Appraisers Upset Over New Rules

From Ft. Worth Texas, another article on the Home Valuation Code of Conduct:

Money quote:

Kenneth Jones, a Realtor as well as a 16-year veteran appraiser, said his options are limited if he wants to continue to work: join a pool.

“What’s so funny is that bad appraisers have been joining pools for years because they can’t get enough business to make it as an independent appraiser,” Jones said. “But now they’ll be on the same playing field as the good appraisers.”

Management companies also typically charge appraisers to be included in pools and Jones said that cost will hurt many appraisers. …

…“I know some really good appraisers who have gotten out the business because of all of this,” Jones said. “The local impact, just like the national impact, could be huge. And I’m not sure if that will be in a good way or not.”

Another story about appraisers, where the big concern is the low fees at AMC’s.

My question to this group is: Are you appraisers having any luck establishing your own fees with Appraisal Management Companies?

  1. We do not sign an agreement with appraisal management companies. They send us their fee schedule and we continue to bill our standard fees (of course they won’t pay them)….so we turn them in to the local credit bureau.

  2. PD

    Most appraisers (myself included) have Struggled to stay afloat over the past 3 years with our existing clients and fees. As of May 1st they will drop by $100 per report on average (more for the unlucky ones). In addition to the lower fees I no longer have any control over the amount of work I get. if I want to get more work I have to do 2 things: Faster and Cheaper. No one cars about the quality of the report in the new world of appraisals (except the lawyers for the prosecuting attorneys).
    The majority of appraisal management companies do not care about quality. I will give you an example:
    A few years ago i was asked to do an appraisal on a $10 Million property for Wamu. They had the chief appraiser for the region meet me at the property, he inspected the home with me and discussed what Comps I was going to use. After I finished the appraisal he reviewed it, called me up, challenged me on several issues and eventually settled on a lower more conservative value (Which I don’t have a problem with, since he clearly understood the market as well as i did).
    Fast forward to 2 years ago under a certain AMC. I appraised the same place. I received a call for the order and was told I needed to get the report done in 4 days and they paid me half of what I got the first time. After completing the report (no one met me at the home this time) the only condition/question they had for me was about an incorrectly formatted date on one of the Comps that the computerized reviewer picked up.
    But I guess they know what they are doing. Oh wait….

  3. David

    They started with the right idea (separating brokers & lenders from appraisers). Unfortunately selfish individuals came to control the end result.
    1. Bankers and brokers should be forced to play on a level playing field
    2. Neither banks or lenders should be allowed any control or ownership in the “third party” ordering companies.
    3. The “third party” ordering company’s fee should be paid out of the borrower’s pocket rather than the appraiser’s pocket. If appraisal review is a portion of the “third party company’s services; that portion of the fee should be paid by the lender (as it was in the past).
    I did some research this week while preparing to speak with a member of the U.S. Senate about this mess. In the 17 years that I’ve been appraising I was able to raise my fee twice. I was only able to get away with it because the form changes during those years required considerably more research from us. Our fees in 1992 were $225. Today they are $300 (none AMC work). If you discount the fact those two fee increases (remember they were for increased work load) you will see that we have had no cost of living increase in 17 years. Government statistics show that the cost of living has increased 50% since 1992. Just Google “inflation calculator” if you need proof. How many appraisers out there realize that they are currently earnying 50% of what they were earning in 1992 while doing the same amount of work. After HVCC kicks in you will earn 1/2 of that (25% of what you earned in 1992).
    Now add on the form 1004MC (1-4 hours work depending on if you have MLS) and…well you see where this is going. It’s a losing profession friends. Not only will you be working for free…you’ll be paying out of your savings to pursue this ridiculous hobby.

  4. Lucia

    I haven’t been able to charge for the extra half day of work required for the 1004MC. The form is labor intensive and there is no short cut. The time involved for the form cuts back my income about $1000 per month and business expenses are still going up. My hope for the future is that I won’t go out of business before I retire.

