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Editor’s Note: Are lower quality appraisals the new normal? Here is why low-bid appraisal ordering might be driving down quality and driving out the best appraisers from the profession.
“Low Bid” Appraisal Ordering and Its Effect on Quality
by Isaac Peck, Associate Editor
Any appraiser who has worked with Appraisal Management Companies (AMCs) is likely familiar with the “order by email-blast” system that some AMCs rely on to fill orders.
The process goes like this: an AMC sends an email blast to all appraisers within a given area, detailing a particular property and offering a certain fee for the completion of the assignment within a prescribed time frame. Depending on the AMC, the email may or may not clearly include a scope of work and offer additional information about the property to help appraisers make an informed decision whether to accept. Appraisers receiving the email are then faced with a choice, accept the assignment as-is, and the fee being offered, or “counter” with a higher fee.
The problem is that oftentimes experienced appraisers feel that the fee offered is neither fair nor reasonable (but might be customary!). These experienced appraisers often counter the AMC’s initial offer and submit a higher bid to complete the assignment. In some cases, the AMC accepts but all too often, the order is accepted by another appraiser “at terms offered.”
The question raised by many seasoned appraisers familiar with this type of ordering system is what kind of quality does such a “low-bid” appraisal ordering system produce? The AMCs who utilize these systems insist their entire panel is vetted so that any appraiser they work with will do a good job. Some appraisers are not so sure. James Johnson (not his real name, he fears reprisal from AMCs and banks), an appraiser in New York with 25 years’ experience, provides a unique perspective on the issue and tells a story that may resonate with many appraisers.
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At Terms Offered
Johnson is a residential appraiser who also does appraisal review work for various AMC clients. Recently, he was underbid on an appraisal assignment to the tune of $50. The order came in the form of an email blast solicitation for a multifamily appraisal assignment. After assessing the complexity of the assignment and the required turn-around time, Johnson countered the bid with a fee $50 higher than what was offered. “Based on what I saw, I calculated how much time I would need to do it properly and I decided that the fee offered would not cover the work involved,” says Johnson.
Not long after he learned that the order had been accepted by another local appraiser at the terms offered, a scenario that Johnson says he experiences on a regular basis. Three weeks later, another email blast was sent out to review the same appraisal in question. This time, Johnson won the bid and was given the opportunity to review the work of the appraiser who accepted the earlier order for the lower fee. This is where things get interesting.
Review
Upon reviewing the appraisal, Johnson says he was shocked and angry at the low quality of work that was delivered. “The report was rife with inaccuracies, mistakes and questionable logic. I was steamed when I saw the quality of work done by one of the appraisers who keeps underbidding me. The comparable square footages, age, and lot sizes were all incorrect. One comparable that the Realtor had listed as a ‘handyman special’ was reported as being in good condition. All comparable photos were cut and pasted from the MLS. Garages were missed on two comparables. Finished basements and property locations were not adjusted for. The Subject contained two units, each with two bedrooms and one bath, but the rental comparables used in the appraisal included an unadjusted two-family unit with four bedrooms and two baths, and a one bed, one bath apartment,” says Johnson.
In addition to shoddy analysis on the adjustments and next to no research on comparables, Johnson says that all of the comments appeared to be canned. “Neighborhood comments were even worse than the comp selection and adjustments. Basically, it looked as though all of the comments were canned and nothing was original or specific to the subject. The 1004MC showed an absorption rate for months seven to12 at 22.50/month, months four to six at 44.67/month and current to three months at 53.67/month, but the appraiser stated repeatedly that the local market is slow, local market activity is stable and the data/activity is considered to be ‘too small to be considered statistically reliable.’ Everything was checked as stable. There was no reconciliation or explanation as to how the appraiser arrived at his final estimate of value,” says Johnson.
How it Happens
Johnson was so upset about the poor quality of work on the appraisal, and the appraisal ordering system that rewards such behavior, that he called the AMC. He says he wanted to find out why the AMC would give orders to an appraiser who produced such poor work when experienced, diligent appraisers are willing to do the same assignment for only a slightly higher fee. “I was told by the representative who works on the solicitation panel that she never would have given that appraiser the job over me. She stated that his rating is terrible whereas mine is excellent, and had this involved scrutiny by a human, anyone on their team would have chosen me over the other appraiser. The problem is that the solicitations are sent out offering a very low fee and it is only when nobody accepts the fee offered that humans get involved,” says Johnson.
The bottom line, according to Johnson, is that for this AMC at least, if a more experienced, diligent appraiser says that he or she needs a few more dollars, or asks for a few more hours on the due date/time, it is considered a “bid” and it is looked at only if no one else accepts the assignment “at terms.” “The result is that even though this appraiser has a terrible rating, and there are others like him I am sure, the AMC leaves him in the system and he can just accept the assignments at ridiculously low fees and continue to steal assignments from me and other appraisers who price the work to do the job correctly,” says Johnson. “Then the AMC uses that depressed fee to calculate what they consider to be Customary and Reasonable for the assignment type in my area.” The AMC representative went on to say that the same system is used for appraisal reviews and all of their products, according to Johnson.
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Penny Wise, Pound Foolish
“The funny thing is that I would have done the assignment correctly for a mere $50 more. And their client wouldn’t have had to wait an extra four-five weeks. The assignment was for a purchase so I know time was an important factor. I was told that the in-house reviewers looked at the appraisal and ordered a field review because they had no confidence in the original appraisal. So they saved $50 and are now spending another $400 for a field review,” says Johnson.
The fact that many large AMCs use an appraisal ordering system that automatically selects appraisers based on their acceptance of a low fee and turn-time is disconcerting Johnson and many other appraisers. “I know that most appraisers take their profession seriously and have standards. They have ethics. But day in and day out I keep losing work to appraisers who undercut me and take assignments at impossibly low fees. I’ve seen appraisers accepting a complex 1004UAD with an REO addendum and laundry list of attachments for a total of $250 and a three-day turn-time! These are appraisers who just check a few boxes, add a few photos and call it a day, and they get work that I should be doing,” says Johnson.
Who Pays the Price
It is not just the “honest” appraisers who lose out with such a system. Richard Hagar, SRA reports that in situations where the appraisal is deficient, the AMC is required to turn the appraiser into the state board for disciplinary action. Additionally, the field review conducted by Johnson is not sufficient for the lender to lend on, so an additional appraisal must be ordered. “While the review appraisal might contain an opinion of value, the opinion is not in the correct format, nor has the review appraiser inspected the property. The AMC must order a new appraisal and inform the lender that it has ordered: a) an appraisal, b) a review and, c) a new appraisal- all of which MUST be submitted to the lender prior to making a lending decision,” says Hagar.
The end result is that the AMC, if it seeks to comply with federal regulations, will spend an additional $400 on a field review, plus another $400-$500 on an additional appraisal, all because it attempted to save $50 on the first order. The catch is that technically the AMC is not the one who pays the price associated with selecting the appraiser in the first place. “Who gets charged for the review and the new appraisal? It should be the bank but they usually figure a way to charge the borrower for the bad business practices of the AMC and lender,” says Hagar.
Good Appraisers Driven Out
Johnson believes his experience is indicative of a major problem in the industry. Namely, that blast-type order systems, that deliberately offer unreasonably low fees for appraisal assignments, result in good, experienced appraisers being driven out of the industry, as well as a systematic degradation of appraisal quality and appraisal fees.
Johnson offers two particular assignments that he recently lost bids on to reinforce his point. The first was a 2055 appraisal order for a property listed for $7 million with over 6,000 square feet of living space on three acres of land. The property was gated and included two guest houses, an in-ground pool, and a tennis court. Johnson bid $900 but according to the AMC’s ordering system, the order was accepted at terms offered of $225.
The second property was listed at $3.5 million with nearly 6,000 square feet of living space located on the waterfront. Johnson bid $475 but the order was accepted at $225. “These are very complex properties. The 2055 appraisal form might save some writing time but it should be the same amount of work as an appraisal on a 1004. You just can’t afford to do all the work that is needed to produce a credible report on the fee offered. You still have to do all the steps. If there are appraisers out there who want to produce a good product and don’t care what they get paid, God bless them, but they’re not going to last in this business,” says Johnson.
“In my area, I’m one of the few appraisers doing residential work who hasn’t come into the industry in the last three-four years. Everyone else has moved on to other things because they refuse to lower their standards and submit shoddy work, and it just doesn’t make sense to submit quality work for such low fees,” says Johnson.
Johnson says that the current system rewards unethical, inexperienced appraisers who accept low bids and it puts appraisers like him in a position where it can be hard to get work. “I would be fine if I was bidding against other appraisers who are doing what I am doing, instead of submitting these generic, non-specific appraisals. Most of the appraisals I review have nothing to do with the subject. Yes they have a floor-plan and pictures of the subject, but every single comparable photo is cut and pasted from the MLS. The market data is all generic, cut and pasted comments from 100 other appraisals,” says Johnson.
Johnson believes that AMCs are fully aware of the problem. “I’ve talked to several AMC employees on the phone and they tell me they have frequent meetings discussing this very issue. It is brought up time and again yet nothing gets done about it,” says Johnson.
“I’ve been trying to hold the line. If we establish a customary and reasonable fee, and then some AMCs offers us $25 less, that is still within a reasonable range. But that slowly becomes the customary and reasonable fee, so the AMCs lower their bid even further. The end result is that the appraisers who are willing to cut corners are the ones who get the lion’s share of the work,” says Johnson. “If they allow the substandard appraisers to continue to underbid the ethical and competent appraisers for an extended period of time, the diligent appraisers will need to decide between working for minimum wage or starving. With the age of the average appraiser rising to over 50, many are making a third choice: leave the business.”
