If you are on social media platforms where appraisers hang out for any length of time, you are bound to see a version of the following, on a regular basis:
“I was just offered $275 to do a full appraisal in my hometown. Before I had time to email the AMC and tell them how ridiculous a fee like that is here, some other appraiser accepted it! Can you believe that? What kind of low-life appraiser does a full 1004 for $275?”
This kind of post is typically followed up by other appraisers piling on with their own stories of a similar nature or of hopes and dreams of leaving the profession soon and slamming the door behind them. To be clear, I do not do full appraisals for $275 either, but I am also not as critical of those who do. Why? I do not know the whole story.
Let me set this up with a scenario that recently happened to me. I have a rental property that was in need of some plumbing repairs. Accordingly, I called three, separate, companies for bids. Unsurprisingly, they all came back with different numbers. Two were fairly close in their estimates and one was substantially lower. Why is that? How is it that three companies can all look at the same job and not come up with an identical number as a cost to fix? The answer is complicated. Is it possible that the company with the lowest bid will also do the worst job? Is it possible that the technician will be less experienced, unprofessional, and will simply have a lower quality of work? Of course, but that is not the only possibility. It is also quite possible that the company with the lower bid has better tools, a well-trained support staff, and a streamlined business model; all helping them to complete the job more efficiently, with a higher quality, and still do it for less money than their competitors. These are the hallmarks of a company who will still be around tomorrow.
What does that have to do with an appraisal office, you might ask? Surely I am not comparing fixing pipes with valuing properties. You are right; they are different professions, but they are still both professions. Business is business whether you are cleaning out a drain or measuring a house. Better tools will indeed allow you to save time without cutting quality. Hiring, training, and managing a great support staff will allow the appraiser to focus on the things they should be doing rather than getting distracted by tedious work that could be delegated to others. Continually refining your procedures and streamlining the way you do business will not only allow you to do more work in the same day, but may open the windows to a better quality of work because you are more careful about how the product is moved, from inception to delivery.
When an appraiser’s peer accepts a full appraisal for $275, it seems like a travesty. To an outsider, it might seem as if they are scraping the bottom of the barrel, cutting corners, and giving the rest of us a bad name. Most likely, your judgments are correct. There are those appraisers out there and I have even reviewed a few. I have even met a few of those appraisers over the years. How they continue to keep their licenses, I do not know. However, their fees do not always tell the whole story.
Ever since HVCC and Dodd-Frank, appraisers have had a harder time making a living. There are real reasons for that. We should fight hard to overturn bad legislation and over-regulation. However, there is still a way to make a very good living as a real estate appraiser in today’s reality, and it does not mean we have to cut our prices so we can get more work than the next guy. Taking off our technician’s hat and donning our CEO cap once in a while will allow us to look at things from a whole different perspective.
The most successful business models I have observed do a good job of balancing three, main ingredients: investing technology, surrounding yourself with a well-qualified team, and streamlining your processes. This will allow you to do excellent quality work, but more efficiently than your competition. As for fees, I would not suggest you cut them and become, “that guy.” However, being open to getting outside the box once in a while and look at things from a business owner’s perspective, may allow you to remain competitive, accurate, efficient, and successful, all at the same time.
As seen first at the Appraisal Buzz
Pingback: Appraisal Fees Do Not Tell The Whole Story - Appraisal Buzz
This may have been mentioned along the thread, however the $275 appraisal may be very profitable at times. When orders are broadly distributed for bid or first-come-first-served at a low fee there may be the case that an appraiser has another assignment in the same subdivision or neighborhood with similar features and may be able to use similar comparable sales or at least consolidate the trip. This is the exception probably, but as an appraiser I have accepted assignments for lower than typical fees if I am making only one trip to an area and will be getting a typical fee for the other assignment. I am not making an argument for lower fees or advocating for the AMC’s and their precious margins, just adding an example of a reason an experienced, qualified and busy appraiser may accept such terms.
Yes, and you still have the same liabilities and work to do on both of them….same calls for more information, same waiting to be paid, etc. Banks and AMCs do not charge less for their services no matter what…. why should you?
” why should you?”
Because every fee appraiser in a given market is COMPETING for work with every other appraiser and guess who gets the job 90% of the time?
Right, the LOWEST “bidder”.
And guess what, if I know YOUR fee is $400 then I’m going to quote $375 every day of the week and get 90% of the work…But you get to brag about your “full fee” of $400 to your buddies and whine about me “lowballing”.
Adam, what you are saying makes no sense at all. I AM a businessman. While there ARE instances when I will offer a single client a discount for a 9specific) bulk order, I would NEVER undercut my own fees merely because I was in the neighborhood anyway! Such coincidences are called “gravy” where I MAY benefit from the happenstance of proximity. They are NOT a basis for me creating a lowered threshold where clients think they can order quality work merely by fee shopping.
In any professional business operation, there will be some assignments that are more profitable than others, despite our best efforts to quote fees fairly. Hopefully, the winners will balance out the losers. Cutting out the winners can be dangerous as you don’t get the benefit of the lost winners and still seem to get the losers. Obviously, AMCs love that strategy, but it may be bad for us in the long run.
Dustin, I hold you in high regard, having had the pleasure of speaking with you direct, and largely due to the recommendations of my friend Jason F. in CA.
Having said that, you are (respectfully) WRONG! Significantly lowering fees to where they are seen to undercut the profession’s ability to earn “reasonable” fees is both fratricide in the short run; and suicide in the long run.
I KNOW Jason’s skills; abilities with “I.T.”; and his high standards so when he tells me he CAN do 2 full appraisals a day he is one of the very few I”d believe that are not only doing them, but are also doing them in a USPAP complaint manner. I also know that his wife is running administrative affairs and customer service for his office, AND that he has another assistant that doe research and pre writing of reports so that all he has to do is “professional appraiser” tasks. I also know he does not work simple 8 hour days.
THAT is three people to do TWO reports! Even if he underpays his wife (she will NOT be happy to hear THAT!), and pays his support minimum wage clerical support fees (now $10 and hour in L.A..), there is NO room to undercut fees!
In fact, Jason’s system allows him to charge HIGHER fees where a $1,000+- is not all that uncommon. Im pretty good, but my computer skills are not remotely equal to his. Nor are my people skills. I don’t have a family member willing to work for what she takes from me anyway. While I COULD hire a trainee to do clerical work, there’s no guarantee they could be kept busy enough for a full time salary…even with $585 fees.
At $275 it would be a virtual certainty of not being economic.
Your correct Dustin, an appraisal fee does not tell the whole story. To better understand the impact of the fee, one must calculate the cost of living to bring clarity. What’s the story if in Idaho Falls you collect a VA loan fee of $450 and in my area of San Diego/Carlsbad I collect a VA loan fee of $450. I’m sure the regulators, AMC’s, and lenders look at this fee number and assume equal treatment, but what does it really mean. According to Bankrate (C of L calculator) Idaho Falls indicates home prices are $185,380 versus SD/Carlsbad and $802,495. Apt Rent in your area is $604 versus my are of $2,054. Bottom line, the percentage increase to maintain the same standard of living in my area versus you area is 80.63%. To be considered at the same standard of living, that VA loan appraisal fee should be $810 for me and not $450. To better understand the impact of such below standard of living appraisal fees, I would ask you to step into my shoes and determine what your situation would be if your fees were 80% less ($90). Could you make a living at $90 per appraisal? While being paid $450 per appraisal in my are that is exactly what we are being asked to do. What say you Dustin?
