The Appraisal Fee Wrestling Match

My boys currently have a couple of friends over. They are out on the trampoline and enjoying the (finally) spring weather in Idaho. As I sit at my home office desk, I have a perfect view to their appraisal-biddingworld and I glance out occasionally to enjoy their playing and laughter. A few minutes ago, they were wrestling and my youngest (8) got hurt. A scream was emitted and he immediately hit the tarp covering his face. As his father, my immediate reaction was to bolt from my chair and run out to comfort him. But I didn’t.


About a week ago, my office sent me a message. An AMC had contacted us about an unusual property located in limited market. It was nothing I had not encountered before, but I knew it would take at least twice as long as a standard appraisal service. Though I give my office full autonomy to bid jobs, they were a little unsure of this one. Since we were slow at the time and they did not want to lose a potential income source, they were especially leery.

I gave them my fee (more than twice our standard fee) and hung up the line. Almost immediately, I started to have second thoughts. “What if they think my bid was too high,” I thought? “What if I don’t get the job? What if we remain slow because I was too selfish? Perhaps I should call them back.” But I didn’t.

Within seconds, my son was done crying and up playing again. Dad hadn’t come to save the day and he had brushed it off. I can imagine his embarrassment if I had jumped to my feet and ran to cuddle him in my arms in front of his peers. Boy am I glad I did not react.

Within minutes, I got the message that our fee had been approved. Now instead of questioning whether or not I had bidded low enough, I was wondering if I had bid high enough. The assignment turned out to be even easier than I thought. Boy am I glad I did not react.

55 thoughts on “The Appraisal Fee Wrestling Match”

  1. Pingback: The Appraisal Fee Wrestling Match - Appraisal Buzz

  2. Dustin, if an order comes over in your name only, as in, we your client don’t allow trainee assistance, how can your office bid jobs? Does your client understand that you the contracted appraiser are not personally reviewing 100% of all assignments before they are bid upon? Does your office respond with your name or simply a company name? Does the lender client in question require communication via a portal? Is the portal approved for the acting appraiser only or under your company policy? Is your client aware that your office staff may be reviewing any and all documents associated with the file? Does your office staff have authority to determine complexities and provide fees above what you call typical?
    The complexities (extra time) you speak of Dustin are common within the industry; however the response from the client is what’s different. In my area where there are 1,000 appraisers in one county and 5,000 within a few hundred miles, any and all complexity requests ($50 to $100) are addressed as follows.
    The appraisal is sent out at the standard fee to 3 to 10 additional appraises and if any ONE APPRAISER says yes to the original fee, than the complex fee request is denied and the order is reassigned.
    Your success on this single assignment appears to be in part based on a lack of competition in your rural area.
    Just my two cents, but I think it’s worth a dollar.

    1. Dustin Harris

      Yes Bill, my staff has both the expertise and authority to accept jobs for me. I see a recurring theme in your posts that we live in very different areas. I think you have made your point. I agree, we live and work in very different areas.

      1. Dustin, I have no reason to doubt your staffs ability, but I truly don’t know the answer as to if they can speak FOR YOU? If the report is in your name only, with no allowed trainee assistance, can they legally in your name determine the complexity, your geographical competence, the need to raise fees, interoperate a 15 page engagement letter, etc..? Is your client made aware that your office staff may be determining such things via your past training, but maybe without your current knowledge? Not to get off topic, but with appraisal fees being set in advance by way of TRID regulations, there is a zero point zero (0.0) chance in my area of getting any approval for complexity fees.

        1. Dustin Harris

          I really appreciate your concern, but I do believe my staff can do anything I authorize then to do as it ultimately is my liability. Quoting fees is not significant assistance and does not require disclosure through USPAP.

          On a side note, I am befuddled by your interest in my business and questioning nearly everything I do as a business owner. I am honored that you care about me that much, just shocked you are so concerned about me.

          1. Bill Johnson

            Dustin, you have your own site, blog page, podcast, provide your tax returns for all to see, share your blogs with other sites, and I believe offer your services for a fee. I’m befuddled (just wanted to use that word) that your befuddled that people (including me) have an interest in your business and the systems you employee. Although we are not direct competitors (Idaho / CA) in a way the teachings of your systems to my potential local competition does require me to stay abreast of how things might be getting done. Regardless if USPAP does not consider other staff members quoting fees on your behalf as significant assistance, there are those appraisers that under some circumstances may disagree with that practice.

