Working RE on The Great Debate on Appraisal Fees

[George Hatch]

And no, when compared to observe/report I don't care enough about how those comments make you feel to refrain from taking note of the obvious. That lender didn't engage you and the lender didn't give you that assignment. Somebody else did because they have the direct relationship with the lender and you don't.

 

[J Grant]

And no, when compared to observe/report I don't care enough about how those comments make you feel to refrain from taking note of the obvious. That lender didn't engage you and the lender didn't give you that assignment. Somebody else did because they have the direct relationship with the lender and you don't.

Who are you talking to?

I would say that most, if not all of us, already know and have known for years everything you post on this topic, which, for some reason, you assume we have no awareness of ..

I don't feel anything about your comments here,. I can't speak for the others.

 

[J Grant]

Wrong. The retail fee is the appraiser's fee when that appraiser is the the one who has the direct relationship with the lender. Not when they are working for someone else who has that relationship.

Like it or not, you do not sell to the lender everything the AMC sells, starting with their expanded geographic coverage and whatever additional layer of review they perform. The lender has 10 assignments and they place them all with a single phone call or email. Not 30 phone calls to different appraisers trying to get their coverage. They leave that to the AMCs.

Now if your argument is that the AMCs value-add isn't worth $10 let alone $300 then there's going to be a lot of people agreeing with that, except perhaps for the lenders who have been deciding for the last 15 years that the $300 is indeed worth it to them. Unfortunately for the appraisers the lenders opinions are the only ones that count in their decision making. Nobody cares what the appraisers think.

Save your anger for the lenders, because they're the ones who - right or wrong - think the $250 AMC appraiser's work is just as acceptable for their use as your work at twice the fee. The AMCs are just engaged in order fulfilment. For profit.

I personally accept work from only one AMC, which is lender-owned. Half of the work is high-fee complex orders; the rest are a small discount off C and R. I do not fee bid for other AMCs. I am disgusted that the business has come down to that.

As far as AMC;s adding value for the lender, yes it does add value for the lender - so the lender should pay for that service to the eAMC as a cost, the way they pay for IT support or accounting - teh vale service to the lender of admin for the AMC should not come out of the retail appraisal fee the barware paid - if it must come out of a split, it should be capped - but a separate not related to the appraisal fee payout from the lender to the AMC would be better.

The above - teh lenders do not pay an AMC fee of $300 to process an appraisal order! Do you honestly believe that if the lender had to pay it as a separate cost , they would pay an AMC $300 per order? They'd probably pay $75, if it came out of their pocket, and if they had to pay more, they would drop the AMC and order the work directly. If the lender could pass along the cost to teh borwoer they might be able to raise what the AMC gets, as long as the lender did not pay it as a cost. But if they had to pay it as a cost - it would be cheaper for them to not use an AMC and order direct, which is what the AMC industry fears, thus they fight to retain the efee split model ( as do lenders - why should they pay a cost if they dont' have to?)

The lender is not approving a $300 fee to the appraiser; the lender has no idea what each job profits the AMC or pays the appraiser when it is assigned - why would the lender care?
The owner paid NOTHING to the AMC - That is what th eAMC service is really worth to the lender - NOTHING. Becasue the lender sent the AMC the $550 the borrower paid as a pass through. Get it? Did a bell bo off finally? The AMC offers FREE OF COSt ( typically) service to the lender. THAT is why they are so popular. Do you think lenders using an AMC would be this popular if th lender actually pay a cost out of their own pocket?

The lender sends the AMC the $550 I( for example) the $550 the browser paid the lender for the appraisal as a pass-through payment. The lender does not keep any of the $550, ( unless there is a kickback going ? Let's assume not ). The borrower paid to X Lender $550 for the appraisal, the lender sends the AMC $550 and leaves it up to the AMC to select the appraiser. The AMC has an incentive to find the cheapest fee for the order they can - so if the AMC finds an appraiser for $250, the AMC keeps $300. If the AMC can only find the lowest fee of $400, the AMC keeps $150. This means a continuous downward pressure on fees from the AMC side only, which is not present in normal C and R ordering.