To continue from my previous post, I ask the additional following question. What does the BOTTOM 50% of the AMC pool want to pay in your area for a traditional conventional loan? With 5,000 appraisers located within a few hundred miles of me, the typical fee is around $275. Again, if I reduce this amount by 80% (C of L my area versus your area) then the equivalent fee for you is $55 per report. If you were getting $55 per report Dustin (equivalent to what much of the industry receives today), then I think the story and your articles would be much different.
Thank you so much for your feedback. This is a common response from you, which I appreciate. I have not responded directly in the past, so I decided to do so in a podcast minisode. I just finished recording it, but it will take a few weeks to come out. I thought the questions you raised were fair ones, but common ones, so it was best to respond with a short episode. However, I will not make you wait till then for the answer. I will say this as my short answer for now:
1. You have a great point and one I will consider now and in the future.
2. You do not know my area and cost of living does not tell the whole story. I would assume (on average) I am dealing with more difficult appraisals (my reasons for this are given in the podcast). Also, my travel distance is probably more than yours (not that I am comparing mine to yours). Just two things to consider.
3. My blog posts and/or podcasts are not just me speaking. I have the unique opportunity to associate quite closely with appraisers from all over the nation (and from a variety of markets). Please know that my own experience certainly has the highest weight on what I say, but it is not the only thing I consider.
I appreciate very much your feedback and hope this and the episode help to clarify my position a bit more.
Thank you for the response Dustin and I will wait until the podcast to form a final opinion, but here are a few additional thoughts.
As it relates to cost of living variances I agree that they do not always tell the whole story, but the C of L calculator I used (Bankrate) does take into account 50 separate items. This should not be confused with the government’s simplified approach in establishing prices on a few basic items.
I will again hold judgment, but to assume your assignments are more difficult than mine may prove to be false. My primary county of operation (San Diego County) exposes me to ocean/bay front properties, international boarders, several military bases, and has a diverse geography (Mnt, desert, ocean). The area also has a traditional big city downtown (high-rise condominiums), rural areas, agricultural areas, Indian reservations, and some of the most expensive real estate in the country. In fact, my primary zip codes have a median price approaching one million dollars. San Diego is also a very heavy local and international city for investments and specifically with the influx of professional house flippers. I will listen to your reasoning’s very closely.
As it relates to travel, one must not only take into account the distance in miles, but also the actual TIME in traffic. Although my daily commute a few years back (3 to 4 days) was from San Diego to Palm Springs (126 miles one way), big city traffic jams (San Diego is 17th worst) often result in daily time commitments of a few hours.
I understand that your opinions have in part been influenced from a national level, but my interpretation and implementation MUST be on a local level.
Points taken. Thank you for the civil dialogue. You have given me much to consider.
Dustin, can you please tell me the name of the podcast that relates to our conversation in this blog? In light of the ENTIRE state of CA moving toward a minimum wage of $15 over the next few years (announced over the weekend), I’m very interested on your take. Without listening to it I will hold judgment, but I see no way to spin one area ($7.15 in wages) verses pending wages ($15 in the future). Thanks.
Here you go Bill.
I will have a listen. Thanks.
Dustin, the podcast (106) does not have an active link. It will not open to play. Thanks.
You are right. Oops. Should be fixed now. By the way, the episode was recorded BEFORE you and I had a conversation and I think much of what was recorded was already cleared up by you. You and I are more on the same page than the episode tends to give credence to.
Dustin, thank you for expanding on your thoughts both in the comment section of your blog post and via the podcast, however I think we may need to agree to disagree.
The point was not to compare you to me, but rather to compare two separate areas to each other to get a read on a local level of what the impact is on set statewide fees (VA panel), national level fees (set AMC split fees) or customary fees in general. Although for many reasons I would guess that San Diego/Carlsbad appraisal fees are lower than your area (1,000 appraisers in SD and 5,000 within 200 miles / high ratio of AMC’s, etc.), I’m willing to concede, round the corners and say our fees are similar (+/-).
As it relates to establishing cost of living standards, again it was not to assume I know your standard of life, but to rather collectively draw from averages as pulled from 50 DIFFERENT C of L categories in the Bankrate calculator. On a side note, with the state of CA announcing this week that the ENTIRE STATE is moving to a minimum wage of $15 in the next few years and future increases will be tied to inflation (C of L), the increase in the gap (your area versus mine) will likely explode from the current 80% higher in my area.
In listening to your podcast and your explanation as to perhaps your area being of higher complexity compared to mine (no way to truly test) I will again provide my side of the complexity story. My primary county of operation (San Diego County) exposes me to ocean/bay front properties, international boarders, several military bases, and has a diverse geography (Mnt, desert, ocean). The area also has a traditional big city downtown (high-rise condominiums), rural areas, agricultural areas, Indian reservations, and some of the most expensive real estate in the country. In fact, my primary zip codes have a median price approaching one million dollars (higher liability / Jumbo loans). San Diego is also a very heavy local and international city for investments and specifically with the influx of professional house flippers. As it relates to your local connection of appraisers, perhaps they are getting the cookie cutter properties as only a few times a year can I ever reuse something I’ve comped before (everything is a one-off assignment).
As it relates to travel, one must not only take into account the distance in miles, but also the actual TIME in traffic. Although my daily commute a few years back (3 to 4 days) was from San Diego to Palm Springs (126 miles one way), big city traffic jams (San Diego is 17th worst) often result in daily time commitments of a few hours. As a side note, a check of national gas prices today showed that my area was on average $1 more per gallon than in your area.
In bringing this all together Dustin, I truly believe collectively that our areas of practice have strong similarities (fees / complexity), however the outcome changes dramatically when you apply on a local level the cost of living and one’s final standard of living.
The entire point of my comments weren’t to debate the facts as I have laid out above, but to take them to help determine why on a local level appraisers can have such strong feelings about their profession. If we take the Bankrate data as fact (average person) it states that my area is 80% more expensive to live in as compared to yours. If at the end of the day an appraiser in your area gets to pocket a $1 after local expenses while under similar circumstances my area gets to keep 20 cents, we are not going to be looking at the problems of our industry from the same angle. At equal fees, appraisers in similar areas to you can live well ABOVE what is considered typical for the area (standard of life), however at the same fees, appraisers in my area live well BELOW what is typical. To better understand my point of view, reduce a $325 appraisal fee by 80% and live off of a $65 appraisal fee in your area. The goal is to have you live below what is typical for your area so that you can have a true understanding of what it’s like to live off of $325 in my area.
After you are in the above situation, there’s a very good chance your opinion might change as it relates to the requirement to have a 4 year degree, 2 years of apprenticeship training (6 years to make $65), and the importance of establishing customary and REASONABLE appraisal fees. Your ability to establish a small business with hired employees will most likely face much steeper challenges based on your gross income, etc.