  5. William Benton

    If you have a good reputation and lots of experience, it pays to network and market yourself. AMC’s can go where the sun doesn’t shine. With 28 years of experience in one county, I speak at realtors meetings and Rotary Clubs. I advertise in the local paper and have a great website. If you are good, sell yourself to the local market. It is too bad that the HVCC is mingling the good with the bad. Hopefully, the cream will rise to the top and the AMC’s will go bankrupt. Don’t give up the ship…

  6. C. Patterson

    All costs seriously increasing – software, support, E/O insurance, licenses, classes, car and office, etc. Fees are taking a sharp hit with the additional hand of the AMC go-between in the till. Only two things count: “How much? How fast?” Doesn’t matter I’m a certified residential appraiser licensed in 4 states for 20+ years, or whether I opened my door yesterday. Accuracy? Who knows? Who cares? Loans are supported, fees collected, lender sells the mortgage and the homeowner and taxpayer are at risk. We know how well that scenario is working. If we organize to support reasonable fees, it will be “price fixing”. The hard work, risks and stress we carry doing our job as it needs to be done, will no longer pay adequately. Result? A serious drop in quality appraisers just when they are most crucially needed in this bizarre marketplace. Lenders will continue skimming appraisal fees as many have done for years, now joined by the AMC’s humming the “how much, how fast” mantra taking their cut, while homeowners and taxpayers are left to await the final fallout for years to come. Put lenders back at risk holding the paper and watch how fast this would change!

  7. Stanley L. Reaney

    I refuse to work for a middle man ( Appraisal Management Company ), people pay me to work for them, I do not pay them. Yes, the Good Appraisers will be on a level playing field now, but who will police the industry and make the bad guy’s pay. Once again, all we get from the powers that are is LIP SERVICE. Nothing changes but the time. If the Good band together and refuse to work for the Useless AMC’s, then possible something will happend. I don’t know, lets wait and see.

  8. Stanley L. Reaney

    I am back. Google my name regarding Appraisal Fraud, and see the statement I made on May 5, 2005. Please keep in mind I am a reguler Joe, who does not look into a crystal ball, but one who has common sense, which is apparently missing by the one’s who write the rules.

  9. Al Rossi

    Hey! Wake up appraisers. You do the work. YOU should get paid what you’re worth. I recently increased my fees $60 per appraisal for clients who now require the 1004MC. I do little work for AMC’s. And when I do, I am very selective with which ones I work with. I dictate the fees. If you don’t do the work, who will. Wake up!

  10. Doug Quenzer

    I just received a fee schedule from MDA. They are dropping the fees paid by 10%. I told them to stick it. Just based upon inflation we should be getting 400 per appraisal. I have been in the business for 11 years. I have to work twice as hard to make the same living. We are quietly beginning to boycott, but there is always someone that will work for peanuts, only to hurt themselves in the long run. The only thing that I can hope for is that the number of appraisers thin to the point that there’s too much work. Then fees are going up, and then they are really going to go up. There are few new people going into the business. We are all getting older, and many will be retiring in the next few years. There will come a day when this is all going to back fire on the AMC’s and we are going to be charging 500 for an appraisal if not more. We’ll say either pay or take a hike, because there’s no one else that will do the work.

  11. Randy Roberts

    This is the beginning of the end as I see it. I believe that we need some way to actively report when things are wrong. This avenue needs to have teeth and put some of these Bozos out of business. The HVCC is an absolute JOKE! Anyone can issue a piece of paper that says anything they want. Right or wrong. The problem now is that the slaps on the wrist have been too few and too light. PUT THEM IN JAIL! What is not understood is that the AMC’s are in it for the $$$ and nothing else. They could care less if a quality report was done. Only that the report was done and got by an underwriter and the loan is closed. Where are they when the property goes into foreclosure? They will find the appraiser I assure you.
    I will hold out as long as I can and not do business with any of these guys. If I do, It will be on my terms not theirs.
    What are they going to do when there are no appraisers?

  12. Scott Lowe

    It’s time for a substantial increase in appraisal fees. If the AMC’s are going to be handing out the orders that’s no reason for appraisers to reduce their fees. On the contrary it’s a good reason for appraisers to up their fees. There’s no other field that has not increased their fees in the last 10-20 years except appraisers. Let’s not be fools. Let’s get fair pay for the work we do. Like anything else if there are no quality appraisers willing to provide cut-rate work the fees will come up to where they should be. There will be no other choice.

  13. Pax

    Hey….Just a thought, how can such a disorganized group like appraisers, who have no real lobbyists or influence in their “profession” truly be accused of “price-fixing”? my suggestion to get a “living wage” is to loosely organize and fix the price to match the level of work and experience in this, um profession. Who exactly would the powers that be sue??

  14. Tim

    In 1993 my home was appraised by an LSI appraiser. When the man showed up he smelled so bad I thought he was a homeless person begging. After a discussion with my lender I let him in. Post closing I was given a copy of the appraisal which was of the my neighbor’s home 2 doors down and my home was listed as a comparable sale. The addresses of course were flipped around.
    Appraisal Management Firms & Nationwide appraisal groups have consistently provided the poorest quality work product over the 15 years I have been a lender. There will not be anything new with HVCC. It is my understanding that some large regional banks are operating with approved appraiser lists and the appraisals are ordered on a strict rotation. At least this does not take revenue away from the appraiser and give it to some paper pusher. The new system will have to be refined at some point when they see it is not working.