    2. bill, why would you want to work for cheaper. If someone else wants to spend 2 days on a report for a standard fee, I say let them have it.

      1. The question Barbara in my area (especially with TRID) is not how much can I charge for the extra work (99% decline), but how much extra work am I willing to do at the standard fee. That is a foreign concept for most on this site, but unfortunately true for thousands of appraises.

    3. Face it Bill…you’re a troll. If you don’t agree with his stuff then stop reading it. Stop wasting your time on appraisal blogs and go find some better clients or move to another city.

      1. Bill Johnson

        If all was rosy and perfect Jordan as most seem to claim on this site, then why does the state of Illinois have 55 trainees compared to a 1,000 a few years ago? Why is the state of CA losing an appraiser a day? I honestly think most people on this site are living in denial as the industry is collapsing (apparently my area first), while many discount what others have to say.

      2. Jordan, “I have learned more from those who question me, than those who agree with me”. Fill free to use that but give me credit. (Bill Johnson – 05/04/2016).

  3. Sherry L Kaley

    I agree with Dustin. My partner and I are the only two women appraisal firm in our area. We cover a large metropolitan area and the adjoining eight counties. Some areas due to lakes or mountains, simply take the entire day out of the office for travel/inspection/comp photos. We charge not only for complexity, but time involved, as some of those assignments take twice the time as a nearby assignment. In addition we often push the due date back a few days for those out-of-county jobs. We know the fees we quote are higher than most appraisers in our area, but we do not lack for work. It’s a matter of supply and demand. Provide a good product, in the time frame promised, and don’t be afraid to ask for a fee that reflects the actual worth. If a client chooses to accept a lower fee, that’s fine…maybe that will give me a little free time to stay home and work in my garden! But typically, like Dustin, after quoting a high fee, when the client comes back and accepts it, I wonder if I shouldn’t have charged more.

  4. Supply and demand is a concept we had to learn very early in our practice. The concept applies beautifully in our businesses as well as the real estate markets we constantly evaluate. I am bidding 200-300% of normal fees and 2-3 times the normal turn times in my market for slight complexities at this time. Not because I am greedy or trying to take advantage of my clients or theirs, but because there is more work than available appraisers at this time. If I were to be “nice” and take fees at market rate and keep turn times at one week, I would fill my schedule for the month in a few days and turn away 70% of all orders coming in. After 24 years, I admit this is an unusual time for appraisers in this market, but I am adjusting to deliver what the market is demanding at terms the market is happy to agree with. If/when things slow down, the paradigm will shift again. Hopefully retirement will be in sight by then. There will always be someone to complain when the world around does not suffer with them.

    1. Bill Johnson

      With a heavy supply of AMC’s in our area (San Diego), 1,000 appraisers in the county, 5,000 within a few hundred miles, Trid regulations, it’s very unlikely that a $1 will get approved for a complexity fee. My only point Adam is that although we are doing the same work, lenders may be paying $250 in my area (keeping it quiet), while voicing their concerns in your area (X2 or X3). Not complaining, just stating facts.

  5. I work a very rural area in Alabama. There are a very few times that an AMC has declined my increase in fee or turn time. Again if you provide a good service and meet your turn time AMC’s are more than willing to approve higher fees in my area. I have about 20 plus AMC’s that I am currently working with. These AMC’s have contacted me, not me contacting the AMC’s to get work. Area and competition has a lot to do with the fees that are approved.

  6. Just a quick note of thanks and encouragement to you Dustin. Lots of criticism and naysayers on these posts, but you offer an open forum as well as some insight into your world of appraising that may or may not apply to each of us. As I scroll through the 100’s of emails not stripped by my aggressive spam filter each day I enjoy clicking on yours when they show up for a few minutes of sometimes informative / sometimes entertaining posts. You may not change the world with your blog but I’m sure that was never your intent. Thanks again.