Although the solutions to our problems are much longer than my comments today, the emphasis should be on the reasonable aspect of appraisal fees. As in, just because $xxx may be customary, the true reasonable fee may need to be double or triple in some areas when the C of L is considered. Here come the haters.
Bill, I’ve read MANY of your other posts (here and elsewhere) and absolutely agree. You point out differences in COLA between where we all are (you in SD and I in LA, and Dustin in the Rockies (I think) and tend to leave that argument as being self evident. You see it. I see it, and I think Dustin sees it; but it doesn’t specifically address whether the base fees being compared are themselves ‘reasonable’.
I think if Dustin read some of your other posts (www.appraisersblogs.com ) he’d see & possibly agree with your broader arguments as well.
Dustin, if you want to look at this from a different angle, say entry into the industry (Certified Appraiser) on a state by state basis (Idaho versus California), then the story as it relates to appraisal fees, becomes even more muddy. In my state (CA) you currently need a bachelors degree to obtain a certified license, but it appears the state of Idaho has no such education requirement. If it does, than insert any other state where no such education requirement is required. What is the lifetime financial impact on that individual in CA who will often spend $100,000 to meet the education requirements while at the same time being out of the appraisal workforce for 5 years (entry delayed). If you assume $100,000 in college fees and $50,000 per year (5 years), then the CA appraiser will need to make up $350,000 over his work life just to be even with the Idaho appraiser. Over a 30 year career, that CA appraiser will need to make $12,000 more per year just to be even with the Idaho appraiser. Assuming 250 assignments are completed each year, the CA appraiser would need to be paid $48 more per assignment just to recoup the upfront costs and loss of income. This $48 would need to be collected for each assignment over the next 30 years!
Thanks for the response. You make a great point. However, I am not sure how that negates the points I am trying to make. Is it more difficult to make a living in California? Quite possibly. Perhaps this (and the tax structure) are why people are fleeing your state. The overall point I am trying to make is one of self-control. We (the business owner) ultimately have control over where we work and how much we charge. Do not misunderstand, I am not trying to make is sound simple. These are hard decisions and I realize you cannot control alone what is customary and reasonable in your particular area. My mantra is that the blame ultimately lies with us, the appraisal business owner. We must decide what we charge and if it is not viable in our area or with our situations, we do have other options. I guess I am just trying to promote an attitude among my peers of self-reliance rather than victimization (not that I am saying you are acting like a victim). By the way, the four-year degree is pretty much universal at this point. I know of no state that has not adopted that criteria.
In reviewing appraiser qualifications via appraisercareer.com one can easily compare the requirements to obtain a certified license from state to state. To become a certified appraiser in Idaho one must only have completed 21 semester credit hours and have experience hours in no fewer than 24 months. Although my numbers will be a little smaller than what I have indicated above, the facts are that the CA appraiser will have a time commitment of 3.5 additional years as compared to the Idaho appraiser. In addition, the CA appraiser will have the additional expenses of 3 years of college, and the resulting loss of income.
Why do the AMCs believe that they need $150-$250+ just to distribute the work? This kind of gouging of the fees is akin to charging a 50-100% mark up. To add insult to injury the AMCs want the appraisers to take on trainees as a solution to increase their bottom line. Why don’t the AMCs hire all temps to do their operations and review work? Many already do send work over seas and to temps. However, the savings seem to be retained by the AMC. THe increase in revenue ought to be passed on to the appraiser.
But then the AMC wouldn’t have a business model.
Business is a game of market power. They can because they are more powerful than you are. They don’t force anyone to accept their fees or their conditions. The underlining caveat is, “If you won’t then someone else will.” You have to feed yourself and your family, so you accept the fee and the conditions. That’s the difference between having power, and a lack of power.
Joe: I am not here to prop up the AMCs (I certainly have my issues with them as well), but I am not sure it is fair or accurate to say that all they do is “Just distribute the work.” I assume there may be some out there that do, but most AMCs that I know do much more than that.
uhm…AMC’s do more than distribute? What would that be exactly? No really explain to me, what task do AMC’s accomplish in the appraisal process other than assigning the order? Pre-underwriting duties maybe? That’s not appraisal, that’s underwriting. So what, exactly, do AMC’s do? I do see them get in the way much of the time. I do see them add a layer of needless management, or at least needless to appraisers. All the things AMC’s “do” ought be part of the lenders costs of doing business, just like underwriting, and before the HVCC in fact were. I think AMC’s are just a way for the lenders to get the appraisers to lower fees so they can pay other portions of the process with the savings – considering the move occurred from over-regulations due to and inspired by the lenders themselves, rather than free-market forces, I would say that’s bs. I say if the industry is going to be over-regulated at the front end, it should be over-regulated on the back end, meaning a national minimum price fix.
$275 for an appraisal will most definitely be “streamlined”. I think in the lowest cost of living market, $275 could be a starting point for the most basic appraisals. However, money is not infinite. I have run the appraisal business numbers over and over and over again. $275 is a price point that will deliver a slow death to the appraiser workforce, because it removes the margins or buffers any other prudent business model would include, to cover over-runs, slow periods and a potential tidy profit in a boom year. IMO, appraisal’s should start at $400 for the least expensive market in the country and go up from there; with most markets paying out $500 as the norm. I got 2 professional home inspections this year when we purchased and paid $425 for the first one and $425 for the second one, plus $495 for loan application and $150 for radon. Consumers can pay $500 for an appraisal.
I am not here to prop up the AMC world (I am an appraiser after all), but you really believe that ALL an AMC does is assign the order? Why not use a computer with a lottery algorithm to do that then? If that is all they did, I think a computer program would do just as well. Perhaps this is why so many appraisers have such animosity toward AMCs. I have my issues with them as well, but I think it is good to understand their role. It is also good to understand that lenders are not required to use AMCs. This is a business decision they have made (most likely because they see they can get done what is needed through an AMC with less expense than they could do it themselves). I do not think your local bank is going to pay $200 for a company to assign the order. Perhaps I need to do another podcast on this issue. too much info to include in a comment section on a blog post.
Listen to this M. Then, let’s talk.
Dustin, when evaluating the AMC versus appraiser relationship there are several points I would like to make.
The AMC’s client is the lender and they make every attempt to satisfy THEIR client while the appraiser is an afterthought.
When AMC’s recruit (e-mail blast) what benefits do they offer the appraiser to join there team? They tell us they offer timely payment (I used to collect at the door), they tell us about their latest technology (benefits the lender not us); heck most will never even tell you what they pay. They say they are expecting NEW clients any day, but yet I NEVER had to spend a dime in the past to obtain my clients.
As it relates to assigning orders, most AMC’s DO HAVE a computer algorithm that may select the closest appraiser, the appraiser with the highest score, and of course they always consider the appraiser fees (the cheapest).
Of course the AMC will also sell their client (the lender) on the review they do, but in the real world appraisers know that no such REAL review takes place. Checking for their required canned phrases is not doing a review.