  15. Roger

    I saw the writing on the wall a couple of years ago and got out of the business all together, AMC companies were asking me to do appraisals for less than half of the regular price I charged, I always said no way and refused the assignments. Look at it today.. Shamefull.. Why do they do this to hard working appraisers given all the liabilities associated with an appraisal report????

  16. anon

    In a free market system you do not get paid what you think you are worth nor does inflation have any bearing on the matter. Rather, it is a simple question of supply and demand. Appraisers who haven’t figured this out don’t understand one of the more important concepts of appraisals. Hopefully we all recoginize that the “fair market value” of a property or of any service (i.e. an appraisal) seldom corresponds to the cost of that product. Appraisers should be the first to understand this concept. This is no different than what is currently happening in the housing market. The law of gravity has not been repealed. Perhaps the fundamental question of what constitutes an appraisal and deciding when an appraisal is required needs to be re-examined. It sounds like the Appraisal Institute in summarizing state laws on BPOs is at least beginning to review the situation, but that is just a rudimentary first step.

  17. Nick

    We started our company in 2005 and I read many a forum and blog with all of this whining about AMC’s as part of my initial business plan research. Originally I was jaded and avoided the AMC’s at all costs based on what “experienced” appraisers had to say. Of course we were presented with an opportunity to work with AMC’s eventually and we took a strong stance with them from the start and our relationships with many of these company do not possess the nonsense many of you discuss frequently. Now we work with many AMC’s, and their sometimes nonsensical guidelines and website/email confirmation, but we have made an effort to tailor our business processes to theirs. We rarely take more than a $50 cut and always get paid if we demand so and properly JUSTIFY the fee to a sometimes less than appraisal-intelligent individual.
    Get to know the individuals within these companies and they will be more than willing to work with you. They’re not all robots and computers, same game-different players.
    The added benefits for us are more consistent work, little to no pressure for values, and they always pay. All of the these things we appraisers are most in need of right now.
    On another note, the few AMC’s that we have had direct problems with in the past have all but disappeared now and those that we still work with either are shaping up, have shaped up, or were on board from the beginning.
    We don’t have the power, money, or might that the banks and politics carry, but we can continue to educate and move forward in an effort to achieve our goals of better respect, compensation, and professional recognition by adapting to the changing business environment in anyway we can.
    The 1004MC is a fairly short, specifically noting that half of the form is reserved for a separate property type and the data/research requested is pretty much necessary for you to accurately comment on the market in a 1004/1073, so…
    Good Luck to You.

  18. Kevin

    If we were smart, we’d unionize…but unfortunately most of us are not. Loans can’t go through without us, nothing can happen without us…and yet, we make the least out of everyone involved in the deal – go figure. “(We) better get organized.”

  19. John

    USPAP was suppose to solve everthing??? Chucky has made the business as mucky as chucky(USPAP)Bill of rights my ass! Come on you guys have not brought it up-up there in your comments. For the educated, what will an appraisal cost when you have a college grad with a math major with a $100,000 college bill cost? I can not wait to laugh when true value has to be paid to the blame all appraisers. Now go to the white paper and try and comment on the bafoons running ASC & AQB. It just gets funnier every day. But than the real reason for all this is computer fraud AVM,S are computer fraud. I am trying to find the white paper for the mortgage industry but the mortgage graveyard is reporting none left. All gone did not pay appraisers enough to protect them…to bad…

  20. John

    Your worst enemy is fear, and appraisers who are scamming on expenses and memberships in order to stay afloat. A stolen MLS login is an example – it’s also a violation of the Ethics Rule. When an appraiser renegotiates with an AMC because they tell him he isn’t low enough, and then suggest the amount to go with – that’s price fixing. Remember, independent fee appraisers are supposed to base their fee on the amount of work required, independent of the value. If you don’t accept orders from them, then they will get behind and have no appraisers except the ones that continously screw up. Stand on your ethics, be strong, we hold the key to the success of our profession. It’ll be so busy after March you’ll be wondering what’s up.

