What is wrong with this picture?

[Ray Miller]

What is wrong with this picture????

Friday I received two orders by email.

One was for a 1004 rural appraisal with all it risks, insurance required, travel time, research time. It was sent to me by an AMC for $175.00 figure I would have about $350 in completing the report then another $150 for profit. Total should have been $500.00

At the same time of day I get an order to verify two credit card machines, fill out six questions on line, take one picture each of the credit card terminals and exterior picture of the subject property. This required thirty minutes of drive time, five minutes on site and five minutes of computer time. Total payment $175.00.

It just so happen that both orders came from the same bank, but different divisions. My total profit would be about the same for each report. $125 to $150.

So what is wrong with this picture and why is it wrong?? How as appraisers do we correct it? Or do we correct it ??

 

[Alison Swain]

Well, it seems obvious: appraisers and their services are held in low esteem and even lower value.

How to remedy? Who knows?

 

[Lee Lansford]

Well, it seems obvious: appraisers and their services are held in low esteem and even lower value.

How to remedy? Who knows?

Yes! ! ! ! ! !

Appraisers are sort of similar to grains of wheat...one being pretty much the same as another.

 

[Mike Boyd]

It is easily remedied by not accepting orders such as these. Their success is perpetuated by those appraisers who are desparate or who lack self esrteem.

 

[Mike Boyd]

Maybe there should be a CE class on how to value your time and expenses.

 

[c w d]

Expenses + <what you want to earn> = Fee

Please make payable your check for $125 to C W D for this pricing class. Thanks for participating in the C W D School of Real Estate!

If you think about how long it takes to complete a cookie cutter with nothing out of the ordinary you should be making $300 - $350 for about 3 hours of work. Thats about $100/hour. And thats what I believe we should be making. Unfortunately, our good faith estimate for our appraisal fee is most often set for us.

I had a realtor today that wanted an FHA appraisal for a house within the city. Nothing special. A typical home. I quoted $400. 15 minutes later she called back "The good faith estimate my client was quoted by the mortgage company is $250 and they're only willing to pay that" I told her that I had nothing to do with the good faith estimate. My fee for FHA appraisals with the added inspection time is $400 and that my typical fee on a conventional appraisal is $350. She canceled the order......

You know, I think we should have a place at the closing table. That would prevent half the crap that goes on. Imagine if an appraiser was at the closing table and saw the HUD-1 where the appraisal fee was inflated from he/she had been paid or could review the appraisal right there only to find changes to it. Could you imagine the influence we could have?

 

[Michigan CG]

.....you should be making $300 - $350 for about 3 hours of work.....

I think those days are long over, and I am not sure appraisers ever deserved $100/hour consistently. My wife has six years of very specialized education and does not make near that much.

Are you suggesting that an appraiser is worth $200,000/year. I don't think that is realistic at all. The typical appraiser made $60,000 in 2005, or about $30/hour. Not bad for a two year paid apprenticeship, and 120 hours (at the time for a certified residential) of education that everyone has to admit is not hard.

Reality is setting in for some, for others now working for $15/hour they are getting screwed.

 

[Ray Miller]

I think those days are long over, and I am not sure appraisers ever deserved $100/hour consistently. My wife has six years of very specialized education and does not make near that much.

Are you suggesting that an appraiser is worth $200,000/year. I don't think that is realistic at all. The typical appraiser made $60,000 in 2005, or about $30/hour. Not bad for a two year paid apprenticeship, and 120 hours (at the time for a certified residential) of education that everyone has to admit is not hard.

Reality is setting in for some, for others now working for $15/hour they are getting screwed.

Are we talking pretax take home after all normal business expenses or are we talking gross for the business here?

 

[Jim Onderisin]

Are we talking pretax take home after all normal business expenses or are we talking gross for the business here?

THAT is exactly the question, Ray. I've lost count of the number of times some of us forumites have tried to compare an appraiser's gross revenue to an employee's hourly wage. It's unbelievable! Either they don't understand, or they don't want to face that a big portion of the gross is eaten up by expenses, payroll taxes, health insurance, etc., etc.

Here's my take on your original question, though: The amount an AMC offers has nothing to do with an appraiser's self-esteem, how much the clients value the appraisal, or how much it costs us to produce the appraisal. We already know that clients NEED appraisals to make loans. They'll pay what they must to get them.

One of the problems, as Lee pointed out, is lenders and AMCs order appraisals by REPORT FORM. By doing so, they create the appearance that all appraisals are equal and should command the same fee. They force all single-family detached properties into the "1004 box", all 2- to 4-unit appraisals into the "1025 box", etc. And, as all us junior economists know, when something becomes a commodity, its price falls because that becomes the only unit of comparison.

The other part of the problem is low demand. Lenders are trying to handle more valuation questions now with AVM's or BPO's and, with the current real estate depression, there is even less demand for appraisals compared to continued high appraiser-supply. So, although lenders are willing to pay what they must for appraisals, they are paying less due to lower demand and AMCs are competing with each other for existing business, then squeezing appraisers for their profits. So, there you go.

 

[Mike Garrett RAA]

Been over this half a dozen times before....

Typical residential appraisal assignment.

Receive order, initial research 1 hour
Inspection, drive comps 1.5 hours
Write Report 2.0 hours
Handle calls from everyone 1.0 hour
Administrative work .5 hours

Total 6 hours per report

Expenses per report $75

Taxes per report $105

Net per report (average) $170 or $28 an hour net

Better than flippin burgers at McD's but not a get rich scheme. Appraisers who are selling their services for $250 or less are going in the hole...they just don't know it.