About the Author
Isaac Peck is the Associate Editor of Working RE Magazine and Marketing Coordinator at OREP.org, a leading provider of E&O Insurance for appraisers, inspectors, and other real estate professionals in 49 states. He received his Bachelors in Business Management at San Diego State University. He can be contacted at Isaac@orep.org or (888) 347-5273.
We’re always listening: Send your story submission/idea to the Editor: dbrauner@orep.org.
by Louis J Gleason, SRA
I have lot orders for a $15 differential!!!. Licensing, as predicted in 1992 has had two results. I see folks with 20 years experience who still do not know what they are doing.
-The competition among appraisers for work in any Metro area is such that, along with the AMC’s taking their 40% off the top, the business is no longer economic and as predicted by some very prescient people 20 years age has become a ‘hobby for those of us than can afford it’
Louis J Gleason, SRA
by Paul Davidson
Just in case you need to fill out a HUD-1, I found a blank form in this link http://goo.gl/AIUTKS. This site PDFfiller also has some tutorials how to fill it out and a few related forms that you might find useful.
-Pingback: “Low Bid” Appraisal: AMC Rebuttal :: Appraiser Talkback Blog
by John...
Just getting around to reading the articles. I would like to see
1.) EXAMPLES of the minimum required work for the low fee AMC’s.
2.) Some transparency in the orders that are sent out. Some AMC’s seem to send only complex assignments at low fee’s my way.
Also, seems like the cheap appraiser in the original article should NOT have a license and be prosecuted for fraud for trying to pass BS as an appraisal. Same for the AMC.
-by Toby@NorthBell.com
All anguish goes away if the breakdown of the appraisal fee appears on the HUD1.
-The AMCs fought “tooth & nail” to prevent this from happening. Imagine millions of residential closings yearly and the closing attorney explaining to the borrower your appraiser got $250 and the AMC got $300. How would the rest of the conversation go?
The HUD1 is LAW….it falls under RESPA. You cannot pass-go if you violate RESPA.
by Sam L
Here is what needs to be done: The AMC, as agent for the lender, charges the lender for its services. Period. The Appraiser sets his or her appraisal fee based on the total scope of work and the characteristics of the subject property; as well as any unusual complexity in the assignment. (How many days of work will it take to complete the assignment.) The Appraiser quotes the appraisal fee to the Borrower at the time of scheduling the inspection and collects the appraisal fee at the time of inspection. In other words, we handle a lender/AMC appraisal the same way we handle a non lending appraisal, accept that we recognize the lender as our client and we submit the report to the lender through its AMC agent for initial review. That is true appraiser independence. We are independent business owners, and we set our fees based on our cost of doing business and the quality of our work which is verified when it is submitted to the lender’s underwriters via the AMC. This way we end the existing fraud that is being perpetrated on the American consumer (who truly believes that “the appraisal fee” that they are paying is totally for the act of appraising their home) by making sure that no one other than the appraiser who inspected their dwelling is receiving any portion of the fee that they have paid. I do not know of any other “profession” other than appraising where the client/agent/customer determines the professional’s fee rather than the professional himself. Do attorneys have an Attorney Management Company? Do plumbers have a Plumbers Management Company? Do electricians? Do Surveyors? Do they require a third party to establish a “Usual and Customary Fees”? You know they damn well don’t. So enough!
-by r. villa
all this re-confirms, yet again, for me is that the lender mentality toward the appraisal process is “FAST AND CHEAP”. it has little to do with appraisal quality nor managing loan risk. lenders and lender interest groups control the entire appraisal process and do NOT want nor seek the input from the profession of appraisers. so the question is when, how or if ever the appraisers will regain some influence??????? just wondering appraiser don’t get involved in determining FICO requirements, LTV ratio, etc…why then do LOAN personnel get SO involved in the appraisal process or standards??????????
-by Downward spiral
I have read a lot of articles over the past several years about appraisers and AMCs but this is the most ridiculous thing I have yet read.
-On one hand the lending industry keeps harping on how important quality is in the appraisal process. Appraisers have taken the brunt of the blame for the financial crisis due to “over valuing” properties. Let’s get serious here. Sure there were some bad actors in the appraisal industry. Mostly these were appraisers that caved in to pressure to “hit” the lender’s numbers. I think the great majority of appraisers are happy that there is now a firewall between the commissioned loan originator and the appraiser. I don’t know any appraisers that liked the constant arm twisting that was endemic as the bubble inflated.
Here is the problem though. The lenders PR machine has convinced the world that they were misled by the evil and unethical appraisers who inflated values. No blame for the constant lowering of the bar for qualifying borrowers. No blame for the absolute fraud perpetrated in the bundling of these subprime loans and the representation of these as low risk. It was all on the appraiser. The lenders were victims you see.
So what was the solution? Let’s create a layer of management that has no requirement to have any valuation knowledge, no liability at all and (wait for it) skims off a sizeable portion of the “appraisal fee” the borrower pays . The effect: fees for borrowers have gone up significantly over the past few years, with people now paying $400 to $500 for a URAR report. At the same time appraisers have seen their fees plunge from about $325-$350 pre crisis to $200-$250 afterwards. In addition to the lower fees appraisers have been forced to provide more and more in the way of product; very fast turn times, more comps, multiple listings, market conditions addendum, an ever expanding list of required comments regarding arbitrary ratios and multiple page lists of specifications that are different for every AMC and every lender. On top of that appraisers have been forced to sign contracts with AMCs that indemnify them from any liability.
Of course AMCs were around before the financial crisis. Did they work to assure accurate valuations? Hell no! The largest users of AMCs were companies like Countywide and WAMU! And this is the model we have now pushed on everyone as the solution? The author confidently asserts that “you get what you pay for” does not apply to the appraisal industry. This is pure rubbish! What is happening is an exodus of the experienced professional from the industry. They are being replaced by low fee box checkers who are, in many cases, being forced to cover huge geographical areas to make a living.
I think the end game here is to starve the independent appraiser out of existence. I don’t know any experienced appraisers who think this profession has a future. They have,or are in the process of, moving on to other opportunities. We have long been a thorn in the lenders side and this is nothing more than a money grab. This is the industry that books billions every year in ATM, overdraft and other BS fees. Pretty soon now, be ready to hear from the lenders that there are not enough appraisers out there and the process is too slow. Of course the proposed solution will be AVMs owned by the lenders. Ca-Ching !!!!
by Charles Thomas
I thought we appraisers are supposed to compare apples to apples, appraisers to appraisers. This reponse by Geroge Mann, tackles the Residential vs AMC low fee problems and then interjects all kinds data about commerical appraisers and fees. Boy, 31 appraisals yeilding $77,600, that’s $2503 EACH!. I need to raise my fees!! I must assume that again he is interjecting numbers (probably commerical fees) to support HIS opinion. In my 24 yrs experience it seems nearly ALL commerical appraisals are but out for bid. So, I guess he is justifying his AMC business moldel, that all Residential orders should be treated like his ccommerial bid process?
-Stick with the original purpose and scope of this article which implies low fees for RESIDENTIAL appraisers paid by AMCs ordering RESIDENTIAL appraisals.
And, all fellow appraisers, that are fed up with being pushed around and treated like a retail store employee rather than the skilled trained professionals you are, hike up your panties and just say NO! when you feel yoour professional integrity is being jeopardized. I also would suggest joining other appraisers in this struggle thru local, state and national coalitions. There are good ones out there who are right now struggling with these issues and they need your involvement. Sitting in your office and taking these jabs on the jaw by “cheap and fast:” intending AMCs, all alone is not fun. The power is in your numbers. Talk with each other and take action befoe it is too late.
Now, practice that response again (NO!). Use it this week, and see how it can shape your future.
by Retired Appraiser
Keep Word: HOPE
The number one tool in most appraiser’s arsenal. You would think that after 5 years of feeding on AMC manure appraisers as a group could manage to GROW A SET and boycott AMCs.
-by Retired Appraiser
Let’s be honest here folks:
APPRAISERS HAVE ALWAYS HAD THE POWER TO RECLAIM THEIR PROFESSION. It’s called an AMC Boycott. Guaranteed to work in 4 weeks or less.
Unfortunately appraisers are the laziest breed of animals on planet earth.
Revenge Of The Nerds comes to mind except that typical Nerds have a spine. Appraisers can be classified with worms.
After 20 years I told my appraisal board where to shove my license. I refused to be associated with this group of losers after 2009.
-by Carolyn@Call.com
To all the USPAP lovers. You see what the two judges (original & appeal)
-that heard the bankruptcy case of Evaluation Solutions (AMC for Chase). With eleven million dollars worth of appraisals naming Chase as the client, they were absolved of payment.
by George Mann
This is from my blog posted today in response to this article. grm
December 9, 2013 – Post No. 34 – Some of you may have seen a recent article by Isaac Peck, Associate Editor of WorkingRE. His article was titled “‘Low Bid’ Appraisal Ordering and Its Effect on Quality.” It can be found at this link – https://www.workingre.com/low-bid-appraisal-ordering-effect-quality/
This was a well written article and obviously presented some factual situations. However, as a review appraiser for almost 22 years, I feel obliged to present the other side of the coin. I have overseen the order and review of about 15,000 appraisal reports over the years. Whether I was an employee of a bank or acting as their Agent, I was/am essentially an AMC. We do the same thing whether we are employees or hired companies/contractors.
Some facts based on what I have seen over the past two decades:
1. Around 90% of appraisal assignments are awarded to the low bidder.
2. The vast majority of assignments, whether awarded to the low bidder or not, are acceptable.
Therefore, awarding to the low bidder should not adversely affect the quality of appraisals over the long run.
