When Customary Fees Become Unreasonable

[glenn walker]

Thanks diver mike I appreciate your sincere move and work to help appraisers. Glenn Walker

 

[glenn walker]

Thank You Diver Mike * I appreciate your commentary and I hope you can help the appraisal industry ** I may join your forces in the near future. I am opened minded and we need people like you to wake appraisers up to what the we face in the future. Keep up the good work !

 

[DiverMike]

Thank you Michigan!

I concur re turn around time, but that is something that I'd have zero chance of getting anything done on alone. The benefits to the consumer in having the appraiser perform a 'cold review' a day or two after he or she thinks they are finished would be lost on our regulators as a stand alone issue. There MAY be incorporation potential in the fee proposal since I am already advocating that all comparisons be done on a 40 hour week with weekends, holidays and sick days off. As a secondary issue the chance of getting is through is stronger than as a stand alone issue.

As for fees relating to quality, I think we will have to agree to disagree. Consumers benefit from having a higher fee, COMPETENT appraiser than they do having a less experienced, lower fee appraiser. Take so called "date of death" appraisals for IRS. I worked for IRS as an appraiser and can tell you THEY have no such thing. Yet, routinely we hear people saying to develop that as alternate product line. Now, IRS DOES have several purposes for which a specific fair market value (FMV) definition applies to a specific date of death. Three come to mind and yet not one of the three has the same defined FMV. (Estate, Gift or establishing a new basis). Ninety percent of the low bid appraisers will provide a standard FNMA or similar generic market value definition instead of the applicable IRS FMV definition. So right up front, the defined value provided may or may not equal the defined FMV value required-a value definition which MAY vary by tax region across the country! (see www.mfford.com value definitions tab-near bottom). The appraisal fee savings today will take approximately three years to come back and bite the consumer on the rear end. Three years of compounded interest and penalties. That's usually much more than the highest fee I ever charged for an assignment. Consumer-taxpayer may win on appeal, but more than likely by that time they will be coerced into a settlement.

In my state, we are at about the same number of appraisers that we had before licensing and FIRREA. Only a few years before that, we had 4 to 6 week turn times. While there ARE too many willing to accept low fees, I don't think it is due to an overcrowded profession so much as a cowed, and broken profession. Those left have grown accustomed to luxuries like food and clothing; and ALL have to compete with that bottom of the barrel appraiser that is still sending his teenage son or trainee out to inspect the subject; shooting LOTS of photos (except the comps); using MLS or Google Street pictures for their "analysis" (and report photos), and arbitrarily adjusting sketch dimensions so they gibe with public records or assessor records. I'll concede we have too many of THAT type left.

Lastly another concession-the young Jarheads of today DO look better than we did (except marching). Don't tell them this but there is a tiny possibility that they may also be tougher. Semper Fi to todays 'boots' too. (PS-Holding presidential umbrellas is NOT part of their standard training; but obedience to orders is).

 

[DiverMike]

Thank you Michigan!

I concur re turn around time, but that is something that I'd have zero chance of getting anything done on alone. The benefits to the consumer in having the appraiser perform a 'cold review' a day or two after he or she thinks they are finished would be lost on our regulators as a stand alone issue. There MAY be incorporation potential in the fee proposal since I am already advocating that all comparisons be done on a 40 hour week with weekends, holidays and sick days off. As a secondary issue the chance of getting is through is stronger than as a stand alone issue.

As for fees relating to quality, I think we will have to agree to disagree. Consumers benefit from having a higher fee, COMPETENT appraiser than they do having a less experienced, lower fee appraiser. Take so called "date of death" appraisals for IRS. I worked for IRS as an appraiser and can tell you THEY have no such thing. Yet, routinely we hear people saying to develop that as alternate product line. Now, IRS DOES have several purposes for which a specific fair market value (FMV) definition applies to a specific date of death. Three come to mind and yet not one of the three has the same defined FMV. (Estate, Gift or establishing a new basis). Ninety percent of the low bid appraisers will provide a standard FNMA or similar generic market value definition instead of the applicable IRS FMV definition. So right up front, the defined value provided may or may not equal the defined FMV value required-a value definition which MAY vary by tax region across the country! (see www.mfford.com value definitions tab-near bottom). The appraisal fee savings today will take approximately three years to come back and bite the consumer on the rear end. Three years of compounded interest and penalties. That's usually much more than the highest fee I ever charged for an assignment. Consumer-taxpayer may win on appeal, but more than likely by that time they will be coerced into a settlement.