When the Lender owns their own AMC ( captive order ) for their own work, it usually costs plus - if the borrower paid $550, the AMC for lender pays the appraiser $400 and the AMC they own keeps $150 ( as an example) - all the appraiser on the panel get the same $400 in a region for non-complex work so there is not competitive bidding, the high-end complex orders do go out for bids.

 

[Mejappz]

 

[djd09]

end the unethical stakeholders gouging the public...and COD

 

[George Hatch]

The above - teh lenders do not pay an AMC fee of $300 to process an appraisal order! Do you honestly believe that if the lender had to pay it as a separate cost , they would pay an AMC $300 per order? They'd probably pay $75, if it came out of their pocket, and if they had to pay more, they would drop the AMC and order the work directly. If the lender could pass along the cost to teh borwoer they might be able to raise what the AMC gets, as long as the lender did not pay it as a cost. But if they had to pay it as a cost - it would be cheaper for them to not use an AMC and order direct, which is what the AMC industry fears, thus they fight to retain the efee split model ( as do lenders - why should they pay a cost if they dont' have to?)

The lender is not approving a $300 fee to the appraiser; the lender has no idea what each job profits the AMC or pays the appraiser when it is assigned - why would the lender care?

I've heard exactly the opposite. That the lenders know exactly what's going on because they require the AMC to disclose it. Even if that disclosure occurs after the fact. The two choices here are that the lenders are either informed about what the AMCs do or else the lenders are uninformed. All or almost of them, not just a couple.

Maybe the lenders are lying. Maybe the AMCs are cheating the lenders. Maybe the AMCs are dictating terms to their own clients and preventing the lenders from shopping between AMCs. "Ms. Lender, from now on YOU work for US and will do as we say."

The above sounds stupid and illogical because it is stupid and illogical. In a competitive marketplace this literally could not occur at the similar degree across all or almost all the AMC users. Of which there are far more than just 1 or 2 or 10 or 20.

Think about it for just a moment: exactly how likely do you think it is that the lenders would all say "Don't tell us how this fee breaks down because we don't want to know"...? These are the same lenders who want to micromanage what verbiage the reports use but they don't care about the appraisal fee?

I support full disclosure to the borrowers and separation of the fee. Full stop. I just don't think it's going to result in higher fees for the appraisers who are still competing with each other. Whether their end is fixed or variable the AMCs are still going to allow appraisers to compete with each other by fee. They're not going to try to prohibit that. And they're going to continue to shop by those same fees to the extent they think there are appraisers out there who will do it. If you don't believe me then try talking to a couple of the executive types for yourself.

If memory serves, we still have a couple regulars who have worked at the management level at these AMCs. You might consider asking them whether of not their company is under constant pressure by their clients to deliver more for less.

 

[J Grant]

I've heard exactly the opposite. That the lenders know exactly what's going on because they require the AMC to disclose it. Even if that disclosure occurs after the fact. The two choices here are that the lenders are either informed about what the AMCs do or else the lenders are uninformed. All or almost of them, not just a couple.

Maybe the lenders are lying. Maybe the AMCs are cheating the lenders. Maybe the AMCs are dictating terms to their own clients and preventing the lenders from shopping between AMCs. "Ms. Lender, from now on YOU work for US and will do as we say."

The above sounds stupid and illogical because it is stupid and illogical. In a competitive marketplace this literally could not occur at the similar degree across all or almost all the AMC users. Of which there are far more than just 1 or 2 or 10 or 20.

I support full disclosure to the borrowers and separation of the fee. Full stop. I just don't think it's going to result in higher fees for the appraisers who are still competing with each other. Whether their end is fixed or variable the AMCs are still going to allow appraisers to compete with each other by fee. They're not going to try to prohibit that. And they're going to continue to shop by those same fees to the extent they think there are appraisers out there who will do it. If you don't believe me then try talking to a couple of the executive types for yourself.