All of the good appraisers out there need to realize that almost every assignment they have won is because they were the low bidder! I doubt they would say their work product was inferior for all of those assignments.
Let me provide some actual numbers from the past few months of awarding assignments in a specific market for a specific client. Amazingly, all of these appraisals have been reviewed and accepted without any significant revisions. All of them were awarded to the low bidders.
In October, we awarded 31 appraisals with fees totaling $77,600. If we had the philosophy that all low bids would result in poor quality appraisals and we went with the second lowest bids (who is to say all of them would result in better products?), the fees would have totaled $99,900! What kind of service would we be providing to our client (or employer) if we had them (or really the borrowers) pay $22,300 more for these appraisals that had no assurance of being any better than the low bid reports? That would be the kind of service that would drive you out of business (or be fired, if an employee).
I once told an appraiser that we were concerned about engaging him because his fees were so much lower than others in the market. He retorted, quite strongly, as to what right I had to opine to how much money he thought his time was worth! Also, he said there are a lot of bad $5000 appraisal reports out there. You get what you pay for certainly doesn’t hold true in the appraisal arena.
While there is a lot of concern about AMCs saving $50 and getting a poor report that might be off by $50,000 on a house appraisal, this pales in comparison to the errors on the high end. We once had to lower a $500 Million appraisal to $400 Million. All because the fee was $50,000 didn’t mean the report was good. How many erroneous residential appraisals are needed to get to this $100 Million error for one assignment?
KC Conway, CRE, published a report a few years ago that showed that appraisals on average were in error by about 20% (my personal data over the years shows an average of 22%-23%, albeit my data isn’t a scientific study like Mr. Conway’s). These appraisals probably had fees ranging from around $5,000 to $50,000. There is no guaranty of quality as fees go higher.
One common question I have been asked over the years was why do we go with low bids? There is a logic to this. If we have grouped a set of appraisers that we know are equal in competency, then the major decision maker becomes fee (and time in some situations). As with the 31 appraisals I mentioned above. We know all of the appraisers in this market. We know which appraisers are say Level A or Level B (we don’t go down to the Level C or lower quality appraisers). So when we have them bid we know the competency is about equal and the likelihood of approving their reports is very high. Where is the logic in not going with the low bid?
There will always be those situations like Mr. Peck encountered. Every industry probably has something similar. But, what about the 60% or 70% or 80% or 90% of all appraisals that are done right, and selected because they were the low bid. Not enough stories are written about those.
Ban The Sales Comparison Approach!
George R. Mann, CRE, FRICS, MAI
“The postings on this site are my own and do not necessarily reflect the views of Situs.”
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-– See more at: http://www.appraisalbuzz.com/buzz/blog/2013/12/08/low-bid-appraisal-ordering-yields-quality-work-most-of-the-time#sthash.aWkTL1FC.dpuf
by Free Speech
The big mistake appraisers made about 25 years ago was NOT getting together and putting together an organization like the CPA’s have. Appraiser are just too goofy, self centered, paranoid and uncooperative. Things could have been good, but, hey, I guess they’re enjoying sucking eggs in 2013, being paid what they were being paid 30 years ago. Stupid, demeaning occupation, full of guys with no self esteem. I got out of it. You should too.
-by Disgusted
I am a Certified Appraiser. One of the new crop but 60+ years old. I had to meet much higher requirements to get licensed. I don’t work for anyone who requires indemnification.The fact is appraisers are their own worst enemy. The will turn on each other in a heartbeat. Many who would write complaining about the new appraiser met lender requirements required to work and were involved intimately in the poor work product that fingered appraisers when the bubble burst. They have given up ethical virginity many times and have no right to complain when it comes to the new “Appraiser”.
-The fact is Lenders do not value our work. Partly because of our slavery to their needs in the past. We are in the way of the sale if we disclose too much or don’t make value. This has not changed. The structure of lending operations separates origination from loss management. As you know the personnel at AMC’s and Lender personnel are not well trained . They rarely last for more than a few years.The fact is lenders are very willing accept poor work as long as it meets the time constraints and makes value.
The Appraisal Institute has their heads up their…. They do not represent us. They are not a union. Their reaction is to try and increase the requirements to be an appraiser. In small markets the training is too extensive and contrary to market reality. Some here would likely support this as a method of cutting down on competition but that is the only value to the increased requirements.
Appraiser insurance is horrible and useless. This is compounded if you indemnify. Your risk will never go away. Those who work for reduced fees are counting the money and have their heads in the sand and butts in the air. This is a precarious position. They should reread the certifications in each appraisal they sign before they send it.
We cannot go on strike but should. Alternatively since we are managed into the sand we have our heads in we should be put on the government payroll as State or Federal employees.
Being an appraiser at this time is like walking into a junkyard with 6 dogs in it. The dogs are the users who can review your appraisal or who can take your license and living away from you.You know one of them is going to bite every time! Probably two or more. You will be hung out to dry up by members of your own community or you will do the dirty work on someone else.
by alex
not knew to appraising but I agree with your notes.
-as to being or getting organized many are crying out about it
and refuse to survey and join org’s like OPEIU, etc
I just repeat this- now I am retied- do same appraisal work and reading comments with the same ideas of independence and do-nothing about it
by I'm Done
I’ll chime in here as another appraiser that loves her profession, and has tried to hang on for the past few years, to no avail. I’d rather go work at a toll booth (if I could get that job) than work for the AMC’s, as a corrupt staff appraiser, or as an “ignore it” reviewer. The numbers (pay vs. costs) just do not work anymore. My question for those that have left for greener pastures – where to go with these skills acquired in past 15 years when one is 52 y/o?
-Sign me (thru my tears) – another disgusted appraiser throwing in the towel.
by Retired Appraiser
Where do appraisers go who chose to quit this worthless profession?
Answer: ANYWHERE beats the L out of where you are.
MY SUGGESTIONS
* Buyer Broker (a great fit for your experience)
* Home Inspector (collect at door…far better fees per hour worked)
* Estimator for a residential construction firm
* Insurance Adjuster (residential)
* Web / App Designer (easy to pick up on your own…great fees…strong demand)
*Run For PVA Or Work In A Tax Assessor’s Office
*Building Inspector’s office
*Start A Real Estate Syndicate (use your appraiser brain but other peoples money)
*Create a new business from out of the blue (people do it every day)
*Network Marketing Firm (yes multi level marketing…it is legal) You can still make a killing IF you truly believe in the product.
Acknowledging that you are part of a dead end profession is 95% of the battle. Opportunities are everywhere. Trust me.
-by Marcy
I have been in this business for 15 years and consider myself to be a competent appraiser. Fortunately, I am in a financial position that does not require me to take AMC generated fees. I have a few good clients that pay me full fees and give me a reasonable amount of time to complete. If I should lose those clients for some reason, I will leave the business.
-by James Johnson II
I will piggyback on your recent article.
I have been telling anyone who will listen over the past three years the current business practice to administer the appraisal process via any AMC is a ‘Broken Business Model’.
The AMC’s via there Reviewers have ZERO GEOGRAPHICAL COMPETENCY, therefore, they have absolutely zero basis to assess any appraisal report. To be intellectually honest, the selection of the most appropriate Comparable Sales is the back bone on any report. To ‘push’ a report higher or lower is simply a matter of the selection of comparable sales. And since the ‘Reviewers’ have zero local knowledge of the area they are review, common sense dictates the ONLY assertion any ‘Reviewer’ can make is upon the AESTHETIC nature of any report. Quality, please. This system only promotes Appraiser’s giving the AMC’s ‘what they want to see”; rather than an honest assessment of the subject property. Stick to Fannie Mae Guidelines at all costs! If not red flags will pop up and your quality rating takes a dive, and so does your business. Keep the report clean and pretty with “comps” within a mile and 6 months you’ll be just fine.
This is a huge aspect that is completely swept under the rug. If highlighted, it would completely call to question the entire process. After all, the AMC ‘Reviewers’ grade the Appraiser (only on aesthetics!) and control the distribution of work. The integrity of the entire appraisal process comes to question with a process which highlights and promotes shortcuts!
Yes, our society needs protection, 2007 can not ever happen again. However, those were the days when lender’s as a whole were not licensed. Can you point out to me a single toxic loan that was ever initiated by an Appraiser. I didn’t think so. Now that lenders are licensed (as an Appraiser) and can loose their livelihood, isn’t the biggest hurdle crossed?
Secondly, I realize there are bad lenders and bad appraisers working together, show me a profession that doesn’t have a percentage of bad apples. However, to completely sever the ties between these two professional groups is ‘throwing the baby out with the bath water”! Who else is best suited to addressed the most professional and competent Appraiser than a highly respect and experience Lender? Can you name me any other professional in the United States of American where one can be the very best at their profession and not be permitted to offer their professional services? Take it one step further, can only offer their services IF a third party with zero geographical competency and questionable experience in the same field allows. Maddening!