As it relates to expenses Dustin, the lender has the choice to keep things in house ($), or pay nothing to have the AMC take a percentage from the appraiser. The expense argument does not hold water.
To determine the real dollar benefit that an AMC may or may not bring, the fees need to be separated from the actual appraisal fee. If the state of LA has a minimum set customary and reasonable fee setting in place (the floor), then how will the AMCs fair when in a backwards way they are on their own. If the borrower pays $500 for the appraisal fee in LA while the appraiser must be paid $400, how will the AMC/lender relationship develop? Did the AMC previously pay $250 to the appraiser while operating on the other $250? Will the AMC survive on the now $100 split? Will the lender raise the appraisal fee to $650 so the AMC can operate on the same amount?
AMC’s do not reduce my time to compete the assignment. They do not reduce my business expenses. They do not reduce my liability. They do all of this while they often require the appraiser to sign paperwork telling us OUR E & O must cover them.
The bottom line as it relates to the AMC and appraiser relationship is they offer little to no benefit but collect a large percentage of you fees.
You say appraisals should start at $400 in your opinion. That means nothing. What matters is what the market will pay for appraisals. I know for a fact that you can run a business on $275 appraisals. You live in a fantasy world and it’s time to wake up.
Joe, anyone that knows me also knows I am no great defender of AMCs. having an appraiser that also owns one, and lets me cherry pick assignments does give me a little extra insight though. The basic business model for an AMC start up requires about $100 per assignment. That’s nothing more than maintaining a list, sending out (automated) orders and then making individual pone calls when all those come back with no one able or willing to do them. They (generically) also pay a marketing fee that ranges from $50 to $75 PER ORDER. The lowest I’ve heard of is $25 per order. Reputable firms like my friends, pay a salesperson. Others MAY pay a sales person AND/ OR a kickback to the person that orders appraisals from specific lenders. (In case you ever wondered WHY lenders keep using PROVEN disreputable firms). Its also why none what separation of appraisal fees and AMC fees on the TRID. Then, MOST want to make a profit. THAT is the money over the first $100.
I don’t CARE what their profit is IF it isn’t coming out of my pocket. They should all be operating on a cost plus basis anyway…but they are not. Contrary to the lies being promoted by AMCs and their trade group legal tricksters, Fees are NOT determined on the complexity of a specific assignment. They have already been predetermined by the cap placed on the orders paid to the AMC of $495 to $550. VERY FEW EXCEPTIONS to those numbers exist nationally by the way; but f COURSE there is no price fixing going on.
We are all supposed to believe it is the Free Enterprise System working as designed.
While all of these arguments have merit, appraisal fees are and have always been, determined by the degree of market power each market segment holds. First the introduction of AMC’s; next the consolidation of AMC’s into even bigger, more powerful entities, which equates to more market power. As market power increases, the ability to negotiate fess also increases. Thus, as AMC’s consolidate, as they are currently doing, the resulting companies operate as oligopolies or even quasi monopolies in their outlook. Therefore, when mortgage lenders are negotiating with AMC’s they are negotiating with a small group if companies with market valuations in the millions of dollars. Contrast that type of market power to the fragmented nature of appraisers, where there are numerous small appraisal firms located throughout the United States. Thus, a one-person appraiser working out of his or her home can offer lower appraisal fees than can an appraiser that’s running a small business out of an office (all things being equal). Sure, taking advantage of increasing efficiency with technology will allow appraisers to squeak out more profit within the prevailing fee rates; however, it won’t address the broader issue of being able to negotiate those fees on a broader level. For those of you who have been around a while, look back over the years and look at the tremendous technological improvements in the appraisal profession, i.e. digital cameras, electronic delivery, computers/software, etc. and appraisal fees adjusted for inflation have hardly even budged or even decreased. There’s no doubt that increased technology has created tremendous value. The point is, who captured this value, and who will continue to capture this value in the future? The answer is, the entities who have the most market power will capture the value associated with technological advances. And, market power is determined by the degree of consolidation (and cooperation) within an industry. As long as the appraiser market segment is fragmented, i.e., characterized by many small appraisal firms, their fees will be determined by more dominant market players. Determined…not negotiated.
For me, the whole “fee per report” measurement is a more than a little myopic. It’s like the $/per square foot measurement the Realtors love to throw at us. When comparing apples-to-apples or for gaining a general understanding of the market, it’s OK. But for analyzing and comparing specific situations it kind of sucks. For me, the most relevant measure is “how much of my time did I invest and how much did I make?” Throwing in externalities like quality, complexity, speed, driving time, etc… just confuses the issue. Sure, all those things are important but they are a different discussion. The single most important commodity any of us have to offer is our time. It’s a finite resource and how you chose to spend it is a direct reflection of how you value yourself. No one but you can change that.
I start from the perspective of how much per hour do I want to make in providing my services to my clients. I suggest you take a look at your earnings before income taxes or EBIT on a hourly basis. So, if the fee is $400 and it takes $50 in expenses (MLS, travel, etc.) to produce the final product and you spend 6 hours working on the assignment, your hourly rate earned is $58.33 before income taxes. If this will produce the kind of lifestyle you expect out of your efforts, create a business model that will produce those kinds of results. That is what I have done with the implementation of technology and an effective support staff. I have been in the biz more than 36 years doing eminent domain assignments and commercial and residential for lenders and other professionals. Currently, I am doing only residential. The business is more profitable today than ever. Develop a web site to capture divorce, estate and other private assignments. These folks will pay the real reasonable and customary fees we all talk about. Again, how much is your time worth? Then develop a business model to support that. I know it can be done.
As it relates to the argument of doing civil use appraisals (divorce, estate, etc.) Dave I think one must consider where they live to determine if they pay more or less than residential work. I hear this argument a lot, but in San Diego with AMC’s fees in the range of $250 to $300, its not uncommon for appraisers to offer civil use services for $200 to $250. Not that its the best place to get work, but the public often refers to Craigslist and these fees when they call for my services.
Bill, sounds as if reasonable and customary appraisal fees in SD are $200 to $300. If that is not enough to support the business and your lifestyle, maybe SD is not the place to be right now if you’re a real estate appraiser.
My point in many of my discussions Dave is to bring attention to the fact that OUR issues can be federal, state, local, city or even at times neighborhood specific. WE have no central voice as appraisers because even on a small scale (20 appraisers commenting on this blog) we have no consensus as to what the problems are. This lack of a cohesion is being used by the AMC’s and lenders of the world to set their own agenda and policy. If you look at the recent case in the state of LA ($10,000 fine), imortgage established their fees based on what was provided to them by their client (Flagstar) who received assistance from Clearbox and Joan Trice. I understand it’s my individual choice to work or not, but collectively we must support the ENTIRE profession and provide a voice even if the issue is not currently affecting you. The lenders, AMC’s, title companies (Corelogic) are joining forces and gaining strength to fight us. My state of CA is losing 1.3 appraisers per day (475 per year) and even with our current numbers (11,062 – 15% of the nation) the trend is alarming.