  7. Whether we like it or not, even if it can be argued the industry is no longer a pure example of the free market, there is still a significant element of supply and demand going on. That is certainly the AMC argument when they claim that appraisers make the fee decision, either by stating the fee or acceptance/refusal of an order at a specified fee. All of us should recognize this economic principle considering what we do for a living. I have had the same experience bidding as well, wondering if I am too high at first and then wondering if I am too low after the fee is accepted! The number of appraisers in an area certainly will have an impact on fees. All a potential client needs to do is find that one appraiser caught in a slow time who is willing to take something for less than they would prefer, because something is more than nothing. I have been that person a few times myself over the years. I too (for the most part), do what many others do, which is to be merciless when it comes to complex assignment fees to AMC’s that have zero moral quams about offering low prices. The days of blanket pricing are gone now that the AMCs have found their way in to claim that margin/element of balance. I often charge 2-3 times for complex assignments to AMC’s. Sometimes I get the order, most times not. I have some clients who send through orders on a regular basis with fees that are above what I might have accepted for, even above what I have published. When these clients send over a complex order, I often take it without adding the complex fee as a thank you for their reasonable business practices. With the clients needs to standardize pricing across the board, I wonder why more clients have not adopted a similar fee policy – maybe that’s coming, but I wont hold my breath.

    After that long-winded commentary let me add this – clearly there is no shortage of appraisers out there in most markets.

    1. Bill Johnson

      The practice in my area M is that after the original appraiser has bid up for complexity issues, the assignment with the original fee is then sent to 3 to 10 other appraisers. The intent of the lender/AMC is not to confirm with a 70, 80, 90% confirmation that the assignment is complex, but to find ONE appraiser that will do it at the original fee. Lenders will do everything under the sun to not re-disclose to the borrower (higher fee) as they seek out that one in ten appraiser that says yes. This practice could in part be reduced or eliminated if the industry adapted on a federal level what was just done in the state of VA.

  8. The Bill Johnsons of the world truly think they know and understand the game but have been thoroughly brainwashed by a system designed to disempower the fee appraiser. As an independent businessman Dustin’s perspective is welcome and appreciated. If the game’s unfair then I say sack up change the rules! Kowtowing at the corporate teat is no way to live.

    1. Bill Johnson

      As an independent business man with over 3 billion dollars in evaluations I do have an understanding of the system/game Mike. If Dustin or anyone else gets an assignment from an AMC where they specifically say there is to be no trainee assistance, why should we not question how the work is being bid? Should we hide behind USPAP and say its okay, I don’t have to disclose to my client because its not considered significant assistance? Does my client deserve to know that my office staff may be determining the complexity of the work, the availability of comps, the zoning, litigation within the complex, the appraisers geographic competence without consulting the actual appraiser? I think my clients deserve better.

      1. Dustin Harris

        Bill

        Just thought I would let you know of a conversation I just had with my biggest AMC. Due to your skepticism, I called them. The first thing I did was to confirm that they do not allow trainees to participate in the appraisal process. They confirmed that this was true. I then asked them if I could have my staff except bid requests. He asked me to repeat the question because he thought that he had misunderstood. I did repeat the question in a little bit different manner, and he chuckled a bit as he confirmed that it would be just fine to have my receptionist accept bid request as long as I stood behind whatever she quoted. Perhaps the AMCs you work with are not so forgiving.

        Remember, the fee has nothing to do with USPAP

        1. Bill Johnson

          Dustin, I don’t doubt that your biggest AMC client would allow your staff to accept bids under your name, nor do I have a doubt that you trained them well, I only question if the process should be allowed at all. It’s not uncommon for me to spend 30 to 60 minutes looking into a property through an appraisers eye to determine the complexities, liabilities, available comparables, zoning issues (3 weeks in my area for zoning history letters / 100% rebuild / $500), pending litigation, interpreting line by line a 15+ engagement letter, etc. I understand it’s your risk, liability, and okay with your AMC client, my point is that many appraisers may feel uncomfortable giving the reigns over even to trained office staff. Your next blog or podcast should focus on the process of what is done prior to saying yes to an assignment. Does your staff immediately start a digital file, import subject information, compare public records to MLS listings? Is the zoning determined (legal / non-legal), is the engagement letter (15 pages) new or have you used it before? Do you have a previous sketch from the neighborhood, have you done the property in the past 3 years? Has the property been purchased in the past 3 years and under what circumstances (REO/Short sale / significant increase in value)? Is the assignment for a purchase and if so was the contract provided for review (furniture included, significant credits, concessions)? How much is the down payment? Has the property been flipped? Not that your doing anything wrong, but many appraisers may want to connect the above dots themselves prior to saying yes to the order. My two cents are worth a dollar.