Logic dictates the current system is an absolute train wreck; and every where I turn I see attempts to massage this square peg into the round hole; possibly brought to you courtesy of the same group of great Americans that package those mortgage backed securities. It’s the Golden Rule, those with the gold make the rules……
-by Appraiser
I have been working with AMC’s since 1997, remember back when the loan officer would tell you to produce the number I need or your fired, but in the past few years, it seems that they are not charging $50 to $75 per report as in the past. I was on an assignment, which was excepted without reviewing the fee, I get to the home the husband lets me in the foyer, then here comes the wife, she is upset and showing it, she then tells me the loan officer told her the appraisal would be $475 and he just called back and said it would be $495 and then asked me what is the real fee. I opened my folder and on the second page of the order was an appraiser fee of $225. This is a full appraisal, I didn’t repeat this to the owners finished the inspection but went straight back to the office and called the AMC and pointed out I’m doing the appraisal and your making $270 for the AMC fee, they told me that they were not getting that much fee, so how much is the bank keeping? isn’t it against the law for them to keep appraisal fees? Some AMC tell the banks that they pay the appraiser their stated fee, then plus $75 for the amc is then charged. The entire system has no supervision, we are doing 45% more work per report for 60% of the fees, this is a 110% turn around. The standard URAR with all the additional requirements in my opinion the appraiser should be charging anywhere from $650 to $825 per report..Original comparables??? I had to drive 1.5 hours each way on a complex assignment res. large house with acreage for one comparable photo. The AMC told me that if I had asked for the increase in fee before I started they could send it to the bank for approval, I’m good but I can’t appraise a property before I look at it to make that kind of call for comparables or even the research required to find comparables. The appraisers have been thrown to the wolves, there is no money to train new appraisers within these fees. Were paid less, required to do more, our gas bill has doubled our autos have gone up by 1/3, why would someone want to do this for a living and it gets worse every year. I used to love this business in fact for the first ten years I loved it but I have grown to hate it and I am looking everyway I can to start some other type of business and slowly work my way away from this mess. 55 year old appraiser. The lender was ORNL and the AMC is the one in India, you know the one we worked for here in America for 12 + years from PA.
-by lyn
To Kenneth Noisewater…. I totally agree with your comments…. you do the appraisal correctly and honestly…. I know a lot of appraisers who don’t call on the comps anymore…take photos or anything….Hang in there…I’ve been in the profession for over 25 years, and I’m fed up with it….and I’m retiring at the end of this year at age 65. Don’t know your age…but you will find something else…. the good guys should always win out….at least that’s how should be….. although this business has proved otherwise !!!!
-by lyn
Really? Really? Landsafe Boys you are so in the dark about the real appraising world. I think you should keep your mouth shut unless you really know what you’re talking about. Sure, people think Zillow and Core Logic are magic and they are not…they suck big time. Unfortunately, our Appraisal Institute, which is supposed to be looking out for the appraiser and not their own butts, has really dropped the ball…but don’t blame the appraisers….your job depends on us…
-by Mike Ford
Me too…though I fear we will more likely be treated like the doctors are, under ACA. Didn’t mean to sound political-just thought the analogy fit..
-by Mike Ford
Agreed.
-by Mike Ford
God Bless you !! I LOVE it.
-by Mike Ford
Bryan, your point is valid ONLY if you routinely hire the higher fee, known superior quality appraisers. Not 100% of the time, but certainly more than 50% of the time. You also gloss over the impact of those lower quality report appraisers and the lower fees they deserve, on perceptions of “reasonable and customary.” ALL federally regulated institution reports are required to comply with USPAP. Its more than a comparative case of BMW versus Yugo. Its a case of BMW right off the show room floor versus ANY other brand that does not even have an engine or transmission-which are both among the MINIMUM requirements for an operating car.
-by P Turner
One aspect of the appraisal trend is the cost to do business.Just to stay in business cost me about 5,000 dollars . More if you count office and transpertation ..
-by Mike Ford
Roy Brown, the ONLY way is to start turning them in to state regulators. I’m not saying reviews should be hyper-critical. They should always be fair and honest in accordance with the certification we sign. I have even offered clients FREE reviews IF they also agree in advance that I may turn in seriously deficient reports to my State BREA. I’d rather ‘eat’ one or two review fees than to have this go on forever.
-by Mike Ford
P Appraiser-read all yor comments. All on point. Answer tot he question is “We will do them.”-assuming you can hang in for the 3 to 5 more years it will take for the industry to shake itself out. Legislators do NOT care. Apparently securities bundlers don’t care either- otherwise, XML would not be allowed to enable mortgage buyers to ‘pick and choose’ ONLY those parts of an appraisal that they want to see. ONLY when investors get tired of being hammered will they require real appraisals at proper fees. Not before.
-by Mike Ford
Disagree Fred. Its not a case of what somebody “wants”, its a case of what is necessary to comply with USPAP. Frankly, you and I both have a pretty god idea of what the property SHOULD be worth as soon as we pull our probable comps. Barring site related surprises, we can even prewrite the report subject to corrections. Making decisions is easy. Supporting them is the trick.
-by Mike Ford
Bill Starnes, Not all AMCs pass the cost on. I know of one appraiser owned amc that eats the loss. They do not guarantee the client anything-except good quality work. If they cannot persuade the appraiser to provide that willingly, then they have it redone at their own expense. They ALSO PAY the appraiser…one last time.
-by Mike Ford
C.A., We have all had similar experiences. In California, appraisers with over ten years experience should not be doing FNMA conforming loan, non complex appraisals for less than $650-yet we routinely are (now) happy to get $450 for them, and to keep the lights on, gas in the car and food on the table; we grudgingly work for $300 to $400 just as we did 7 to 10 years ago. (On the bright side, most of us aren’t working for $250 to $275 like we did 20+ years ago!). My commercial fees have been cut routinely by a national amc whose work I generally respect; but in all honesty-they “cheat” by having subordinates review and sign for the chief appraiser-without disclosing it . I am sure their clients are not aware of that aspect.
CA it is up to those of us who are older, and better able to defend ourselves to stand up to bad appraisers; bad appraisals, and bad AMCs. Similarly, we have an obligation to mentor our less experienced associates and to freely consult with our peers.
No certified appraiser doing residential work requiring an AR or AG should be doing such work for the same fees as an AL would. The second the appraisal profile dictates that certification level appraisers are required, the fee should go up accordingly.
-by Mike Ford
William, he isn’t really from LandSafe. They’d fire him for his posts if he was.
-by Mike Ford
B.@ Landsafe; I doubt you are affiliated with whom you infer. In any event, fair enough question coming from a layperson, completely unfamiliar with appraisals; what they are, and why they are needed. (1) The reasons the other are ‘cited so often’ is that they are data and statistics collectors and reporters. They typically report increases in median pricing over given time periods. You could do the same if you wanted to spend the time and cull through assessment records. People that cite Zillow; Trulia and others similar services as being reliable sources for determining value are simply damn fools. Remember ZAIO? Even had a retired former high level State Dept or Other cabinet level wonk pimping for them.
(2) Zillow is among the most honest or forthright in disclosing what they are, and what they are not. Their “Z-Estimate” explanations clearly explain that the greater the distance from median values or median profiles a given property is, the less reliable the estimate is. The drop in reliability for only a 15% variance is staggering. No appraiser could keep their license with such low accuracy.
(3) My personal favorite (seriously) is DQNews. I consider them to be an extremely useful tool. Frequently I consider them more reliable than my own FNMA MANDATED 1004MC data, which is often two limited to be truly reliable. But like the hammer in the carpenters tool chest; one tool does not ‘build the house’. I use ALL my tools. Even Zillow and Trulia have their place. It just does not happen to be in the area of offering credible specific opinions of value. THEY are not bound by any standards, for the opinions they offer. I AM.
(5) NONE of these sources adequately describe market value as opposed to other types of clearly defined values. Neither do these sources cull inapplicable transactions from their statistics. Example; I once did a four-plex appraisal. It showed in public records as a “sale” for $400,000. That was actually a refinance transaction wherein title ‘clean up’ issues required grant deeds be used where the owner granted the property to themselves (vesting issues). I completed my appraisal at $650,000. Some genius “reviewer” (NOT an appraiser it turned out), but rather an administrative staff member of the lender used a self generated AVM software program and decided the value should only be $400,000-like its prior “sale” less than six months earlier. Aside from being off by a quarter of a million dollars, the AVM software also was & is incapable of determining the impact on marketability of rent controlled rents that are below market with tenants that have no intention of moving, and who cannot simply be evicted.
These companies cannot reliably determine and report commercial property net operating income and applicable capitalization rates for a specific property. Absent that ability, all they can do is report a hugely divergent range in “values” (prices) per square foot; that NO software can reliably convert to a market value; or a going concern value; or a liquidation value; or an investment value. Even regression analyses fall far short in this area.
Yes. We DO have some “clowns” in our profession. Its a good reason for making sure the appraiser you select IS qualified to do the assignment, AND is reputable enough to do it right. Typically those of us who are ‘humor-challenged’ and that don’t like costumes involving floppy feet or big red noses tend to charge more than the clowns. SIGNIFICANTLY more. Obviously we are not the first choice of AMCs, and automated software vendors selling snake oil aren’t overly fond of us either.
Hope that answers your question, but if not, feel free to visit my website at www (dot) mfford (dot) com . There is more data there.
Correct me if I am wrong. Wasn’t it YOUR firm (or the one you are purporting to be associated with) that was involved in the over 240,000 deficient appraisals cited by the feds in their case against Countrywide and WAMU? With something like 90% to 97% of all the appraisals FDIC investigated being labeled deficient to egregiously deficient, I can understand your contempt for appraisers. We are not all like those. In fact most of use are not. Many of us, FIRED Landsafe as a client, very early on when they started dictating how we would complete our appraisals and reviews. I even turned them in to their own B of A Vice President of Corporate Security several years ago. I understand from the VP that a L/S District Manager received some individual counseling after that. and I was not placed on a blacklist. If it happens from this, then so be it. I don’t WANT to work for clients that don’t adhere to the spirit of USPAP as well as the ‘letter of the law’. Anyone that blacklists an appraiser without specifically notifying them of that fact, and the specific appraisal related reasons is not a client worth working for.
You are right to hold our feet to the fire for our associates outright dishonesty and or incompetence. IF I believed you actually worked at Landsafe, I’d share a bit more with you, but my real belief is that you are trolling this site to see what you can stir up. Keep up the good work though.