As it relates to time Mike why has no other commenter considered my argument as it relates to appraisal fees and the cost of living. Although Dustin and I shared civil dialog on the subject, no one is taking this stance seriously. If you want to keep it simple Mike the state of Idaho and CA pay the same fees for a VA assignment ($450) while my area is 80% more expensive to live in. As it relates to time Mike, with a typical mortgage in Idaho Falls ($600) the appraisers need to complete 1.3 appraisals each month to pay for housing. In my area ($3,000) at the same VA appraisal fee we are completing 6.6 appraisals to pay our mortgage. Assuming 8 hours per appraisal the Idaho appraiser must spend 10.4 hours per month to pay for housing while the San Diego appraiser must spend 52.8 hours. All discussions should start after the C of L is taken into consideration.
All discussions should not start with cost of living. No one guarantees you can live off your appraisal work. Nor do I want that guarantee. If you can live off your appraisal work in you area then great. If you can’t change your business model or find another line of work. Cost of living has no place in a discussion of appraisal fees.
Too bad Billy Boy has NO CLUE…..
I agree. Fees SHOULD be related to time to do QUALITY work including proper analysis of rights being appraised instead of (typical ) AMC appraisals assumptive conclusions that everything is “fee” and no adjustment of explanation is required as to how to get there from what may actually exist.
While this COULD potentially tie into Dustin’s argument for enhanced efficiency, I think it bet exemplifies the FACT that appraisals take a certain number of ‘man hours’ (whether in the one person fee shop; OR the composite staff assisted high efficiency shop).
IF Dustin’s methods yield more reports per day; they also cost more to produce. WHY would he pass along the benefits of HIS increased efficiency to the clients rather than to benefit himself?
I’m not talking about fees that undercut “reasonable” fees by competition-say 5% or 10% but I AM talking about fees that undercut reasonable standards by 40% to 50%. $275 is only 40% of VA fees for most states. It is only 50% (47 and change) of C&R fees I proposed to FFIEC and CFPB; and the State of Virginia (through AGA on 2/23/16) where a licensed, non certified appraiser with 10 to 15 years should be charging at least $585 per appraisal!
I’ll add my 2 cents worth- The entire model of the AMC taking their share from what is disclosed to the consumer as an Appraisal Fee should be changed. In my opinion, this is fraudulent when taking into consideration all the new TRID regulations which were supposedly put in place to be more transparent to the consumer.
Dodd-Frank and HVCC never demanded that lenders use an AMC. If the lenders so choose, they could still be in compliance with all previous regulations by having a separated department that used employees to order the appraisal. This department is to be separate to the point that they do not associate with the employees that make the decisions on the loan and the loan originators. However, that would cost the lender more. So it makes better financial sense for the lender to use the AMC.
Technically, the AMC is a vendor of the lender and it should be the lender who pays for this service. This fee, if paid for by the lender as a vendor service, wouldn’t even need to be disclosed to the consumer. It is my contention that if a lender chooses to use AMC’s for the service of ordering their appraisal work, then they should be paying the AMC directly as a cost of doing business- it is a service they are choosing to use in lieu of having the added payroll to follow the regulations. Due to the fact that this will most likely never happen, then at the very least, the appraisal fee and the AMC fee should be separated out on the closing documents so that consumers clearly understood who the “Appraisal Fee” went to. Again, this will also most likely be fought by lenders on every front as they have one of the largest lobby groups in the government.
Although the idea I present is a long shot, if instituted, then we would see an impact in fees because then the AMC would not have to bargain to collect their portion of the appraisal fee for their services. They are a business and they should be paid for their service. it is my opinion, that the fee for the AMC should be coming directly from the lender.
I agree with you! I have been in the appraisal profession for over 35 years in all capacities: as a bank employee appraiser, an appraiser for ad valorum tax valuation, as an independent fee appraiser and now as a review appraiser for a lending institution. Our institution has an appraisal department. We order our own appraisals and have appraisal review specialists to value properties under $250,000 and review work from fee appraisers. The AMCs are an unneeded middleman. They do not know the local market area.
Bill, I left CA due to the high taxes, regulations and deteriorating standard of living. If you are a farmer and your irrigation dries up, you plant different ground. I think you need to quit typing and rent a U-haul!
Working in Southern CA I live within a few hundred miles of 10% of the entire number of licensed appraisers in the United States. Although many will say its complaining, or wander where I get the time to post on social media, or want to say I have a victims mentality, the facts are the facts for the thousands of appraisers in my immediate area. Regardless of the fees you earn, or hourly wage, or what our clients want to call customary and reasonable, YOU MUST TAKE INTO ACCOUNT THE COST OF LIVING. I would suggest you go to Bankrate and use there cost of living calculator to draw your own opinions, but my arguments are solid. At a VA schedule ($450) the San Diego appraiser must complete 6.5 appraisals per month to pay the typical mortgage for the area ($2,937), at the same VA rate in Idaho that appraiser must complete 1.45 appraisals to pay the typical mortgage ($659). In my discussion with Dustin I had pointed out that my area is 80% more expensive than his and that to understand the San Diego appraisers point of view than he would need to reduce his fees by 80%. With this logic, the VA appraisal fee in his area should be $90. If you again take the typical mortgage from his area ($659) and divide by this $90 amount, than the Idaho Falls appraiser must complete 7.3 appraisals per month to pay the mortgage or similar to the rate in SD (6.5). Our lender clients are not telling the regulators about the thousands of Southern CA appraisers being asked to complete work for $275 in 4 days (80% by way of AMC’s), but they are bringing attention to possibly your area where you may live like a king. We need to support our industry and understand what our fellow appraises are going through. To live the same lifestyle in SD verses Idaho Falls, then support fees of $810. What say you.
Your “COST OF LIVING” has absolutely NOTHING to do with the price of an appraisal someone is willing to pay you. All your goofy little made up “formulas” are just that GOOFY and worthless…
Michael, if the blog is in part why someone may or may not choose to do an assignment for say $275, than C of L has EVERYTING to do with that decision. The manipulation and control of this industry (some areas worse than others) by the lenders, AMC’s, software portals, etc., has altered what someone SHOULD be paying for appraisal fees. What did I personally make up Michael? Idaho and CA have the same VA fees ($450). The C of L I quoted is directly from Bankrate and is open for you to review (based on 50 separate items). As an appraiser in CA who must complete 6.6 appraisals (gross fees) to afford the typical mortgage ($3,000) while the Idaho appraiser (Bankrate San Diego/Carlsbad versus Idaho Falls) must only complete 1.4 ($659), is a valid argument and is not goofy or worthless.
You might want to go back to college and take Economics 101.
There is absolutely NO correlation between what amount a buyer is willing to pay for a service and what amount the seller NEEDS to get paid in order to afford ANYTHING they need to buy.
