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“One of the best courses that I have had in 17 years!” -Amy H.
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Editor’s Note: The current edition of Working RE is in the mail. OREP E&O insureds enjoy it free!
I Can’t, Therefore…It’s Not Possible
By Richard Hagar, SRA
I was reading an interview with a chief appraiser at a large AMC. He indicated that many lenders and AMCs are paying more than $700 for their appraisals in some areas. Many of the comments posted to the story said: “You live in a dream world,” or “Talk about fake news,” or “Nobody’s receiving fees like that,” and “I work in Southern California and lenders are not paying fees like that.” I find it interesting that if something is not within the realm of their experience, many conclude that the information must be wrong, fake or not possible. Most of the critics were stating that they can’t earn fees higher than $Xs, therefore this chief appraiser must be making things up.
Here’s the deal: if something around that fee seems unbelievable to you, maybe it’s due to the quality of your clients, the quality of your work or your inability to negotiate a higher fee—or all three.
Most residential appraisers have been given a grade based on the quality of their work and how they run their businesses. An appraiser’s grade or “Tier Status” has a major impact on how much they are paid for their work. Tier 1 appraisers are often paid more than $700 for a standard 1004 appraisal on a ranch style house, on an inner city lot. While Tier 2 or Tier 3 appraisers are paid significantly less for an appraisal on the same property. Why? It often comes down to the quality of the appraisal and the level of professionalism.
I teach CE classes all across the U.S. and in every city I explain how appraisers and their work are graded and how it impacts the fees they are paid. In every single class, I have a small group of vocal appraisers tell me that appraisal fees in “their area” are significantly less. Then during breaks, other appraisers come up and whisper that their fees are even higher than I stated in that same area. Just this week while teaching a class in the southwest an appraiser told me that his standard fee is $900 and he’s already booked out two weeks. He then glanced over at the appraiser who complained about making significantly less and said that his work is known by the lenders and AMCs to be sub-par…Tier 3, or worse.
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In Tucson, Los Angeles, Redding, Seattle, Houston, Cleveland, and even small town Kansas, I hear the same story: “Lenders aren’t paying over $400 for appraisals.” Hogwash! In most cities I’m fairly certain that today certain appraisers are earning higher fees. Some lenders and AMCs are ready, willing, and able to pay more than the $700 fee noted by the chief appraiser in that interview. But here’s the catch: they pay higher fees for polite, businesslike appraisers who produce high-quality appraisals.
An appraisal fee is more than just the money paid to the appraiser. Clients must also pay for the management of the appraisal flow and its review. When a client has to spend more time managing and reviewing a bad appraisal, begging an appraiser for additional information that should have been in the report in the first place, or running the appraisal through CU multiple times, there is less money left over to pay the appraiser. The management, review and appraisal of a property can easily top $1,000 per property. How much the appraiser receives is dependent upon how well they solve the client’s appraisal problem.
In my live and new online CE appraisal class (Identifying and Correcting Appraisal Failures—visit OREPEducation.org), I show appraisers 20 problems that are easy to solve, and that if corrected, can increase the quality of their appraisals, in addition to avoiding snags with Collateral Underwriter and help qualify them to ask for and receive higher fees. When discussing continuing education, I sometimes hear “No thanks, I have enough CE for this renewal period.” Enough?! The minimum needed to renew should not be the criterion for how much education you should absorb and put into practice. I suggest learning more than the minimum—then increasing your fees. Figure out how to elevate your business practices and appraisal quality. My recommendations are to take good appraisal education and find opportunities to talk with other appraisers about how to enhance the quality of your work.
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About the Author
Richard Hagar, SRA, is an educator, author and owner of a busy appraisal office in the state of Washington. Hagar now offers his legendary adjustments course for CE credit in over 30 states through OREPEducation.org. The new 7-hour online CE course How to Support and Prove Your Adjustments shows appraisers proven methods for supporting adjustments. Learn how to improve the quality of your reports and defend your adjustments! OREP insureds save on this approved coursework. Sign up today at www.OREPEducation.org.
Send your story submission/idea to the Editor: isaac@orep.org
by Joshua Walitt
In my fee appraiser experience, the key to my success was to deliver an appraisal report that answered the questions before that type of intended user would need to ask. In other words, if lending clients were asking me about x, y, or z two or three times, then I knew to include that type of information in my appraisal report as a standard, rather than waiting for the revision request. This process allowed me to maximize my time (revisions eat up a lot of time!) and to expect fees commensurate with the quality of my work. Speaking with clients, I knew it benefits them to receive reports that allow them to use the report initially, rather than asking for a revision or multiple revisions. I got to the point I was typically being asked for 0 to 3 revisions each month, and working very efficiently. My work was in towns, rural areas, and remote locations. Good article, Richard!
-by Paul Oliver
In Texas, Texas A & M University conducts a fee survey every two years in order to determine customary and reasonable fees. From the last survey, the c and r fee for the Houston SMSA for a basic 1004 was +/- $350.00.
-by Terry O McDaniel
Even VA changed the fee in West Texas to $700 on March 1.
-Terry McDaniel
terrym@acrosstexasappraisals.com
by Mike Ford, AGA, GAA, RAA, Realtor(r)
Richard I took your Avoiding Appraisal Fails class and recommend it to all that perform FNMA appraisals without hesitation. As an aside, you never did identify exactly WHO is rating appraisers T1, T2 or T3? Because IF it is FNMA then they have even more to answer for than I originally estimated.
-by Steve
I average over $650 per appraisal in Utah.
-by George Nervik
Great article Richard and so true. I increased my bare minimum base fee to $800.00 when the VA increased the base fee for Washington back in November 2016 and I’ve been getting those fees ever since. In fact it’s rare that my fees are not above the $800.00 base fee.
-by James Scholl
Richard, I wish you had asked the amc in what cities he is paying appraisers $700. I am ready to move. Do you still appraise? Are you getting $700? I am very highly rated by my clients and can’t $700. So I imagine you will say “get better clients”. Fine, where are they? Can you point them out? I market our firm routinely hear the potential client will only pay what I consider low fees. Then I verify with other appraisers that they are hearing the same thing. Is it possible you have been misled? Or that this is an isolated area and that it does not apply to most of our country?
-by Spencer Paul
Great article and could not have said it better. No one in the PNW should be work hard for 400-650. They are MANY lenders that paying 700 and much higher with flinching. Self examination of work and clientele is always critical in any business.
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