-by Mike Ford
Bill, I live AND work in some very rough parts of town (three nights ago, 24 year old was gunned down a block from my house). I STILL ALWAYS take original photos, even if it is only of a vegetation covered entry gate that I THEN supplement with mls photos AND an explanation why I have done so. I too have been followed and (politely) asked why I was taking photos. I always explain. In one case, the local dealer’s ‘lookout’ came up to me in the alley by the carports and asked if he could “bum a cigarette”. I gave him one (used to smoke back then)-he then asked point blank if I was “The Man”. I laughed, said no, and explained who and what I am and what I was doing where I was. He peered around inside the car and went on his way, and a few moments later business as usual was conducted out the back window of the upstairs unit. Bill, I am not overly brave nor stupid. One thing I learned in the Marine Corps was that IF I accept a task or am assigned one, to do it to the best of my ability and in accordance with the requirements of the job. I am 62 now but if I ever get so old that I am afraid to do my job PROPERLY, then I will hang up my tape measure and clip board. You DO know don’t you, that FNMA does NOT accept mls photos in lieu of actual exterior pictures by the appraiser, right? Most MLS also copyright them and use in your reports without their consent may violate that copyright.
Respectfully Bill, neither you nor I are allowed to make up our own rules about which guidelines we will follow and which we will not. It’s a very slippery slope. I am assuming you disclose the use so that you are not misleading anyone.
-by William Stahl
Keep it up. You are doing a fantastic job of disclosing what you and Landsafe are all about. “Clowns” you say. Seems like it was a bunch of clowns that let the Countywide fiasco happen. You have a lot of nerve.
-by William Stahl
You sound like a very typical AMC. Cold, uncaring and money grubbing with no real empathy or compassion for appraisers. Keep up the good work. Your true colors are shown by your heartless comments. After all if you guys screw up again like you did with Countrywide the government will just bail you out again. You will miss us when we are gone. Or will you?
-by California Appraiser
Very good article! I hope someone is listening. I had a similar experience with a field review I preformed about a week ago. I told my wife I had never seen such a poor quality appraisal before (numerous errors & contradictions). The review was for an appraisal I did not accept approx. 3 weeks earlier due to a low fee from the same AMC that ordered the review. It appears to me that this is costing the borrowers unnecessary closing expenses in addition to wasted time & possibly not qualifying for the rates they were originally promised by the broker or bank. If I understood you correctly it’s the original appraisal, the review and additionally a second full appraisal (total cost ~$1,200) for what could have been accomplished for approx. $350 – $400. Could it be that the AMC’s that utilize this unethical appraisal order procedure purposely due so in order to generate more business for their company and the end user, the borrower is of no concern? There must be a legal ramification due to this type of unethical business practice.
-by Daniel
Zillow is a joke, realtors are self-serving (and have the political clout to protect their commissions), and AMCs have profited from this mess. Not much has changed on the lending end, making the loan is the prime directive. Reminds of the appraisal sweatshops from years ago with minions of staff cranking out garbage, ah, deja vu, all over again. Too bad the AQB didn’t implement the 4 year degree requirement years ago, might have filtered out some bad eggs, Funny, so many appraisers used to do some other kind of work before trying out appraising. As long as the banks (friends of government) control the financing markets and support the AMC business model, things for appraiser’s won’t improve. AMCs are hiring their own staff appraisers to replace fee appraisers. Makes for a nice tidy (make the deal) arrangement and creates the new in-house appraisal sweatshop.
-by Bill Yon
I no longer take orginal comp photos. Just too dangerous out there to be sticking a camera out the window and taking a picture of somebody else’s home. I have had people get really upset. Even had a guy get in his truck and follow me for over 20 miles till I confronted him. Copy Paste is MUCH safer!
-by Boys at Landsafe
If you appraiser “clowns” really think that what you do is soooo important than why are none of you or more specifically your appraisal associations ever considered as the “status quo” for Real Estate Valuations? Time…Newsweek…Major Municipal Publications….TV…Radio never is the Appraisal Profession mentioned when it comes to “expert opinion”. Realtor’s…Zillow…Core logic, etc. and other valuation companies are always used by the media and considered the “status quo” by public opinion. If you appraiser’s think you are sooo valuable why do you all basically work in the shadows without any public or media support to speak of???
The Boys at Landsafe
-by Tim Savage
Landsafe is the WORST offender. You should be ashamed to work there, unless flipping burgers is too complicated for you.
-by Bill Starnes
I just passed on a blast offer for $225 for a 1004 assignment. Ridiculous. When I starts appraising 14 years ago, the fee was from $325 to $400, depending on certain issues with the property type. One major point has been missed in the article. The amc’s who use the low fee blast system do get shoddy work. That is true. However, when the review is ordered, they collect another fee. If a second appraisal is ordered, they collect another fee. The bank or lender, is probably charging the borrower well over $400 for each appraisal assignment. So, bottom line, if the amc turns the first assignment into 3 assignments, they are doing pretty well for themselves. They are, essentially, incentivized for producing low quality work. And therein lies the problem. Doing the right thing would hurt their bottom line.
-by Rip Booker
Excellent article about the issues with AMCs and C&R fees. I’ve lost what has to be hundreds of bids over the past few or more years by providing realistic fee offers and turn times for assignments via email blast and whatnot. What amazes me is there are appraisers out here who supply work at very low fees in miraculous periods of time, yet I have no idea what the quality standards would be as I have not been presented with an opportunity to review a previously offered assignment as indicated for the appraiser mentioned in the article. I’ve noticed some commentary here about the quality versus fee argument. The real issue at hand, articulated and presented very well in the article, is how many AMCs are affecting our profession in a negative way by focusing strictly on fee and turn time. All of us know that each assignment is different and may require differing scope of work and in turn a commensurate fee, but attempting to get folks from outside of our profession to understand this issue appears to be moot given the concern for fees and turn times. Quality work and ethical behavior is a must in this business, but the low end fees and quick turn times have seized the day. The bottom line has become the only recognized measure for results for some lenders and many AMCs which, as many of us know, does not fit well within the parameters of real estate appraisal given the requisite scope of work requirements and ethical behavior. I’ve already made plans to move on as bills are bills and I’m sure as hell not getting younger or wealthier. Good Luck to the survivors!
-by lyn
Great article. I hate those appraisal blasts…..they are a joke. I don’t understand why the AMCs feel as if they need an answer within one minute. I too, have been on the website when a blast came out, accepted the offer and it was already taken….I answered within 20 seconds…how can that happen??? I too, turn 65 in a month and I am going to be leaving the business even though my license is good thru 2014. This business used to be fun & rewarding, but not anymore. All the lenders care about is turn time & fee, they don’t give a rip about quality anymore. And besides, 95% of those reports are now reviewed by computers which check for the ratings and numbers guidelines in UAD….I don’t think a real human actually reads any worthwhile comments an appraiser writes about the subject or the comps. Gonna miss this business–or at least the business it used to be—but not the way it’s going now.
-by Scott Williams
There is a similar problem with appraisal reviews. If the assignment is to review a poor appraisal it can take a very long time compared to a good appraisal – especially if the reviewer has to come up with his or her own value. In those cases, the reviewer has a choice. There is a strong financial incentive to approve the poor quality appraisal. Johnson would never cut corners, but there are others out there that will, in fact the same types of appraisers doing the poor quality appraisal work that is to reviewed. The result is good reviewers are supplanted by bad reviewers. The whole system is rife with financial incentives that work together to build up unknown risk that is mostly invisible to regulators.
-by Divedude
What happened to the requirement in Dodd/Frank for reasonable and customary fees? We need to challenge the CFPB to do their job. Document these AMCs’ and report them. How can the CFPB possibly be for the consumer while allowing AMC’s exist? We’re being played!
-by jeff
I haven’t even read the other comments yet because I’m so disgusted over the state of this industry. To promote public trust, ha. I know for a fact some of these are non-certified appraisers who can’s get (FHA work) many gd clients, so they settle for anything that comes in. I also understand that you don’t have to be certified to be a gd appraiser. The whole “Customary & Reasonable” thing is a joke to these AMC’s and we are not getting ANY real backing by the Consumer Financial Protection Bureau. They recently said they would look into this a little closer in 2014. If it was there pay they would have looked A LOT closer in 2010 when it went into effect. Here’s how I see it. My Bank clients pay me $450-$500 on every 1004, 1073 typical non-complex appraisal, & have for years. THE AMC’S DON’T!!! I have the proof, what’s so (expletive) hard to figure out?
-by Fred Ferrara
Sounds familiar, hate those blast orders too, though normally quote my regular fee and typically lose the work. Not above being a little more competitive though when work is slow or the property seems interesting. On the other hand we have all accepted a fee for a property before we fully knew the difficulty of the work. The differentiation between the competent appraiser and the cut and paste bunch is the competent appraiser will still spend the time and effort to do a good job even though it is a loser time wise for him.
I have to laugh though at some comments relative to the amount of research some appraisers do on every job no matter how complex the assignment. We all have known people like that who cannot seem to reach a conclusion on even a simple property unless they complicate the process and getting into detail which is really not market responsive. They are the ones that turn out wonderful work of agreed good quality, but cannot make a reasonable living unless their fees are far above normal for the work required by the assignments complexity. Keep in mind all that this is a business too, and your analytical skills must be honed to the point that you know when sufficient data is found and you can provide a reliable report without busting the time and fee constraints. Nobody wants a demo report or one so full of BS that it runs to 30 pages for a simple split entry in a typical neighborhood. Then too there are those who believe if they send many pages in a report they are turning out better work. That may fool some property owners but not any knowledgable mortgatge lender.
-by Divedude
I don’t know if it will work but I like it!! In fact, all appraisers should try this. Imagine the backlash. Fun if nothing else!