Sounds like you are the PERFECT socialist getting in line to vote for Barnard Sanders……..HaHa
The connection Michael is what makes one appraiser take a fee of $275 while others won’t do the same work for less than $450 (form 1004)? The decision to do the work will vary, but ultimately the final take home pay versus how far that money goes (local C of L) will play a vital role. If a large metropolitan local government is hiring a police officer (buyer), the officer (selling) his services from a current small town, will absolutely give weight to what things cost before making a decision. In addition, the buyer making the higher offer (small city to big city = higher pay) will certainly consider the higher cost of living, increased security risk, increase liabilities, etc., in offering employment and compensation. In bringing this comparison to the appraisal world, lenders and the AMC’s they hire are not considering enough state, or local items in establishing at times, set appraisal fees (C of L). The attempt to set flat fees (VA by states) has created winners and losers amongst the appraiser ranks, and there are many of us who are losing….. HaHa.
“The attempt to set flat fees (VA by states) has created winners and losers amongst the appraiser ranks, and there are many of us who are losing….. HaHa.”
The fact that YOU might be losing is not my concern.
“We” are not on the same team, we are competitors, so to speak.
Look out for your best interests and I’ll look out for mine.
You guys whining about nobody caring about “your” issues need to get a clue.
NOBODY except you complainers gives a damn about YOUR perceived problems…
All of the points made have been valid so I’ll come at this issue from a different angle. How is it that even the fry guy at the local fast food place makes more now than 15 to 20 years ago? Has frying technology changed? Does it take a degree to make fry’s? I can’t think of another industry or profession that has not been able to raise its rates other than appraisers. Even the people doing title search work are making more today than 20 years ago. However, we (appraisers) are being asked to accept less in fees today than we (I) was making 20 years ago while at the same time the report has grown in both scope and number of pages and the turn time demand has gotten shorter. Yes technology has been a boon to the individual appraiser with mobile appraising, no more using spray glue to put photos into the report, laser measuring devices and electronic delivery, but as the technology has increased our efficiency, the banks, AMC’s and other lenders have added more and more requirements that in my opinion tip the scale back to past even. I don’t believe there is an appraiser out there that wants to work for less than they were making 10, 15, or 20 years ago, just staying at those prices makes it hard to make a living. If the fry person, the local car mechanic, lawyer, or bookkeeper can all see cost of living increases why should we be any different?
My answer to you is found here:
Maybe it is time to repost that article. It has been a while.
Fees are an interesting topic that is more complex than the business of appraising property. Fees on the residential side of our business tend not to vary by much (maybe +/- 15%) but fees on the commercial side tend to vary more significantly (by 100% or more). Like it or not, as an appraiser, clients tend to pigeon hole you based on your perceived expertise, skill set and quality of your work. For example, you might be that go to guy who can get appraisals out with a short turn time or the gal who specializes in giant houses. Just as all appraisals are not alike, clients need for appraisals are not alike. Sometimes they just need something to stuff in a file so they can check the box on a loan app so they just want the cheapest thing. Understanding your clients needs and having the ability to adapt your product to those needs are traits of a strong business model. Although my mantra is that I don’t move out of my seat for less than $500, I am currently considering a non-USPAP product that can be completed for less than $200 because my clients need something for loan monitoring. The other thing to remember is that different appraisers are at different places in their careers and businesses. Someone just starting out or have found a lull in their business so they might bid something really low just to make sure they get the assignment. Conversely if it is an assignment that they perceive as difficult or if their schedule is full, they might bid it much higher since they really don’t care if they win the bid. If you find yourself in that position, remember that you are perceived more by the price of your product than the quality of your work. Most clients almost never read the drivel I write but they all remember how much they paid for the last appraisal I completed.
Hello Dustin, not big on internet responding, seems to lead to some crazy things. First off I am a one horse shop. Not very efficient I know. But I do understand a little bit about cost of doing business. I do know what my avg cost per appraisal is for my entire business, fuel, car repair/service, internet, MLS, cell phone, Quarterly Estimated taxes, E & O insurance, seminars, Health Insurance, you get the picture. I am apparently not very smart as it seems to me that if my average cost per appraisal is already pretty high, how adding staff (increase productivity I get that) works out if the fee is $250 or $275. I know my cost per appraisal, and if I use that number in my business my net profit per appraisal would work out to less per hour than if I flipped burgers at the Golden Arches (does McDonald’s still have arches?). I understand efficiency, but less of a fee means more work in order to compensate for less fee, doesn’t it?? I use to be in corporate life back in the 70’s and 80’s (showing my age), had a sales person come to me and tell me that I needed to work with him on the price or our widget in order to get this order. I found out that the cost of making the widget would be more than sale price. The sales person told me that we could make it up in volume. I asked him to seek other employment several weeks later. Too me it looks the industry as a whole is trying to make it up in volume. I like your comment about working smarter not harder. I am beginning to think that either I don’t understand my costs, I don’t understand profit, or maybe I am just a lone wolf appraiser, who is just not getting it. Oh yea, since 2010, my health insurance premiums have increased by 123%, still trying to find the client that will pay me $900 for a standard tract house. Which leads me to next observation, why is it okay to pay $1200 for a title report and no one objects, the appraiser asks for higher fee and well I will just leave it at that. We as appraisers must be doing something wrong. Dustin I do enjoy your blogs and every now and then I catch your podcast from deep in the Rocky Mountains. Sure wish I could have gotten my wife to move to Montana or Wyoming, would have had less competition and more opportunity to view some of the most beautiful part of the U.S. Thanks for letting me chime in. I wish you and your gang of followers all the best, Happy Appraising. And Dustin rest easy I am not in your private group so you don’t have to worry about me chiming in there also. Personal Regards, Brad
My primary zip codes in San Diego Brad average nearly $900,000 per transaction and the typical agent/broker commission is 5%. Just last week I had a double sided broker deal where this single broker collected $45,000 on one deal! Although typically the fee gets split 4 ways ($11,250) I find it so frustrating that lenders decline appraiser attempts to collect an extra $50 for a complex assignment (sorry reassigned to a different appraiser / TRID).
Quit crying and whining and go SELL HOUSES then…..
It has been my experience when dealing with most AMC’s that offer a “standard” fee on assignment requests, are open to fee negotiation (we don’t work with those that don’t). We are in a rural area with no subdivisions to speak of, each property being ‘one of a kind’. When making our counter offer, we point out the factors that we consider to justify the higher fee. As I said, we have ‘fired’ those that don’t. Maybe I have become that ‘grouchy old appraiser’ that lenders/Realtors/AMC’s talk about, but so be it. After 42 years in the business, I may have become less eager to please, or expand my business, but we still get more work than we want. I would like to think that our knowledge and expertise in our niche market area brings the assignments in, for lenders / clients that want a solid report. Those that do not can move on.
While in your area Ward the AMC may want to consider your thoughts on your fees, in my area most every client supposedly sends out the request to 3 other appraisers to get THEIR opinion when the first appraiser asks for more. With TRID restrictions, I have yet to get approved for a bump in fees for complexity issues ($75 to $100). Even though an hours worth of work has gone into determining the complexities of the assignment, the work gets pulled if ANY appraiser agrees to take it at the predetermined TRID fee. In a recent example, I brought attention to the lender about how the 5 varying models from the PUD in question all have incorrect GLA’s as per public record files and the stated builders brochure. I was part of a team that helped settle a large issue brought up by many owners and helped establish FACTUEL DATA on the property characteristics, but the lender did not care and pulled the assignment over $100. At this point, I do not waste a minute or an hour to give a quote on fees.