  21. julie

    In 20 years in the real estate business, I was just starting to see AMC’s last year or so in Hawaii. My ONLY involvement with one was on a personal level on the refinance of my home. A local appraiser appraised my home conservatively and the lender had an appraiser I (nor any lender/appraiser I knew) heard of come redo the appraisal. He walked in with the attitude of God and discounted my original appraisal 30%! I ended up selling my home 6 months later last year (in a declining market) for $200,000 OVER his just done appraisal. This “group” appraiser said he didn’t work for anyone local (lenders or realtors) and did all his work this way in several states and was HORRIBLE! He was probably forced this route for lack of anyone voluntarily choosing to use him.

  22. Ron Rynders

    And where is NAR on all of this? Aren’t they supposed to represent appraisers as well as selling Realtors? We pay just as much in dues. They are the only organization that all apprisers are members of..

  23. Justin Morton

    And where is NAR on all of this? Aren’t they supposed to represent appraisers as well as selling Realtors? We pay just as much in dues. They are the only organization that all apprisers are members of.
    NAR is working on developing legislation that will address the increased influence of Appraisal Management Companies.

  24. Justin Morton

    Also, for what it’s worth, NAR represents approximately 40,000 appraisers, that’s less than half of the total appraisal population.

  25. After reading all of the blogs I find myself saying “just like real estate”. I know it just isn’t exactly, and surely the money isn’t the same, but dealing with ethnics and supposed rules and regulations and having NO ACCOUNTABILITY or CREDIBILITY for the work is the same. Just because you can pass a test doesn’t mean you can do the work. I have dealt with terrible appraisers just as I have dealt with great appraiser that follow the rules, do the job. In my area appraisers did crazy things raising values beyond where they should be under pressure from the mortgage people and real estate people. Then there are appraisers that do an appraisal not wanting to know what the contract price is so that the value is real. You do need to unite because when we realtors have one voice we are heard. It works.

  26. Charlie

    This has been an interesting read… But I think many of the issues that you are complaining about are self inflicted. For so many years, many if not most appraisers were completely satisfied with the protection of the 2000 hour apprenticeship, and running a one man shop. By this I mean the business of being an appraiser was pretty much a closed shop profession. Generally the only expansion to the business was to bring in a family member, or friend. The reason I can say this is I have attempted to enter this world with absolutely no success. I find it strange that a persons education, qualification, or tenure in a related profession holds no merit to the 2000 hours. Most all state licensure requires and background, education platform, followed by testing. If a person is successful to this point… State License. This covers Attorneys, Pharmacists, Real Estate, Contractors, and the list goes on. I know of appraisers have gathered the 2000 hours well before little if any class time. Most time the only class time is the State required hours to set for the exam. My qualifications areas follows: Licensed Real Estate Associate Broker & GRI (Arizona, Idaho) – General Building Contractor (California, Arizona, Idaho) – Past president of the a North Idaho Building Contractors Association – Custom Home CAD Designer – Past Planning & Zoning Commissioner, Kootenai County, Idaho, and I have completed the required Arizona State hours of study for appraisal. Still not qualified… No 2000 hours. Strange.
    Now back to your issues of AMC’s… This is no different than it was in real estate in the 60’s when the franchise companies came on scene. C21, Red Carpet, Tarbell, Coldwell Banker, ERA, to name a few. Prior to that, it was all Mom & Pop brokerages. Many didn’t even have a sales agent working for them. Sound familiar? As in most business, it is difficult to stay with the pack, yet be the leader. If business share is what you’re after, it is usually achieved by expansion. Take a look around. How many one or two house contractors do you know of today? How many one person Real Estate Brokerage? How many anything? Just keep this in mind… The only one that gets paid in a Real Estate deal is the appraiser. The Realtor, Lender, Escrow, & Title Insurance Company only get a pay check ONLY if the transaction closes.