In my state, we are at about the same number of appraisers that we had before licensing and FIRREA. Only a few years before that, we had 4 to 6 week turn times. While there ARE too many willing to accept low fees, I don't think it is due to an overcrowded profession so much as a cowed, and broken profession. Those left have grown accustomed to luxuries like food and clothing; and ALL have to compete with that bottom of the barrel appraiser that is still sending his unlicensed teenage son or trainee out to inspect the subject; shooting LOTS of photos (except the comps); using MLS or Google Street pictures for their "analysis" (and report photos), and arbitrarily adjusting sketch dimensions so they gibe with public records or assessor records. I'll concede we have too many of THAT type left.

Lastly another concession-the young Jarheads of today DO look better than we did (except marching). Don't tell them this but there is a tiny possibility that they may also be tougher. Semper Fi to todays 'boots' too. (PS-Holding presidential umbrellas is NOT part of their standard training; but obedience to orders is).

 

[Terrel L. Shields]

$550 for a simple 1004 that can be written in five hours? $100/hour for simple 1004's? Very few professionals make $100. I like how the proposal talks about plumbers making $130/hour. That $130/hour does not go to the plumber on the job. That $130 also pays for the storefront/office/warehouse, the plumber's van, all the tools, the inventory they carry, the secretary who schedules the appointments.

You haven't hired an attorney nor surveyor lately have you? The court reporter is paid by the word. I got a $25 "witness" check and she made $1 a word - couple thousand while knitting a sweater. Our abstract office charges $50 an hour....to use their records which they copy from the clerk.

So you have no tools? No costs? no assistants? I cannot think of a single URAR that I didn't spend more than 8 hours and 20 miles mileage at a minimum and like today I just drove 530 miles doing research in two distant courthouses. Ask me about my 14 hour day.

 

[DiverMike]

Thank You Diver Mike * I appreciate your commentary and I hope you can help the appraisal industry ** I may join your forces in the near future. I am opened minded and we need people like you to wake appraisers up to what the we face in the future. Keep up the good work !

Thank you Glen. We'd love to have your help. All I do is try to show fellow appraisers that we CAN succeed. CA AB 624 proved that to me. BTW-posting in this forum put me in touch with an appraiser issues fighter from a few years ago that did a separate study re time and costs. He also pointed me to a wealth of ammunition on this and some other issues we are concerned with. Thank YOU folks for reading through my long winded posts!

 

[DiverMike]

You haven't hired an attorney nor surveyor lately have you? The court reporter is paid by the word. I got a $25 "witness" check and she made $1 a word - couple thousand while knitting a sweater. Our abstract office charges $50 an hour....to use their records which they copy from the clerk.

So you have no tools? No costs? no assistants? I cannot think of a single URAR that I didn't spend more than 8 hours and 20 miles mileage at a minimum and like today I just drove 530 miles doing research in two distant courthouses. Ask me about my 14 hour day.

All good points Terrel ! Sometimes we forgot how much time we really do put in. By the way, I only allocated 25% for office & operational overhead. Those with assistants tell me its closer to 50% or 60%. I know back when I had them, I used to pay trainees 35% the first month; 40% the second; 45% the third and if I still had them after that I split 50/50 while cosigning their reports. I wanted THEM to earn no less than $25 an hour. That was eight to ten years ago. I never begrudged them outside work as long as they didn't poach my clients; and would even help them. Im still friends with most I ever trained, that stayed in the business to this day. Four are even fellow Guild members.

 

[Eli]

You haven't hired an attorney nor surveyor lately have you? The court reporter is paid by the word. I got a $25 "witness" check and she made $1 a word - couple thousand while knitting a sweater. Our abstract office charges $50 an hour....to use their records which they copy from the clerk.

So you have no tools? No costs? no assistants? I cannot think of a single URAR that I didn't spend more than 8 hours and 20 miles mileage at a minimum and like today I just drove 530 miles doing research in two distant courthouses. Ask me about my 14 hour day.

Ok . Many if not most would agree with you. Many times the differences and disagreements on this forum are because real estAte markets are so different in complexity.

 

[Eli]

Sometimes the disagreements on this forum are due to people trying to drive down appraisal prices,

 

[Meandering]

DiverMike,

Can you point me to the legal reference of what AMCs are allowed to charge for their services? Seems I saw it in a law some place awhile back, and I can't find the reference anymore.

I think that what AMCs can charge is just as important as what appraisers should be paid, as the CFPB is so darned determined to keep the fees comingled.

Thanks.