-by Randy Brewer
$400 for a field review on a multifamily property? I guess I can understand why the author got the job on the review order from the AMC. Frankly I haven’t done a review in ages because the fees are nowhere close for the time necessary to do a credible job. Honestly, appraisers are their own worst enemy. As long as appraisers discount their fees for AMCs this problem will continue.
-by P Appraiser
Most of these AMC’s just don’t know. . . . . & finally AMC employees….. you are really in trouble when you don’t know. . . . . . . that you don’t know!
-by P Appraiser
No what I really like are the continual email blasts, from the same AMC’s that are not even in the areas you cover, telling you that you must reply by blah,,,, blah,,,, blah,,, or they will reassign, really????? How am I going to get any work done if I am sitting here in my office watching my email waiting for a crumb from you????? Ha ha ha IDOTS
-by Kenneth Noisewater
And this will never change. I have devoted a significant amount of my life toward becoming the best appraiser I can be. Very little canned commentary, every adjustment backed up with data when possible, and phone calls to parties involved in each comparable transaction. I have had other appraisers look at me like I have two heads when I tell them I do this for all reports, including my 2055’s. It takes forever to do this, but I can sleep at night knowing I did my part the right way. As a result, my fees have to be reasonable in order to make a modest living. Because of this, I have had only 5 appraisal orders in the last 3 months. Every AMC I have talked to tells me they are having trouble providing me work because they are not able to get my fee approved. I spoke to 7-9 AMC’s in the last two weeks and its as if they all read from the same script. They blame the lender. My family has given me until February for things to turn around. If things do not change I’m out of the profession and have no idea how else to make a living with my current skill set. Outside our industry, nobody cares. It seems the wave of the future are the appraisal mills where staff makes 30-40k completing $100k worth of work for the mill.
-by Retired Appraiser
Welcome to the land of the intelligent (those who chose to quit). I’ve been begging appraisers to either boycott AMCs or quit cold turkey for 5 long years. Trust me when I tell you that the truly intelligent appraisers have been out of this business for quit some time.
-by P Appraiser
Exactly Joe!! Apparently the appraiser/ owners of the AMC needs an education! My fee is my fee I’m not going interested in providing work to AMC’s that need to make money at a financial loss to me, since when does the AMC have the appraisers liability or cost, do they think we are here for the fun of it??
-by John Kelly
Exactly why I am no longer doing appraisals, cannot make a decent living after many years in the business, and even more so, the lenders do not care about appraisal quality, just on to the next one, business as usual. Just like before the real estate collapse, why even bother with having an appraisal at alll if you do not care and you know the government will bail you out again?
-by P Appraiser
AMC’ers We didn’t invite you we got you crammed down our throats my corrupt politicians, bad boys on the stock market, bad banks and lenders. We are required by FEDERAL LAW how to conduct business practices you are not.
-by Doug Lyons
I agree with the Johnson article. I have been doing residential appraisals for 25 plus years. It used to be a good job, where you could make a decent living. I have quit trying to get an appraisal from the e-blast type orders, as they are being accepted for such low fees. When young people ask me about the profession, I tell them you would be much better off becoming a plumber. The plumbers coming out to your house, not the owner of the plumbing company, make more money than the average appraiser. As long as the AMC’s are in charge of this, it will not get better. I made a lot more money 15 years ago, doing less work than today. That is why the average age of appraisers is over 50 years old. You would have to be a fool to knowingly get into this business today. Doug Lyons, SRA.
-by P Appraiser
Not only that but the reviewers, (not review appraisers) reviewers, come back after 3 previous revisions now they want you to explain and comment on info they found online. . pardon me but since when is the internet deemed a good place to find CORRECT data????? Heck the REALTORS in my area don’t even know how to calculate sq ft, I can complain because I am a REALTOR and the MLS system is a joke. Bad info in Bad info out.
-by P Appraiser
Happens to me all the time. Wonder who is going to do their assignments and provide appraisals when the low ballers are all off the list because of poor performance and all the seasoned good appraisers are out of the business because they are just plain old fed up with the crap, low pay and aggravation???
-by P Appraiser
Yeah that’s typical of “The Boys at Landsafe” attitude! keep on showing your true colors “Boys at Landsafe”
-by Leon Danforth
Well, this Mr. Johnson, and many of the commentators just don’t understand that we AMCers have a bottom line to protect. If we don’t make a profit, we’re out of a job. ~The Girls of LandSafe~
-by Roy Brown
It is heartening to read the many articles that come out in this vein. And yet the next step, one to fix it, has never happened and probably never will. AMCs do what lenders want them to do. Lenders have always tended to marginalize appraisers and the profession for the 35 years I have been in the business. They not only have a huge conglomerate war chest, but they are happy to spend it on congress. The laws and regulations only change in their favor and leave out the needs of the public, whose needs are the same as the appraisers. And it is the appraisers individually who are their own worst enemy. Lenders still need the appraisal, even though they don’t want to have to have it. Appraisers can say no to low fees because lenders need the appraisals. And yet the appraisers do not say no. It then becomes the decision to accept low fees or lose your business. At 67, I can’t afford to lose all of my business. So for years I just said no to low offers, but now I have to accept them. I’m too old to live in my car. I say let’s find a way to drum out the incompetent appraisers. They are killing us competent veterans and they either don’t know how to appraise, or don’t care.
-by William Stahl
Many of the previous comments blame the “rookies” for taking low fees but there don’t seem to be very many new appraisers coming up so who are these “rookies”? Its not the rookies, it is veteran appraisers that are trying to keep from starving to death. This is a troubled profession and after obtaining a degree in Real Estate and practicing appraising for 23 years I am out. My entire appraisal career has been a struggle and I am not going to play this game anymore. Luckily I have other options which I plan to pursue in an effort to make up for the many years that I wasted in an attempt to provide a service that nobody seems to want or care about.
-by Bryan Caffrey
In the interest of full disclosure, I have been an appraiser for about 20 years. I am currently the owner of an AMC. While the points you have made concerning fees and quality are correct, I do not agree with the conclusions you and others are making. Reasonable fees is the same as saying the same fees for everyone. Paying the same wages for all work is a joke and has never worked in any business where quality is the goal. If you were to raise appraiser fees do you think that the poor appraiser would increase his quality? Of course not he would just make more money for poor quality work. Fee is almost always what separates the quality of a product or service. It cost more to create something of quality, in time, in training, and in materials. The acceptance of a lower appraisal fee is the natural effect of this principle. They can afford to charge less because they have less experience, complete appraisals in half the time, and spend less time reviewing their work. In fact, their poor work is worth less than another appraiser and it is the fee that separates us. Appraisers should not want to have every appraiser making the same for their appraisals. What they should want is for people to become more educated in differences in the quality of appraisals. In essence, you get what you pay for. When I pay a higher fee for my appraisals I should have value to that. I should be able to tell lenders that I am the BMW of management companies and that should have value. You do not increase your value buy all appraisers receiving the same you diminish it.
-by Shocking!!!
Sounds like this guy “Johnson” is just another appraiser perfectionist!!!
Signed,
The Boys at Landsafe.
-by Stephen Meyer
Email blasting appraisal orders is akin to throwing a cold French fry into the middle of a flock of pigeons. My personal belief is the practice is unprofessional and participating in the practice is unprofessional as well. No excuses.
-by Denise Long
We are seeing a similar trend in Commercial Appraisal work. Our average fees are dropping by 10-20%, and we routinely lose awards by as little as $50. Or we calculate a reasonable fee for a complex or quick turn-around request, and lose the award to appraisers who do not calculate that factor into their responses. We see awards go to appraisers who are out of the market area, charging fees that are almost half what we used to see. The results are slipshod and hastily done, with little thought to the market or the true Highest-and-Best Use. We have started doing reviews as well, and we are shocked by the shoddiness of the work – cut-and-paste MLS sheets as the comp data, use of comps that are nine years old, misspellings, poor grammar, etc. On the occasions that we do win awards, we often find that the Scope of Work needs to be revised, or the turn-around time needs to be extended to allow us to gather the necessary data (or sometimes even to gain access to the property). In this situation, we have discovered that our “professionalism and timeliness” rating by the AMC suffers, and we notice a subsequent drop in RFPs and a total loss of awards. Our counter to all of these trends is to develop our other services (consulting, valuation, expert testimony, etc.), with the ultimate plan of reducing or eliminating our dependence on bidding work – another way of leaving the field.
-by Christine
I have been working in the industry for years also and I like having the third party in the middle as it prevents the pressure that was once seen from the Lenders, etc BUT in saying that we also need to make sure that third party is taking some responsibility for quality appraisers and quality work which is where the revision comes along; along with reasonable fees. I question these blast emails that are going out at 11:30pm at night and someone is getting to them before the next am. Does anyone have a family and life? Our jobs are already time sensitive and technology has made that worse but what happened to a rotation? As far as I’m concerned that seems to be a little more logical for assigning and fair to everyone. Eventually the poor quality will be seen but everyone would have a chance for the work. I have done this for years and it is my primary income – I don’t have another income to rely on so losing work to nonsense is really not acceptable. We really need to find a solution for the appraisers that care about their job and quality of work. We are already at a shortage of appraisers, if we continue and good appraisers continue to get out of the business we will definitely have a problem.
-by Darren M. Morgan
This is a great article. Unfortunately for us experienced appraisers, this is happening in Utah as well. I’ve gotten to the point where I don’t even try to get the e-mail blast requests because they are a joke. There are a lot of bad appraisers out there that are happy with AMC’s because they got them back in the game. They were immediately taken off the “black lists” of lenders and able to work again. Sure, they are working for $100-$200 less an appraisal, but they now have work.