  27. AJ HOllman

    I am an appraiser and owner of an appraisal firm in Southeast Florida as well as a licensed real estate sales agent and member of the National Association of Realtors. I’m writing this letter to media outlets and government representatives as a plea for action. This letter reflects an appraiser’s opinion of the new Home Valuation Code of Conduct (HVCC) rules which have been previously announced and have been recently revised with implementation set for May 1st of this year.
    Our appraisal company has strived in earnest to provide accurate and professional appraisal services to the lending industry. During my years as an appraiser people have tried to bribe, threaten, harass, and punish me for providing impartial and accurate work. I consider this to be a necessary part of the job as we are typically one of the only parties to a real estate finance transaction who’s pay is not dependant on the outcome of a loan. If you are buying a home or refinancing your home we are the people that are expected to give you and your lender an informed, honest, and independent opinion as to your home’s worth.
    My colleagues and I take the job very seriously as we understand that the majority of the time we are working with people that are making the largest investment of their lives. I wish that the new Home Valuation Code of Conduct rules reflected the same sense of responsibility to consumer interests exhibited by my staff and colleagues. Unfortunately this legislation will allow corporate banker control of one of the few remaining independent steps in the loan process. The recent changes are yet another example of special interests tipping the scales towards the benefit of a few and in direct contrast to the interests of the many. I believe the American people are tired of government officials that support special interests over public interests. I have been looking for a change in the business as usual model of Washington. I do not see that change reflected in this new legislation.
    My primary concern with the Home Valuation Code of Conduct is that title companies and banks will be allowed to own their own Appraisal Management Companies (AMCs) which is a reversal of the earlier legislation position on this issue. The original proposal from Mr. Cuomo’s office (he has been the main sponsor of these rules) had wisely indicated that Appraisal Management Companies could not be owned by lending institutions or title companies because the banks they represent have a vested interest in the outcome of the appraisal portion of the loan process. This industry does not need to break free from the relatively light bonds of independent scrutiny remaining in the loan process. What the industry needs is stricter regulation with oversight by independent sources. The Home Valuation Code of Conduct requires the vast majority of appraisals to be ordered through Appraisal Management Companies, while at the same time it allows ownership of those companies by the banks underwriting loans utilizing those appraisals.
    The HVCC encourages a virtual monopoly due to control of the vast majority of appraisal assignments which are placed in the hands of a few management companies. These AMCs are guaranteed to receive all business from their parent company. Providing services to these organizations will be (and for the most part already is) a necessity for any appraisal firm to survive due to the volume of work that they control. Banks will demand use of their subsidiary Appraisal Management Company for all loans underwritten by their corporation, which is already beginning to happen (at lightening speed) as the implementation date of these rules draws near. At this time these bank owned AMCs control a large percentage of the total appraisal assignments, and with the HVCC rules being proposed they will control the vast majority of all assignments in the country.
    Historically appraisers received orders directly from lenders or loan originators at a local office such as the appraisal firm which I own and operate. Firms were able to establish a reputation as fair and competent professionals and could reasonably expect to receive increased work volume as a result. Because the appraisal process demands in depth knowledge of local market conditions, appraisal firms have typically been small offices with territories consisting of a few Counties in their established local market. Some of the larger national appraisal firms are actually networks of these small appraisal offices. These smaller appraisal firms fall into the category of the “small businesses” we heard so much about during the election, and which I’m told form the backbone of the US economy.
    In recent years the appraisal assignment process has shifted to a new industry system which primarily utilizes a handful of Appraisal Management Companies to distribute orders for appraisals throughout the country. In the new model, these companies operate on a national scale to distribute orders through a primary processing hub or hubs which can be located up to thousands of miles away from the property being appraised. In some cases they are even staffed through India, further reducing the number of American service jobs performed by Americans. There are benefits to centralized organization and processing, and all innovative suppliers in our changing industry should expect to evolve if they want to succeed. Unfortunately, bank owned Appraisal Management Companies are taking advantage of their virtual monopoly by skimming an unreasonable majority of the borrower’s fee making it almost impossible to survive as a professional appraisal firm.
    The result of this new model is the degradation of accurate quality work as experienced appraisers find it harder and harder to remain in business. In the new appraisal model, the large management companies are operating as profit centers for the bank or title company as they often take as much as 70% of the fee paid by the borrower. Since they control such a vast quantity of appraisal orders, and since their parent companies can specify the management company as a sole supplier of appraisal services for their loans, these large AMC’s are able to essentially (and some times quite literally) auction off appraisal assignments. This system virtually guarantees a minimum amount of time will be spent by the lowest bidding appraiser performing each assignment if he/she wishes to make enough money to survive.
    Given that appraisers have historically been paid 90-100% of the end user’s appraisal fee, they have been able to provide relatively accurate values by spending the time necessary to properly research and write their reports. Lately, since the AMC industry has begun to take over the industry, we have seen a profound drop in quality as appraisers rush to provide enough low dollar low quality reports to survive. Whether or not this has contributed to the poor equity positions of loans written by these lenders, it undoubtedly has not helped.
    Although all management companies demand timely reports that do not have obvious errors, there are many considerations that are lost in the new contract appraiser selection model. Primarily due to lack of concern over experience and lack of risk involved, the assignment of appraisals by management companies is often based on the contractor’s ability to charge the lowest possible fee. As long as a supplier meets the minimum requirements and can provide assignments on time, they are placed on a level playing field with long term industry professionals with 10 times the level of experience. In fact, by spending a minimal amount of time working on the appraisal suppliers can reduce their turn time making them the most preferred suppliers. The primary concerns that are usually expressed include working for the lowest bid price, providing fast delivery, and providing a report which lacks technical errors. The actual “quality” of the appraised value is not usually discussed and is not easily measured. Since the bank ordering the appraisal is not going to keep the property as an asset (typically the loan is resold), there is little or no risk for the lender associated with the actual equity of the property long term. The goal for these lenders is to get an appraisal that meets minimum Fannie Mae guidelines so that someone else can take on the risk. This process is efficient, quick, easy, and cheap (representing all of the new industry ideals). Quality appraisals are cumbersome, take longer to produce, are more expensive, and result in the most accurate value which may “kill the loan”.
