigan CG]

Why does no appraiser seem to understand the basic mechanics of supply and demand? .....................
The ONLY reason the AMCs can get these requests gobbled up so fast is an oversupply of appraisers in that market ......................... Again--that is supply and demand.

Supply/demand is what always HAS and always WILL drive the price appraisers can expect to get for any assignment. Especially the now commoditized 1004 on your local area's typical SFR. The folks getting more than C&R? Ask them how they do it, though I doubt they will share many secrets.

Some people will never understand supply and demand............they think that fees should be contrary to supply and demand.

I have shared multiple times how to get fees higher than C and R, some people don't want to put the work in.

 

[Michigan CG]

The only way S/D applies is the special set of circumstances/reduced ordering channels affords the AMC;s tremendous leverage over the supply of appraisers, whatever that supply may be, unless there is such a severe imbalance such as in the COW states.

The fact that some appraisers are blind to it, and then accuse other appraisers of not understanding supply and demand plays right into AMC interests. They love having appraisers fight among each other and cling to a myth about s/d as if some day it will balance out.

So you admit that supply and demand raised fees in the COW states..........is that some sort of anomaly? Is it something that is just a fluke and not related to supply and demand?

Why are some AMCs getting away with $295 in my market (the fee was $325 but the scumbag AMC reduced the fee by $30 because of no 1004MC needed on the order) while my average fee for residential is around $500? That low fee is because the appraiser is afraid of losing a (garbage) client.

No one is going to pay me $450 or $475 or $600 if they can find a guy for $295 for the same work product.

Why would an appraiser charge $400 for a divorce when for the same divorce I am getting $750?

Some of the fees are because appraisers don't know what they are worth (or maybe they do) while some fees are a product of supply and demand in the local market and some live under rocks where they don't know what the fees are in the area.

But overall, when it comes down to it, supply and demand works in all markets.

 

[Overimprovement]

One last thought--every market's supply/demand curves meet at what we call price. But that is in aggregate. This is a macroeconomic look. In reality, these aggregate curves are the summation of EVERY individual supplier's curve AND every individual user's demand curve. In a small market with 10 appraisers, 3 may be fine doing 1004's for $350. 3 may require $375, 2 $400, and 4 $450. There may be 8 users. Now all the users want to pay as little as possible, but have to accept what the suppliers are willing to supply reports for. In the short run, they simply have little choice.

So C&R may end up being $375, with a few folks not getting as many orders, and others getting all they can handle. If the folks happy with $350 raised their level to $375, then C&R would inch up.

I know this example doesn't speak to most appraiser who are in markets with perhaps a 100 or more competing against them, but even in those markets, the aggregate curves are still constructed one appraiser/assignment at a time, and one user at a time.

I don't care if anyone agrees with me or not that supply/demand is the main driver of fees, but I do at least hope there is some increased understanding that individual appraisers are a lot more in control of setting C&R fees than we might care to admit. We are not lemmings being driven over the cliff. We can stop, look around and say, ahhh.....no. Yeah you may get trampled a bit by the other lemmings, but once the rush is over, who will be the only lemming left?

And just as one final reminder, which many others drive home all the time--there ARE appraisals that are not mortgage related!

 

[Michigan CG]

That plan may work for somebody but most are not embracing it for good reason...verification, time management, etc it simply will not work. If that is what it takes to compete, working at such warp speed with instant turn around it is first of all not possible to do on many assignments and in normal course of business takes a couple of days to verify and gather information. And OMG an assignment may need a modicum of analysis and thinking to get it right...................

YOu are wrong, many are doing EXACTLY what George talks about already. While George may be a well-respected guy on this forum, many figured out how to do this long ago. VERIFICATION.............that is why you are wrong. Many do not believe in verifying anything. They get in trouble when they get into work that is not lending and get their a**es handed to them. Then they crawl back into just lending work.

..........................The fact that you are not actually working our side of the fence might explain the detachment from reality of some of your feedback, even though academically it might sound reasonable it does not reflect real world conditions, there comes a time what it might take to succeed, such as warp speed or low fees is so inane it simply is not worth it, considering the cost and effort to stay in the business current with education .............

George has no detachment from reality, many people are doing exactly what he has stated. And considering the very low thresholds of quality for the AMC report it is actually not hard to stay in this business.

............... In general, appraisers including myself are delivering faster than ever. There comes a point where when such inane solutions are the only way to get an edge it would be an untenable business, fortunately it is not there yet, ..................... But unless USPAP is absent or nobody is reviewing or caring any longer, it is not feasible to achieve speed and credible results. so one or the two is sacrificed.

SOME appraisers are delivering faster than ever. I don't subscribe to that method and know very many others that don't either. BUT there are many that do. In the last six years appraisers should have worked at getting rid of the AMCs or at least the ones that suck (as you have).

As to USPAP or no one caring any longer, there are many who do not care or just look past the errors and violations of USPAP.

I did a review earlier this year and misread it as a DESKTOP review when I got the assignment. Turns out it was a standard review and took a lot more time than I wanted it to but I accepted it without really reading what they wanted. My bad. I did the review of the absolutely horrible report and in the notes to the lender I told them the fee was absolutely too low for a report like this and that they needed to turn the report into the state. They responded to me, and I can't make this up "If the report was bad, we would have sent you a different one. This was just for compliance and we have to have X number of reports reviewed per year and the reports are picked randomly". That was their response. They did not care about quality one bit, just compliance.