-HVCC, thanks for “protecting” the appraisers. Taking work away from our long-term clients and making us share their requests through an AMC and cutting our fees really “protected” us. Many good appraisers are being pushed out because of these AMCs!
by Mark
Wanna see my shocked face? Same story; Different day 5 years later. I simply refuse to do work for less than a fee we quote after reasonable due diligence on every specific subject property. We still get the lion’s share of complex properties in our market, regardless of fee. It’s my belief (and findings) that lenders are waking up to the “true” costs of shoddy work, even if it’s more time as opposed to money. It certainly doesn’t make the customer (borrower’s) happy when multiple appraisals are required to complete what they view to be a “simple” transaction.
-I was recently “blacklisted” at an AMC I’ve done business with for over 10 years for calling a processor a moron in writing, then apologizing to all competent 8 year olds for the insult to them. It’s MY business, MY license, and MY reputation on the line and, as such, it’s MY way or look elsewhere. This is not to say I’m disrespectful or impolite, as much as it is to say I’m professionally blunt.
Say what you do; Do what you say (better than most in your market). Obviously doesn’t work well for everyone, but it’s served my business well. And hey, if all else fails, think of how your review business will skyrocket if they keep up these practices.
by Igor Bily
Great article, and very well put. I think all of us, residential appraisers, experience the same thing. Bad appraisers, as you have described in your article, should be reported to the board and investigated. I hope some day all of this hard work will pay off, and we, appraisers, will be treated as professionals, with dignity, and rewarded for all of that hard work. I hope I live long enough to see it. :-)
-by Tim Gilbert
A sad commentary on our industry. This essay could have been written by countless expeienced appraisers. I say could have because I know that they are running from the profession, as they should or are forced to do. It is galling that AMCs are allowed to operate as many do. Among many personal experiences are the calls for assignments on properties that I am quite familiar with & that are in close proximity to my office. After giving the caller the property’s DNA and a reasonable fee, I am told that they would get back. Its a good thing I don’t have to hold my breath. Never the courtesy of a call back & I’m certain the fee I quoted was no greater than a few dollars more that the appraiser, coming from 6 counties away, accepted. In some email blasts, the offer is described as what the lender considers R & C. Am I wrong to believe that appraisers in an area set R & C fees for their work? After 36 years, this old dog is looking to get out like too many of my colleagues. & no one I know is training the next generation. There is no incentive. (I am a 3rd generation appraiser-many family members were in the profession.Now only a cousin(MAI) & I are still in, but are no longer enthused) Prediction-In 10 years, if we haven’t been automated out, there will be one appraiser standing, a 95 year old in Fargo, ND.
-by Margie Snow
This article hits the nail of the head. Southern California still has too many inexperience appraisers willing to accept these low fee appraisals. They run out measure the house (hopefully), take a few pictures of the subject and go back and cut and paste MLS pictures. They have no idea that a comparable maybe in a superior gated community, freeway influence, etc. Yet the AMC let this happen because – bottom line – they are making money for themselves. These bad appraisals are the responsibility of the lender who passes the extra fees to the borrower. They just don’t care. Greed is still running crazy! What is worst the appraisers are still getting blamed for the industry problems. This would not be the case of appraisals were ordered by creditable experienced appraisers. Lenders/AMC are so worried about turntime and costs, they have no concern for quality appraisal reports because they may take one or two days more to get an accurate picture of the market.
-by Judy M
I have also experienced the issues mentioned in the article regarding “Blast Appraisals”. In addition to low fees, I have also noted that the first appraiser to accept the order gets the order. I recently tried to accept a order within seconds of the blast and it was gone! *(I spent a total of 46 seconds and the order was already accepted)! When I called the AMC and asked how this could happen, they responded “it’s technology”! Additional problems with “Blast orders” is that the most qualified appraiser is not the one who gets the order. A recent field review, show the appraiser who lived 35 + miles from the subject was the first to accept the order while I lived less than 2 miles from the subject. This area is mixed with tract homes, custom built homes, manufactured homes, some on septic and some on public systems, some zoned for horses and some not. Yes, the appraiser used both types of properties, statements were very canned, and appraisal was misleading. As with many of my reviews, the AMC should have submitted the appraiser to the state board. Who knows if this is truly being done?
-Why is it so important to the AMC that the order be assigned within 1 minute?
A simple solution for the AMC, is to blast orders, wait X amount of time and then the appraiser with high quality, good turn times, previous local experience, and possibly closest proximity to the subject, is assigned the order! All of this could be done automatically within 15 minutes!
by 30 year appraiser
You are missing the point. Quality is not a priority for most lenders and AMCs. If quality was a priority, they would conduct their business in a way to encourage it. They conduct their business now to encourage low price and quick delivery. Strict regulation of lenders and AMCs (or abolition of AMCs) is the only way out of this problem. As things stand now, we have another value crash just waiting to happen.
-by Diane Hirsch
I agree totally with everything stated – this is so true. I too am in the business 23 years and have seen it all. I hate the AMC’s who send out blasts at fees as low as $125 – what are they thinking! But as said, someone takes it and does a lousy report. It is very frustrating for the appraisers out there that do like the work we have done for many years and to see what has become of the business. I would like to see the AMC’s disappear and deal directly with the bank. It worked for many years. I would also like to see reports sent as a pdf and not “AI ready” to be read by computers. Changing things to get rid of the human element has not always worked best. Thanks for the good article – well said!
-by John Ford
When I get these blast requests I always change the fee to $50 over my standard fee and extend the turn time to at least a week. I don’t get many but sometimes I do.
-by Lee Perry
I would HOPE that the appraiser in the article did not hesitate to send this information to the state regulatory officials!!?? I understand that there are bad apples in all walks of life. If we as appraisers do not report situations as described in the article we have officially become a “bad apple”. In the Chicago area we are and have experienced the same issues. However I have simply told our staff that you can survive on eating McDonalds but you can only live if you eat right. Between the economic impact of diminished fee’s, the Laws, Rules and Regulations that appraisers are required to adhere to these folks will get caught up to eventually. The question remains as to how many good appraisers can hold out until they do. The VA system is without question the best in place. Panel appraisers with fee caps and specified turn times. The GSE’s could implement that with great long term benefit to appraisers and users of appraisals. We as appraisers often forget that we are a VERY small cog in the wheel of a mortgage transaction. Lenders have many other elements to considered and contend with these days. Until we as appraisers educate and apply consistent professionalism with our clients and make sure they are aware how important our services are we will continue to have these discussions and problems. Lastly – never forget that the mortgage transaction cycle is a FOR PROFIT business that cares only about said profit and that will never change. There is nothing wrong with that mentality just don’t expect it to change to make an appraisers life more comfortable.
-by Richard Vadimsky
This article is slow close to my experience that I could have written it. An appraiser for 25 years in New Jersey, my fear is that the industry (I no longer call it a profession) is in a death spiral and cannot be saved. The day will come that the banks will be able to go to government regulators and show them that there are not enough competent appraisers available to complete their required appraisals and hence they can no longer be required to perform appraisals to support their lending decisions…over and out. I too will not accept assignments at greatly reduce fees and hence have little work. I seem to be able to get only the very complex assignments which oft times turn out to be barely profitable because of the extra work involved. I’m already looking into other livelihoods since real estate appraising does not appear to be long for this world.
-by Bridget Weaver
Well said! Thanks for speaking up about this elephant in the room. It’s increasingly difficult to produce the quality that’s required for competent appraisal reports when so many of our fellow appraisers are willing to compromise standards to get volume. As an experienced appraiser who is being pushed out of the business by this trend, I’m hapy to see I;m not the only one holding the line on fees and quality. Good Work!
-by Harry
I Totally agree with this article and it really concerns me also. I have had the same experience in my area. I received a blast for an assignment of a purchase of a custom home of 11,000 sf of GLA on 2.54 acres, with a pool, stable, and guest house (of 2250 sf). Knowing the area and doing some research on the property I countered the customary and reasonable fee of $250 with a $1395 fee and 7 day turn around. I was not awarded the assignment, but was able to see that an appraiser did accept the assignment at $250.00, with a 3 day turnaround. I was amazed when the AMC called and asked me to review the appraisal for $175.00. I declined the assignment and have removed them from approved list with the state. Even though volume of assignments has declined the last 2 months this type of blast assignments is not good for the profession.
-by Ruth Sunday
I turn 65 in a few days. Between the extended liability, computer/site submission hassels from the lender’s additional UAD rules, the fees from the 1980’s and the increase in costs I no longer expect to work until I’m 70. My license is good until the end of 2014, but I’m closing my office at the end of this year.
-Like the appraiser in this story, I’ve done appraisals where someone else has done the work at a lower price. In my area the AMCs are not looking at a appraiser’s geographic competency, nor have they figured out the difference in experience merely by looking at the license number. In the past, local experienced appraisers have waited out a 6-12 month period where we are invaded by out of state or out of area appraisers, then we get the work to clean up the mess – at higher rates.
Many of us are moving on. It simply isn’t worth our health, the stress on our families or our future financial well being to stay in business. Frauds are being perpetrated daily, sometimes unknowingly, sometimes on purpose. Either way, I don’t need to work on straightening up the mess – again.
by Tim Savage
Excellent article! I’m now going to try a new approach. I’m going to accept the blast email low ball fee and then 2-3 days before the appraisal is due I’m going to contact the AMC and inform them that after the completion of my physical inspection the assignment has now been determined to be complex and I will require a higher fee. If they don’t agree I will withdrawn from the assignment and the AMC will have to start all over finding another appraiser and therefore not meeting the lenders turn time. Do you think this will work?