“At this point, I do not waste a minute or an hour to give a quote on fees.”
But is sure appears to have PLENTY of time to waste on some appraiser’s blog…..
I’m sorry Michael you find my comments a waste of time and that leads me to believe my points and issues are CURRENTLY not yours. If all is rosy in your area and you are getting what you consider customary and reasonable fees, enough time to compete the work, and think in your area of the country that your are being treated fairly, I say good for you. The issues and points I bring up adversely effect thousands of appraisers even though they may not have the time to express them. I will have an open opinion if in the future the next article negatively effects you while not a concern for me. Here’s a thought Michael, as 90% of my work involves loans above $750,000, what will the effect be on you or the other commenters if the regulators jump from the current $250,000 limit to $750,000? Assuming you don’t work in an area similar to mine, what will your comments be when 20, 40 or 80% of your local residential assignments vanish? Although this issue may have a minimal effect on me (jump in the limit), I will still actively voice my opinion to increasing the limit.
My appraisal volume has been steady over the past 10 years and rarely involves loans over $350K.
Anyone appraising properties with loan amounts over $750K are absolute FOOLS for charging anything less than about $1,000 per appraisal report so that’s on YOU.
I appraise mostly tract houses in neighborhoods ranging in price from $150,000 to $400,000 and me fees are in the $350 to $500 range. The last $750,000 house I bid $1,200 and got the job.
Maybe you need to find a new “market” to appraise in or change careers………
There appears to be a lot of trolling on these posts by Bill Johnson. “Even though an hours worth of work has gone into determining the complexities of the assignment…” I’d like to know the amount of time you spend posting cynical and valueless comments.
Peter, considering the author has said in response to my comments “Thank you so much for your feedback”, “This is a common response from you, which I appreciate”, “I have not responded directly in the past, so I decided to do so in a pocket minisode”, I thought the questions you raised were fair ones”, “You have a great point and one I will consider now and in the future”, Thank you for the civil dialogue”, and “You have given me much to consider”, I think you need to read my comments again as it appears you may be the one not bringing anything positive to the table. Good luck sir.
If cynical trolling paid minimum wage Bill Johnson wouldn’t have to worry about assignment fees.
Insert Bill’s cheeky, passive aggressive comments below.
Thank you for your comment Don and your contribution to bringing to light the serious issues facing this industry. I look forward to your future two sentence responses to bring enlightenment to us all. If your pillow is nice and cool Don, don’t forget the other side maybe hot and uncomfortable. Thanks.
Hey C.C. I am so excited for Whispers at Moonrise and the last SF novel its almost always on my mind. Kylie’s story is just amazing and I am having so much fun reading your books! Anyway, I know your suppose to comment to try to win the advanced copy but I just wanted to say this stuff as well? Your books really are amazing and I’ve learned a lot about writing and the different types of writing styles just by reading them! <3 So thanks! And happy writing!
Personally I could spend all day reading Bill’s comments. I don’t think they’re cynical or trolling at all…amirite.
In case any one was wondering, Don Johnson was my conjoined twin at birth, and thanks to Dr. Ben Carson, we were separated some time ago. I’m sure its obvious to all, but yes I received 100% of the brain.
Did you get it from the Wizard?
No need to pile on Dustin, the article says he doesn’t think you should lower your fee to that.
While I don’t do work for $275, I’ve never understood the argument, especially by appraisers. The person buying the product, gets to decide which seller they want to use. If they are happy with what they are getting for $275, they are allowed to do that. Much like we do when we do an appraisal, we look at the price, and what you get for the price.
I do often give a discount if I am going in that direction, and I do understand why someone would pass their efficiencies on to the customer: to get the order. See, I don’t care, what I want to make an hour, what my time is worth, or what a cost per appraisal is. I care how much money I make. If I do 2 in the same neighborhood, my cost per appraisal goes down, and my money per hour goes up.
If I have no work, I don’t lose money by taking an appraisal for $275. That’s $275 I didn’t have before.
Mainly, though, I’ve never cared for Customary and Reasonable. If I don’t want an order at $275, I don’t take it. But I fear a time when a vendor tries to set my price. Their customary and reasonable may say $400, but my fee may be $500. My whole point is, its my business, I can charge what I want. To say anything else is ridiculous. Wal-Mart has a business model, and so does Tiffany. They are both doing okay.
I agree Clint, its your business as to what you want to take for a fee, but in part the decision involves how much money is going to be netted (expenses). If you live in San Diego where at times gas is the most expensive in the nation (including Hawaii and Alaska) that 2 hour trip (traffic) will cost me more than anyone else. If I have hired help that costs me $15 per hour while other parts of the county can hire help for $8 an hour, that will contribute to my decision. Local business expenses play a direct role in your decision, but lenders and AMC’s could care less and want a one size fits all.
Wow its nice to see another appraiser who GETS IT.
I could not have writtem those thoughts any better myself, so congrats to you sir!
And I agree about “customary and reasonable” what a STUPID term with absolutely NO real meaning.
That is one of the best things about having help. The worst part is the overhead, but the best part is you decide how much you want to cover that overhead. So, if you wanted to, you could take a lower fee in an area you are already going to. Your office costs are mostly fixed, so the more income you bring in, the more it offsets your overhead.
Of course the goal is, to be able to say no. So where you really want to be is a place where you can make money if you want, or say, “I’d rather enjoy sunny San Diego than work for that crap company at the fee. So long”.
I get it Clint and thanks for the dialogue. In part, my point about fees and weather one appraiser will take an assignment or not (Say $275), is directly related to local costs (C of Living). If in another part of the country I can get away with paying $8 per hour for office help, while in my area the cost of living puts that cost at $15, then the take home pay for the business will be much different. With a gross of $275 in San Diego, general expenses of $75 and a single employee at $15 per hour ($120 per day), the net per appraisal to the business is $80 per appraisal ($10 per hour to the appraiser/owner (8 hr per assignment)). If the typical mortgage in my area is $3,000, then the first 37.5 appraisals completed each month would only go to my mortgage. If in a different city you take that same fee ($275), have an area that is 80% cheaper to live in the results are much different. With $50 in general expenses, and $64 per day being paid to a single employee, the net to the appraiser is $161. If this other area has a typical mortgage amount of $650, then the appraiser/owner will only need to complete 4 appraisals per month to pay his mortgage ($20 per hr). If we call appraising a profession, please tell me what other industries pay half as much per hour when the C of L could be 80% higher.
You are WAYYYYYYY too full of a bunch of BLAH BLAH BLAH nonsense.
You seem to have a much better skillset for minutia and details than is required to be a good appraiser.
Should have gotten a degree in accounting or statistics or some other boring 9-5 job dude……….
