Appraiser Politics

 

Recently, I noticed many appraisers were excited about a new bill that was introduced in Virginia. This bill initially sounded favorable to me, but as I examined it more closely, I quickly became concerned with the excitement that was building up around it in the appraiser community. Laws in general are typically difficult to understand, and they can look better at first glance than they actually are. It is important for us to analyze new laws carefully before we advocate for them.

 

Senate Bill 655 had two main components. Firstly, it would require AMCs to disclose the amount charged for their services. In my eyes, this was a positive feature of the bill as transparency is generally a valuable thing, especially when it comes to government. However, the second part of the bill put a cap on the amount that the consumer would be charged for an AMC’s service – specifically that cap would be 20%. In other words, an AMC could charge the consumer no more than 20% of the total appraisal fee.   

 

At first, this may seem like a fantastic way to keep AMCs in check and insure that appraisers are treated fairly, but I want you to try slowing down and really thinking through the consequences of this type of law. When we allow the government to limit the amount companies can charge, we also, by default, allow the government to limit the amount our own company can charge.

 

The same principles that apply to others also apply to you. I doubt that appraisers would be as excited if a cap were placed on appraisers and how much they could charge for their services. In order for a free market to work, companies need to be able to charge what they deem their service is worth. Before you advocate new rules, make sure you’re okay with those same rules being applied to you. P.S. Senate Bill 655 died a quick painless death – thank goodness.

For more information on this subject, please download and listen to The Appraiser Coach Podcast Episode: 327 – Good for the Goose Good for the Gander

10 Comments on “Appraiser Politics”

  1. Pingback: Appraiser Politics - Appraisal Buzz

  2. While I understand your position, I find fault with your description of the free market for appraiser. We operate under two markets, the AMC market and the other market where we provide services to the general public where we CAN set our prices accordingly.

  3. As a fee appraiser, I always set my fee, no matter if the client was a direct lender, a lender through an AMC, private homeowner, attorney, etc.. Why would anyone want the government setting fees?

    Also, the services provided by AMCs vary greatly depending on the client. Some lenders want the AMC to provide a simple cursory screening because the lender has its own review department, while other lenders want a deep-dive screening performed by the AMC before delivering the report to the lender. How can a state set a cap on a spectrum of AMC services, by basing it on the appraiser fee? And, again, should states even be setting fees?

  4. I really do not concern myself with how much money the amc’s are getting paid. They provide a invaluable service to the appraiser by collecting the money and dealing with the loan officer. Any appraiser that has been in the business over 10 years and remembers the start of the century knows it was a crap shot on getting paid no matter how good of job the appraiser did. Since the inception of the AMC in 2007 I have never been stiffed on a appraisal fee or pressured into doing something I thought wrong and that is worth its weight in gold.

    1. You are definitely fortunate, as I have thousands of dollars in unpaid fees from AMCs that went out of business, cancelled an appraisal post completion and refused to pay the full fee, or other reasons that have left me with unpaid services. I also have a pretty thick file where I have documented pressure from AMCs. It is more rare now than in the past, but it still happens. With that said, I agree with Dustin completely on this one.

  5. I agree with the fact that government should not be allowed to set fees. In this instance however they are not setting the fee per say they are setting the percentage of the fee. They would still have the option to raise or lower their fees. The idea behind it is that the AMC should not profit more by hiring the cheapest, fastest and possibly worst appraisers. The question is what is a good solution for shopping the Appraisal to the lowest bidder? Require the AMC fee be separated from the Appraisal fee? AMCs should be able to charge what they want and there should be incentives to get the best apprisers not an incentive to get the cheapest.

  6. YOU ARE TOTALLY WRONG SOME AMCS CHARGE $700 TO THE CUSTOMER & THE HAVE THE APPRAISERS BID TO SEE HOW LOW THE APPRAISERS ARE WILLING TO GO. SOME WITH LITTLE WORK GO AS LOW AS $200 & GUESS GETS THE WIND FALL THERE SHOULD BA A CAP ON WHAT PERCENTAGE OF THE TOTAL FEE GOES TO THE AMC

  7. You are all wrong the Lenders Pay at least $750 for each appraisal. Think about it. They are your direct competition.
    Charge accordingly.
    Large Banks rely on AMC’s, but even the Lenders have trouble finding appraisers that can do complex assignments, and they often hire them directly.

  8. Why does the AMC’s income even tied to the appraiser in the first place? Two businesses – two completely separate fees.

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