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        2. Dustin:

          Trainees completing appraisals is also a no-no in Kentucky, but you are right in that they can quote the fee for you, upload it for you, update the status on their site for you. So, I’m not sure what the problem is with the AMCs for which Bill works.

          On a side note, I did have a conversation with one of the “top dogs” of a large AMC at a function nearly a year ago. I told her that by not allowing trainees sign off on reports, obviously along with a supervisor, they are killing the industry and only making things more difficult for them and their lending clients. We were all trainees at one time, and without the experience hours, we couldn’t get certified. She told me that many times it is the lender that has this restriction and the not the actual AMC. She also told me that for her particular AMC that the trainee could be listed as providing significant professional assistance. So, when a trainee accompanies one of our certified guys, I tell them to list the trainee as providing significant professional assistance and to list in the scope what that assistance was (helping measure the building, assisting with market research, etc.). We did it and that particular AMC has accepted our reports and others have as well. So, I think the problem is the trainee signing the report and not them actually contributing to it.

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      2. Michael Morris

        :Billy J. wrote: ” over 3 billion dollars in evaluations “.

        That’s the most ridiculous way to present your “experience” in appraising I have ever read IN MY LIFE. That’s even more absurd than Realtors bragging that they sold “$1,000,000 in houses this year.” In other words, meaningless blather.

        You are truly pathetic and I can see why you spend so much time on appraisal blogs, it’s because nobody wants to hire you and put up with your nonsense. And quit stalking good ol’ Dustin you old fool….

        1. Considering my typical assignment is approaching a million dollars Michele, no realtor is bragging about having one sale a year in my area. Since you live in Above Ground Pool USA (AGP), then I guess your market must put a lot of merit in reaching that million dollar mark. If your advertising to realtors who speak THAT LANGUAGE, its an interesting exchange when they find out your experience is 50 to 1 in your favor. Speaking of YOUR language Mike, can you provide me any tips on how to get this plastic fireplace lit? If it catches on fire, how much value should I give it? If I replace the light bulb inside with an LED bulb, can I claim its an energy efficient item? As I said above “I have learned more from those who question me, than those who agree with me”. Fill free to use this Mitch but give me credit. (Bill Johnson – 05/04/2016).

  9. Another question I keep wondering about: does anyone know of another business that requires a middle man? AMC’s were created by the former attorney general of the state of New York, in order to line the pockets of his cronies. Prior to 2011, appraisers moaned about lender ordering systems, now it is the AMC’s. I would much prefer doing business directly with the lenders. I guess it is a wish sandwich at this point. Thankfully I am slowly transitioning away from lending. My message to some is “careful what you wish for” and “if you mind your own business, you will not be minding mine”.

  10. Great read Dustin. I go through that same process all the time. I am glad that I typically go with my first instinct. Thanks

  11. Great article – great perspective Dustin. Within the past 2 days, I just bid on 2 separate complex properties. Both which would have taken significant time to complete as in 6-8 hrs of field work each and minimum 15-20 hrs on the computer creating a credible report. I spent 15-30 minutes researching and preparing each bid. Although I specialize in these types of assignments, they take away from the regular “book of business”. If I don’t get either job, I am fine with that and most likely will never know why. I have plenty of work ALL the time. In fact, I am completely overwhelmed just about all year long (I might be in a unique situation – not really sure). I just bid the jobs based on the time it will take me (in the field and at the computer) to create a credible report. If I don’t get them – I don’t care. Click the mouse and on to the next house.

    1. Bill Johnson

      With TRID regulations Jeffrey where most lenders set fees in advance without lifting a finger (they know nothing of the property), do you ever wonder if you should be paid a consultant fee? Lenders and AMC’s receive our local knowledge and our information for free when we bid on assignments (large GLA, lot, solar panels, guest house, detached condo, etc.), and they use our knowledge against us when they ask others to complete the assignment for less.