    The current system rewards those lowest bidding contractors available without sufficient regard to the substantive quality of the appraisal or experience level of the supplier’s staff. As long as the management company can extract the maximum profit level, the actual quality of the final number produced is basically irrelevant. Does this sound familiar? Does anyone remember the definition of insanity? Have we learned anything in the past two years? I propose that we try a different approach and take some regulation control back from the corporations, not reward them with more.
    In a free market society, the risky lending practices displayed over recent years would have been punished by falling stock prices of the most irresponsible banks and subsequent takeovers by the most responsible lending institutions that were able to show prudence in their lending practices. What is taking place looks like the opposite scenario from where I’m sitting! Many of my colleagues and I had assumed that quality appraisers would be sought out following the recent mortgage melt down, but we have learned that quality is not among the concerns typically discussed by potential clients. I have bail out fatigue as an insider watching money flow to a number of these corporations without sufficient regulation planned or implemented. I do not see what risk is left for these banks related to quality of the appraised value since they continue to resell the vast majority of loans and most recently have seen their cash positions “infused” by the tax payers.
    Apparently the lending industry agrees, and we now can see that the quality professional appraiser is no longer in demand. The best example of the professional appraiser’s future that I can provide is the story of the World Savings appraisal staff. This was a lender that did not resell their loans, and therefore had a strict selection & training process to ensure quality appraisers and accurate results. Their team of employee and sub contract appraisers had a reputation as being among the best in the industry. Their relatively strong loan portfolio certainly contributed to their worth as the company itself was valuated before being sold off. World Savings was purchased by Wachovia in 2008 and Wachovia was then purchased by Wells Fargo (with assistance of a now famous tax break), and now the World Savings stock of highly qualified appraisers around the country have been told to go home and find new careers or work for the AMCs at a greatly reduced rate of pay.
    The lowest bidders are not the professionals of the industry; they are the most minimally qualified suppliers available. Quality appraising requires perspective of events over time and years of experience or access to other professionals with experience for guidance. There are skills and knowledge that can only be obtained over time or through collaboration of a group due to the unique attributes of a given home, community, sub market, etc. Running an office of professional appraisers has associated overhead costs and they cannot remain competitive with appraisers working alone from their homes.
    Since the appraisal process is subjective, it is not difficult to provide inferior appraisal services without leaving significant clues for detection. A given report may be technically correct (having no obvious factual errors), utilize several comparable sales within close proximity and within other statistical guidelines, but still be grossly inaccurate. By spending only a few hours on research and the preparation of the report, an appraiser can turn over a larger number of orders but quality will undoubtedly suffer. An experienced quality appraiser may put 10 times as much effort (and associated time) into a report while the end product may appear relatively similar if you are not familiar with the market area being appraised. The HVCC solution to this concern is to require appraisal reviews, but is not reasonable to require a percentage of appraisals to be reviewed by a computer or from a desk in India and expect the accuracy of appraised values to improve. You might weed out the appraisers that flagrantly lie or send in technically inaccurate work, but you will not easily find the appraisers that provide technically accurate work that incorrectly values the home. Over the past few years my colleagues and I have seen an increasing number of appraisals which are poorly prepared and are grossly inaccurate due to the tendency to utilize the most conveniently available comparable sales as opposed to the most relevant sales which invariably take longer to discover and verify. A rushed appraisal using the most obvious sales is easy to write, quickly completed, hard to identify, and rarely includes a realistic value.
    Using common sense anyone can see that the lowest bidders are not the people you want watching over your assets, let alone the largest asset backed system in the entire country. You wouldn’t apply this theory to your retirement stock portfolio by hiring the financial advisor that will handle your assets for the lowest fee would you? I think you would be more likely to hire the professionals that know what they are doing and that charge reasonable fees for their services.
    The small experienced appraisal firms that know what they are doing used to prosper within the industry, but now they are being pushed out of business nationwide. In the wake of the new industry model we find isolated inexperienced appraisers that rush out their files. I hear a lot of talk about job creation, but a job lost is just one more that has to be replaced. While the proposed model does generate the largest possible profit margin to the management companies and their parent corporations, it does not serve the interest of the consumer or the country. In fact the fee charged to the consumer for appraisals has actually increased over the past several years according to the borrowers I have spoken to while over the same time period the appraiser’s pay has been typically cut in half. During one of my last appraisals performed in 2008 I was sternly questioned by a borrower who was upset that her appraisal was costing more than she paid just a few years ago, and she wanted to know why “we” were charging her more. On that particular assignment I was making nearly half the fee I would have been paid for the same job just 18 months ago.
    If the HVCC is allowed to be implemented as written, we will be forcing the vast majority of appraisal business through AMCs while at the same time we will be driving non lender/title company owned AMCs out of business. I think the American people have had enough of the banking model that puts profits before all other considerations, and I know for a fact that I have had enough. However Mr. Quomo apparently has decided that the banks have sufficiently proven their ability to self regulate to the extent that now they deserve to take over control of the appraisal industry.
    Is this really our plan to restore opportunity and prosperity to the country? Competition is the cornerstone of capitalism, and it is easily possible to operate an Appraisal Management Company by keeping a reasonable portion (30-40% or less) of the appraisal fee while paying experienced professional sub contractors enough to make a reasonable living. You don’t even have to operate offshore to be profitable! If management companies were able to compete on a level playing field we would see a multitude of new management companies enter the market competing to provide the highest levels of service and quality. Why would we not allow these companies to thrive through innovation and competition instead of creating a monopoly of lender and title company owned management companies?
    It is distressing to me that the current AMC model will allow this near monopoly to enrich their companies with 50-70% of the fees while degrading the accuracy of these appraisal reports. This should be the time to restore trust and confidence in the system, but instead we are allowing deconstruction of the most impartial gate keepers in the entire loan process. Why is it necessary to allow the banks and title companies to control the appraisal industry? What other possible interests are being served besides those of a very few mammoth corporations? What damage is being caused to the appraisal industry and how long will it take to rebuild the numbers of professional appraisers that are being lost?