-by Barry
State licensed since 1992 still active however I haven’t accepted a appraisal assignment since 2006. I spent many hours on a soapbox but nobody was listening. In most cases You can’t do a credible appraisal in 24 hours for the fees that these clearing houses offer. I am one of the appraisers that has moved on to work that actually rewards you for quality as well as efficiency. Near the end of my stent as a full time appraiser I too was reviewing appraisals. I found the same blatant errors. Sometimes the subject property appraised wasn’t even inspected. The appraiser simply copied and pasted photos from the MLS. To my knowledge no action was ever taken against these appraisers and they continue to work today. In my opinion the appraisal industry was then and apparently still is a joke. Near the end I was changing clients like underwater as I was black- listed by clients that weren’t getting paid because I was doing my job right. It is heart wrenching to do your best and lose work. I will continue to sit on the sidelines and watch this game in hopes that one day these inexperienced rookies will be revealed for what they are. But is it their fault or the industries fault. We all have to eat!!
-by Ric Berue
I too have lost bids through the “blast” system, and learned in short order to refuse to deal with the AMC that submits orders this way – it was just a waste of my time. I have built relationships with a few fair-minded ( nearly ) AMCs that are just beginning to value my dilligence ( after 3 years ). Indeed, field reviews are more work than an initial report, and should cost more, and if this is the way that some AMCs chose to work, then they will lose time and money, and eventually their lending clients. Good appraisers need to be steadfast in holding the line on their already too low fees.
-by Ryan
Hopefully one day, government will realize that creating AMC’s didn’t solve a thing in the real estate industry.
-by Guy
i recently have taken some work by an “out east” outfit. They send me emails about potential appraisals, some nearby, wanting a 2055 drive by, with cost approach and MC addendum, while offering to pay $200, and wanting it returned in 2 days. I have negotiated a couple of assignments wherein they pay me $300 and give me a week, but there are many that i see are apparently accepted at the $200 pay level. I can only imagine the quality of work that is provided at 1985 fee levels…… I concur with “Mr. Johnson” that the work is shoddy, because this same outfit has hired me for 2 field reviews and looking at the appraisals, it was obvious that the bottom line dollar amount was filled in first, and then the appraiser’s best attempt to work backwards to make the adjustments equal the final value were done. How about the Lake Access home which was appraised while omitting a half dozen timely, similar lake access sales at the same lake, while using homes some distance on a gravel road, with no mention anywhere in the report that the Subject was located on a Lake Access site at a popular lake. Unbelievable. I think the drawback is the lender doesn’t really care, as long as the value is met, and the deal goes through, they are going to sell the loan anyway, and the fact that the young employees at the lender’s have a guide book to tell them how an appraisal is supposed to look, but have absolutely no clue as to how to properly value real estate. If i have to be starved out of the appraisal business, I am trying to think of how to use my 35 years of valuation experience to create a job within the local lenders, wherein i might be hired to oversee appraisal work to see if it’s legit… or not…..
-by Joe sena
Great article and very true. I was one doing many assignments for one of these companies and have refused to do shoddy work for a mere $200 for an exterior or $250 for a 1004MC. I reviewed comparables, drove by and took pictures of the subject and comps and, included deeds and did all of my due diligence and produced in my opinion a very credible report. Being someone who had a very successful business as well as a college education, I thought this profession would be a great alternative as my final career. Unfortunately it has not! The interesting part is that this one company has indicated that I am one of their top quality appraisers but I still lose work to appraisers that seem to select all assignments regardless of price. I recently contacted about a dozen AMC’s that I hopefully will be able to produce quality and not be taken prisoner by how quickly I can accept an offer.
-by GEORGE C HOEZ JR
THIS IS ALL TO COMMON. I WORK IN THE DELAWARE VALLEY AREA SURROUNDING PHILADELPHIA COUNTY. I SEE THE SAME EXACT PROBLEM ALL THE TIME. I DO NOT DO REVIEW WORK ANY MORE DUE TO THE LOW FEES. I ONLY WORK FOR 3 AMC COMPANIES, THIS IS BECAUSE EVERYTHING IS AUTOMATED. I AM CONSTANTLY QUESTIONED ABOUT MY FEES, WHICH I WILL NOT LOWER. I HAVE BEEN A RESIDENTIAL APPRAIERS FOR 23 YEARS. I LIKE MY JOB AND WILL NOT BE FORCED OUT. THANKFULLY, THE DOWN TURN IN THE MARKET WEEDED OUT MANY INEXPERIENCED APPRAISERS.
-by Gary Drake
Very good article. Just had a AMC try to get me to send in a Excel sheet with my fees, but I couldn’t make changes, because fees shown were customary and reasonable fees. When I called and talked to the AMC they said I could change the fee at time of order. But having done business with the AMC before they will not change fees. They say the fee is what I agreed with, therefore I no longer do business with this company. NOTE: Their customary and reasonable fees were $150 below our normal starting fee for appraisals in this area.
-by Dave
Just yesterday I had an AMC price shopping by the phone for a complex assignment – she told me my price was $100 over what they wanted to pay, which was VERY low. She said she would get back with me if they needed me, I am sure I won’t be getting a call back since there are more appraisers here than we need – somebody will take it for a low price,
-by Steve Collins
I’ve only been in the industry 15 years. The author of the article “nailed it” on what the appraiser is telling him. This apparently is an everyday event happening much more than anyone in the “banking” upper level management thinks. I do not know that I would do a review on work I lost a bid on. Having said that, I do get review work on appraisal’s that fit the exact scheme the appraiser has described. I just finished a review of similar quality work, canned statements that could represent a neighborhood anywhere in the USA, neighborhood section comments no person could interpret and there were comments in the addenda that appeared to be answers to typical AMC questions before they were asked? I understand some people have a family to feed and when work is slow, you have to sort of “let it go” that someone takes a low-ball fee simply to eat. The problem is these same people are killing the reputation of the rest of us. It’s supposed to all be about public trust, what kind of public trust does this “story” leave anyone with?
-by Donna
Whenever I call an AMC to ask, “Why haven’t you ordered from me in a while?” I am told, that they can get appraisers for $275.00 will to do the assignment. After listening to that idiotic mentality, I said my goodbyes and hang up, There is not reason AMC’s need to exist. Lenders have plenty of conduits like Mercury Network to order their appraisals. Appraisers don’t need sharing the lowest paid fee on the HUD closing statement with an AMC. Ask yourself “for what?” After 15 years, there is no incentive to expand again and hire staff, trainees and State Certs., I gag every time I am asked what my fee and turn time is from a phone monkey. And next they are pushing background checks. Please, I wouldn’t be holding a license in my State if I wasn’t clean. Another way for AMC’s to make extra cash. If the lender wants one, let them pay for it.
-by Dave
Unfortunately, this issue will continue to happen time and time again unless the “loop hole” with establishing customary and reasonable fees is addressed. The reality is that for every time a scenario like this plays out, there are too many others that don’t include a review and another appraisal. The net result on a large scale is savings and more profit for the AMC, and most lenders don’t even know to what extent they are at risk. The regulations clearly put the risk and liability for third parties on the lender, and one can only hope that at some point they will pay for their lack of due diligence and knowledge of how their AMC operates!
-by John
Great story but does it really matter when the Amc’s set fees. Nothing is going to change
-by Joan Strickland
You hit the nail right on the head! Our profession requires competent analysis of the market and attention to detail. Not only are experienced qualified appraisers leaving the field, they are no longer training the next generation of appraisers, since the fees can not cover the costs involved. The appraisals being sent for review are mind boggling and explaining everything that was done wrong, and why, takes even more time than doing the appraisal competently in the first place! To say it is a discouraging situation is an understatement. Then add to the mess the number of AMCs that go under, leaving appraisers unpaid for their work, and more and more of us are saying our profession is becoming a financial liability and it’s time to consider a different career path!
-by Renee Williams
The real reason the AMC’s are doing nothing about low fees to appraisers, is they are charging lenders a much higher fee and keeping the difference. They claim to be doing a technical review, which means they are making sure all of the boxes are ticked, 3 comps within a 1 mile radius etc.
-The real question, is this what lenders want? If we polled the lenders would they say they are getting good quality appraisals for reasonable fees? Or would the lenders say they are paying high fees for average appraisals but they are stuck just like we are. I believe we need to be more active as appraisers in reminding the lenders they do not HAVE to use AMC’s. There are other ordering options. (ie) in-house separate departments, Mercury Net Work, Appraisal Port…. In stead of us being out here complaining, let’s get out there and inform the lenders!
by John G. Mettloing
Excellent article and mirrors almost exactly my own experience in the appraisal business which encompasses over 30 years. I have been consistently under bid with my key clients for some time now and have seriously considered quitting the appraisal business altogether. I just can’t financially survive in this situation and refuse to turn in crappy reports like those of the “canned/robo” appraisers out there. JM
-by Joe Izzo
I’m tired of hearing that you cannot produce a quality report with such low fees. DON’T TAKE THE ASSIGNMENT! The fee should have nothing to do with the quality. If you accept the assignment than you agree and are expected to produce a quality report. My guess is that this appraiser would produce an inferior report no matter what fee they were paid.
-by Tara Carson
I get these e-mail blasts every day, sometimes two or three a day. I look at them, shake my head and delete the e-mail then move on to an appraisal I’m doing at full fee. The old motto is so true “you get what you pay for”. Unfortunately the borrower is getting screwed big time and they probably don’t even know until it’s time to sign on the dotted line….
-by Mark Whitman
The one thing that I noticed that was missing from the article is the fact that the AMC gets a fee for every service they provide. Therefore, their profit incentive is not to have it done right the first time as they get a cut from the first appraisal, the review and the need to order a new appraisal. The only time you see an AMC change their way of doing business is when they lose a large lending client after they realize that this model is not in their interest and they are not closing the majority of their loans on time.
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