      1. In this area all properties similar to what I described are “fee quote” jobs. These fees are not set in advance. The opportunity for the fee quote only goes out to a handful of appraisers that cover the area (less than 5 is my guess) and I am one of them. They may or may not be high dollar but they are all complex in nature and the lenders I deal with understand that. They also understand that it is like a niche market – not every appraiser is qualified or wants to tackle the homes I do from time to time. The limited information I provide (for free) is only to help my cause to explain the complexity further and hopefully they will see things my way and assign the job to me. In addition, most of the info is on line anyway (they all have access to the towns websites and MLS systems). If they don’t and they assign it to someone else, I would bet anything that it is ONLY because my competition (although limited) can get it back sooner than me and are not as busy. The client knows my work and they pretty much knows what I am going to charge – just by looking at the last complex assignment I did for them. I have been told, when I asked why I didn’t get a particular job in years past, that it is never about the fee and always about the turn time. Whether that is true or not I don’t actually care. I charge what I charge and move on. I am just too busy to care and to be honest, these types of jobs add more pressure to me – which is why I give extended due dates when quoting them. I guess we are just talking about two completely different markets.

        1. Bill Johnson

          It sounds like you have a nice system Jeffrey but my counter to that (5 appraisers in your area) is that my primary county of San Diego (30 miles in all directions) has over 1,000 appraisers in it. My area demands ocean front, acreage, 30th floor penthouse condos, 2-4 units, mobile home knowledge, etc., so all appraisers compete for the same work. If you take into account other licensed appraisers from Southern CA (within a few hundred miles) then my competition will be well over 5,000. This response is not to disapprove what you do, but to simply say the solutions offered by many don’t work on many parts of the country.

  12. If the article in the headlines states “wrestling match” this assumes the other parties (lenders / AMC’s) want to participate. I received a “tentative assignment” today with a fee of $425 ($100 rush fee) that is under contract for $1,780,000. The property is located on a canyon, has an ocean view, pool/spa, pool house, separate guest house, solar panels, and overall is superior in GLA by 400% compared to the typical property. There are no sales in the PUD nor the immediate neighborhood from the past 24 months that upper bracket the subjects GLA. Did I mention that the property has both a beneficial location (Cul-de-sac) and an adverse location (proximity to Marine airport). Before I could even suggest what my fee would be for such an assignment, one of I’m sure the 3 to 10 appraisers that it was sent out to, said yes. This fee is less than most would accept for a typical assignment in their areas of practice, but in mine they are gobbled up in less than 30 seconds.

    1. Okay, your area has an oversupply of appraisers and like any other service or product with an oversupply, there is ruinous price competition. So what is your point? Is it that AMC’s are somehow at fault because there are too many appraisers in your area or that appraisers should be exempt from the law of supply and demand? You can either relocate to an area where the supply of appraisers is in balance with the demand for appraisal work or find a niche in your market in which most other appraisers cannot or do not compete. Or you can whine about your situation like a 3 year old whose mom would not buy him any more candy. By the way, why does your area have an oversupply of appraisers? That’s right, your area has an oversupply of appraisers because you had too many greedy appraisers train their own future competition by taking on trainees during the heady times of the bubble run-up.

      1. Or, I can fight for enforcement of the law that’s already on the books Tim. If its customary to have fees in the $450 to $500 range, why with 80% AMC coverage is the fee often in the $250 to $300 range? Telling the truth and asking for enforcement is not whining like a 3 year old.

  13. I am a big fan of greener pastures. If there is a glut of appraisers in your area, rather than be upset about it, leave the profession. Find something else to do. You should always have a Plan B. When applying for a loan, the appraisal is not a source of income, it is an expense. Large corporations will always try to mitigate expenses. If they can get an appraisal at $250 from your competition, then that’s the market price. Get over it. You/we are in the commodity business. We sell opinions of value and risk mitigation for underwriters. The only way to make money in a commodity business, is to reduce the costs of production. If you can create more value elsewhere in the market, do it.

    If you want to change the profession, start a PAC and lobby for change.

    1. Is the answer really to give up and leave the profession David, or is it to continually spread the truth so positive changes can come about? Should we all leave or should we fight for enforcement of existing laws that in some ways are supposed to protect us? As it relates to fees, just because a competitor may set the market at $200 or $250, this does not mean the lenders and AMC’s they hire are meeting their legal obligations. Just ask imortgage about their $10,000 fine in the state of LA for paying $200 on a 1004 FHA assignment.

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