  28. Lewis Jackson

    Very little has been said here about USPAP and unfortunately it reflects a common attitude of the “Appraisers” sitting next to me in a USPAP class who don’t even understand the basic concept of the “Rules of Engagement”. This would be the equivalence of a professional Baseball player who don’t even understand the rules of the game trying to compete with other professionals on the field who do.
    How many commentators on this forum understand Advisory Opinion-19?
    If you don’t then I would suggest that you open up your dusty USPAP manual and take a peek. We haven’t in the past nor will we in the future accept any assignment with predetermined values nor will we be intimidated or coerced do to anything other than our JOBS and that is to report what the “MARKET” says a property is worth including a FULL COST APPROACH at minimum that supports our final opinions and conclusions. Not some DUMMY cost approach that I see in many reports that I have recently reviewed and if those “Appraisers” had valued the land “As though Vacant” and then actually costed the improvements out, then they would not be in trouble now for over apprasing a property by 30-40%! It may have told them something about the “Priniciple of Substitution” and that the comps chosen were in a superior market and superior in “Quality of Construction”, etc….
    We also deploy the Income Approach if it is applicable to the market and this is the reason that you have three approaches to value, at your disposal, and deploying those methods of valuation has nothing to do with your FEE! It is your JOB! We already do an indept market analysis so the 1004MC rquirement come April 1st has no bearing one way or the other on the profitability of our practice because we are already doing it, just in a different format.
    When we do have an occasional NEW client that does not understand the RULES OF ENGAGEMENT then we immediatley respond as Advisory Opinion-19 suggests in USPAP. Guess what? They always come back and say “I did not know that” and thank you for pointing this out to me. We then proceed to do the appraisal and report what the MARKET SAYS that property is worth without any regard to some pre-determined value. We have documented cases where the owners estimate of value was 20-30% more or less than the current market value. It is VERY rare that our findings are the same as a pre-determined value. Bottom line, our current clients DO NOT engage us with value because we have requested them not to.
    Example: “Please remove the owners estimate of value from any future engagement letter so our appraiser can give you a completely unbiased opinion of market value.”
    Example-2: ” As long as the amount is only to inform me of your objectives or someone else’s opinion and IS NOT a condition of this assignment with me, we can proceed. However, if that amount is a condition of this assignment, accepting an assignment under that condition violates professional ethics. (SEE USPAP AO-19″.)
    I once had a property under contract for $750,000 and it appraised for $505,000. Guess what, the builder was selling it to a developer who was his silent partner! It took a little more due diligence to figure it out but I did and saved my client a very painful loss after a subsequent foreclosure proceeding. You think maybe the aforestated scenario may have something to do with inflated homes values in America?
    Now, this is a second carrer for me and I have been in this field for approximatley 4 years. The first two years were VERY painful for me because I saw this train wreck coming. Let’s see, you get an order in with a predetermined value and then go find comps to support that value and you call that an appraisal?…and you wonder why the client thinks you can do 2-3 a day? And then you wonder why fee’s are what??? Stop complaining because you did it to yourself my friend by not following the rules of engagement and the PRINCIPLES of the Trade.
    We do very little business with AMC’s and we do not accept assigments that are not PROFITABLE to our firm. Therefore, we decline those assignments that will not produce a living wage for the appraiser, that is conducive to a PROFESSIONAL PRACTICE!
    It is OUR PROFESSIONAL PRACTICE, not some third party with a clerk sitting in an office in a high-rise building out of state, who don’t even understand the basic concepts of what we do, much less our LOCAL markets. If you are DUMB enough to pay a non-certified entity 30-40% of your pay, then I would suggest that you find another profession because you will not survive in this one and you may end up losing your freedom because somewhere down the line your work will be reviewed and that review process may bring with it some serious consequences if you cut corners while trying to earn your peanuts.
    If you do participate in the hijacking of our profession, you will in effect play a MAJOR role in undermining OUR professional practice by accepting assignments knowingly that the appraiser CANNOT follow all the principles of the trade in valuing a property. They will CUT CONNERS because they have to, to survive. Don’t do it…period!
    Bottom line, do what is right and stick to the “Principles of the Trade”, as outlined in USPAP, and you will establish yourself as a COMPETENT appraiser and regardless of who engages you to do the assignment they will be more than happy to pay YOUR fee because your SKILLS will demand it and the quality of your work could save your CLIENT a major loss in the end.