If memory serves, we still have a couple regulars who have worked at the management level at these AMCs. You might consider asking them whether of not their company is under constant pressure by their clients to deliver more for less.

I don't think the AMCs are cheating the lenders. The only ones getting "cheated" are the appraisers (financially, I understand it is legal)

Geez, don't you get it?? If the bundled fee with its fee split is ELIMNATED, then no, the appraisers will not need to compete with each other for low fees at an AMC . ( see below)

I agree, I do not think disclosing the fee splits is the answer and I've said that repeatedly. The answer is to eliminate the bundled fee for appraisals and have the appraisal fee that is covered by the borrower paid to the appraiser (what lenders who order direct do, and the mortgage brokers used to do, bad as they might have been in other respects).

If an AMC and lender want to disclose the fee split, I support it, of course, and it might help a marginal amount.

 

[George Hatch]

I have never disputed the point that the appraisers are making less than they should. I don't know why you would (apparently) think we are in disagreement about that. As for it somehow becoming possible that appraisers won't have to compete with each other, I understand you ; I just don't agree with you.

Even if the disclosures are expanded the borrower is still going to be paying both fees. And such a change in disclosures is not going to change the amount of the appraiser's fee. If the borrowers complain about the AMCs end all that happens is their end gets cut - maybe. In no case is the appraiser going to be getting any piece of the AMCs end; not when the AMCs can still readily find another appraiser who will accept less.

Fees vary by locale. That demonstrates that the AMCs don't have the same amount of leverage in all the different markets in the U.S.. The AMC motivations and conduct are the same everywhere; what's different is the level of competition-between-appraisers in the different markets.

^^^^ What's your response to that fact?

 

[J Grant]

I have never disputed the point that the appraisers are making less than they should. I don't know why you would (apparently) think we are in disagreement about that. Or indulge in the idea that you are capable of coming up with any reasoning that others can't somehow understand. I understand you ; I just don't agree with you.

Even if the disclosures are expanded the borrower is still going to be paying both fees. And such a change in disclosures is not going to change the amount of the appraiser's fee. If the borrowers complain about the AMCs end all that happens is their end gets cut - maybe. In no case is the appraiser going to be getting any piece of the AMCs end; not when the AMCs can still readily find another appraiser who will accept less.

Good to hear we agree on th first!

Once again, I do not think disclosures are the answer. Haven't I said that on the board hundreds of times ?

Eliminating the bundled fee ( and its split ) is the answer, and let the lender pay a hard cost from their own funds for the AMC service. Maybe the ledner can pass thedi rcost for that service on to th borrower, idk.

In the above, by eliminating a bundled/split fee, the lender passes on the full appraisal fee covered by the borrower to the appraiser. - which removes the AMCs from the fee end wrt appraisals, and they can do the rest- ordering, administration, and review. Tht is in fact the way AMCs;s owned by a lender usually work - they operate on cost plus where their appraiser in a region get paid the same fee for non-complex work and only bids on complex or high value ( typically)

For independent AMC;s if the lender can get the AMC hard cost covered by the borrower, then they will. Again - disclosures of a fee split is not teh answer; elimination of the split via the bundled fee on the HUD allowed is teh answer.

 

[George Hatch]

What do you mean "good to hear that we agree on that"? When have I ever said otherwise? Never, that's when. Grow TF up.

The only way the lenders will be forced to pay the AMCs end instead of the borrower paying for it is if the feds enact a regulation to that effect. I daresay you'll have better luck getting the feds to legislate a national minimum wage for appraisers.

As for cost-plus what that would do is *increase* the amount of shopping and negotiating the AMCs engage in (and the costs they charge the lender for doing it) . But that isn't what you had in mind, is it?


I just posted a poll. Let's see who can be honest with their responses. And who will lie in order to make a point.