If your past posts are to be believed Michael, how have you been in this business for 40 years and completed 10,000 assignments? Michael, I just hope you have updated your canned adjustments as given to you by your trainer, because that full bathroom is worth more than the flat $5,000 your giving it. Michael, when you say “customary and reasonable fees are STUPID and absolutely have NO real meaning” I couldn’t disagree more. You have lenders, AMC’s, and now individual states determining the meaning of customary and reasonable fees while it seems you have brought nothing to the table but the disgust for my opinions. I have posted in the past and in part tried to explain in Dustin’s other blog (a la carte appraising) that we need to start from a USPAP compliant report to assist in determining starting fees. What lenders get now (scope creep, 15 page engagement letters, etc.,) should cost them twice as much. I know Michael, Blah, Blah, Blah.
Here’s a question for all including Michael. What makes an appraisal fee customary AND REASONABLE? I think for the typical noncomplex assignment we all have an idea in our area what is customary (non AMC assignment), and although I have found the fee surveys being supported by several states to be severely flawed, they are in part taking large amounts of data and determining what is customary. In my opinion, the reasonable part of the question needs to take into account the regional, and or local cost of living. What reasonable fee is necessary to live a reasonable life. Is it reasonable to have an appraiser in one area of the country complete 4 appraisals per month to pay his mortgage while other appraisers must complete 37 appraisers in other parts of the county (see previous comments)?
” In my opinion, the reasonable part of the question needs to take into account the regional, and or local cost of living. What reasonable fee is necessary to live a reasonable life.”
It’s painfully obvious you either flunked Economics 101 or never got that far in school.
The price of any good or service is what a buyer is willing to pay, PERIOD.
Uh, you know, kind of like “Market Value”.
There is NO component of “how much the seller needs” in that equation.
No offense, but you sir, are an economic ignoramous……
I work in a rural area with low cost of living. I have great technology but no staff which for me equals less overhead and stress. Not everyone wants to be a CEO. I have as much work as I want, equal parts Lender and AMC. AMC quality control can be a hassle as their reviewers are not trained to understand the report, just relay computer generated messages. That being said, they pay me what I ask or I don’t take the assignment. I don’t work for anyone that bids out appraisals. $350 is my minimum for secondary market, $500 for FHA and RHS. If the assignment looks complex I ask for more. Even the AMCs will usually pay extra if given good cause. That’s a pretty good living in Kentucky.
“assignment looks complex I ask for more.”
What’s a “complex” assignment in Kentucky, a double-wide with an above ground pool?
I was simply offering another perspective. As much as I would enjoy making an entirely uncivil reply, I won’t. I will confirm that bracketing a double wide with a pool on 10 acres for an FHA appraisal is far more difficult than appraising tract homes and McMansions. A house worth more than $750,000 in a neighborhood full of them does not make for a complex assignment. I’ll happily take my normal fee for something that easy.
Michael, is your argument that Kentucky is back words? If so, with more mobile homes in the area the assignment would be easier not harder. As for the pool, no value is given as its personal property. IF you really have completed 10,000 assignments over the past 40 years Michael as you’ve previously said, then a mobile home assignment is not mandatorily difficult even in my area of San Diego County.
BJ wrote: “As for the pool, no value is given as its personal property.”
Since when are ALL above ground pools considered personal property, especially in hillbilly land?
Right, since NEVER.
And the market determines whether or not said pool has contributory value, not the appraiser “giving it” value.
Michael I hope your continuing education classes are up soon as you need a refresher course. Since above ground pools are not affixed or attached directly to property or land, they neither add to nor subtract value from a home appraisal. Don’t tell me your also giving value to those non affixed Costco purchased covered patios, or those fake electrical fireplaces with no chimneys. Heck Michael, how would you handle that 3 million dollar property and the $250,000 in furniture included in the sale. Are you giving value to the furniture? Does the local accessor report in public files the presence of an above ground pool? Do your property taxes go up based on these non permanent improvements? Is it seasonal where they go up in the summer and down in the winter when you take out the lining? What permits are required? You would think after 40 years and 10,000 assignment you might know what you are doing.
Let’s hear it for Bill Johnson’s smart ass reply. Once again bringing nothing to the table but trolling cynicism. Don Johnson had the right idea when he said “If trolling paid minimum wage Bill Johnson wouldn’t have to worry about assignment fees.”
As the ENTIRE state of CA now has plans to raise the minimum wage to $15 per hour Scarecrow, I may just go flip burgers and grant you a wish. After implementation, the wages will increase according to inflation (cost of living). If on a federal level the minimum wage is $7.25, (CA currently $10), but in a few years wages in CA will be $15, DO YOU THINK THIS WILL HAVE AN EFFECT ON THE COST OF LIVING? Do you think businesses will raise the prices to offset the extra costs? With AMC’s setting flat fees across the nation for what they see as the same product (1004, 1073), how much profit will be left for that San Diego appraiser when the cost of labor is double? The truth is out there.
I’m waiting for the time when it’s a requirement of the appraisal report what the he/she was paid and what the AMC was paid. I believe that we as appraisers would be more likely to bid higher $$$ knowing just how much money we are leaving on the table. If an AMC has set their fee to the bank at say $500 per report; then it behooves them to keep as much of the $500 as possible. If they keep 30% for operating expenses or $150, than any bid an appraiser makes which exceeds $350 would as a rule be exempted from consideration. If the can keep $200, so much more the better for them. Is there not then an incentive to keep as much as possible? It would be unfair to say that all AMC’s take as big a cut as possible, but there are those that do. So next time you’re on the phone with AMC confirming some operational detail with the individual who sent out the bid request, casually/unobtrusively ask if the work on commission.
Give me a break! Prior to the comment period beginning June 1, 2010, after Frank-Dodd had crafted regulating our fees as “Customary & Reasonable” to ensure a stable appraiser population no AMC had any input into crafting our fees. The Federal Reserve then responded. The Fed Res is, of course, owned and run by the 12 member private banks…not exactly an unbiased player. The results were that one more option of compliance were slid into the C&R fee regulation, whereas, our fee structure then became determined in a pure competitive environment., i.e., relentless price shopping where AMC profits are determined by how much they can short change the appraiser. Do you think the economists of the Fed Res really did not what exposing a profession to such pure completion would do? The “Appraiser Coach” does not get in the least that the financial industry is trying to our profession out of business and he acts as if we are all exposed to the same competitive forces as say a accounting firm, dentist, etc.. From what I see he talks like we should just relent like we are just another product on the shelf at Wal-Mart.
Does the standardization of the appraisal process and review make you feel like you are more or less in control of your value estimates? What would you think would bring a more accurate valuation to the table?; a computerized statistical model that cannot possibly account for all the variables a appraiser does, yet forces the appraiser to spend ridiculous amounts of time responding to tiny inconsistencies in our reports of zero consequence to accurate valuation or maybe, perhaps, instead a completely independent, respected, adequately compensated, experienced appraiser with high job satisfaction and job security that has real reasons to care. Which direction would you say the forces or regulation is pushing our profession in and just who do you think is behind crafting this regulation? The largest lobbies on capital hill against the appraiser profession with the “Coach” giving us such advise? I am not saying Dustin does not provide very valuable insights at times but in reality he is motivated by selling advertising space and not necessarily the truly wise and experienced leader he would like to be appreciated for.
oh my .. you have to tell your hub and Yi that true spanish food is really, really good. too bad they are not as popular as the other european counterpart.