  29. Thomas G. Sadler

    Our company is one of those mom/pop 2 people businesses. I am certified residential appraiser in Michigan. I am also a member of the Almont Township Board of Review. It has helped tremendously in better understanding the value of my township where we live.
    Anyway, back to the question at hand AMC’s. I have done work for two or three AMC’s that pay full fees. The only requirement concerning the pay is that 99% is C.O.D. and I collect the fee. If I charge them $325 then the customer is told to have $400 ready for the appraiser. The AMC handles this. I won’t work for AMCs that try to set their own fee. We also work for small county banks. Avoiding large banks that use AMCs. The banks pay right on time and the AMCs we deal with have us collect. It is a great relationship.
    We decided a long time ago that an AMC will either work for us or there will be no working relationship. These companies will be told what we charge and they will abide by it. Otherwise they will not get our quality product.
    It has worked out fine. Sure we still have slower times but then we just go on vacation. We have a couple of appraises that will watch our accounts while we are gone. By the way. . .95% of our work is in rural to semirural areas. We charged for the increased gas fees and for time when the job is a long drive. If they object we tell them to find someone else because we are too busy to argue fees with an uncooperative AMC.
    Also. . .the new 1004MC form will not be the hard to handle. Take a class. You can write it off. And YES. . .I will be charging extra for that form as soon as it is required. Somewhere between$60 and $85 dollars to all customers including my banks and AMC’s

  30. It sounds like PD who posted on 2/17/09,knows what he is talking about. It is the Real Estate industry that needs reform. working just for commission encouages many a greedy agent to push for a certain appraisal, Banks will push for what is in their favor. Somehow the appraiser needs to be protected from the imput of the others.

  31. Denise

    Greedy Realtors pushing for a certain appraisal? I don’t even know who does any of the appraisals on my deals. I use several banks and credit unions as do others who sell my listings. We have absolutely no input as to value. I must say all but one appraisal over the past 7+ years has been right on target – the only one that was under the sales price was ABSOLUTELY correct (my buyer paid the difference, I guess they REALLY liked the place!)

  32. Luis Vergara

    I have taken a stand after all it is my bussiness. I feel that if I am forced to work under these conditions then I will shortly go bankrup. So I have made my own rules. The AMC sends me an order I respond with my fee schedule and in that schedule I tell them that upon receiving my fee ($400) I will release the appraisal. after 5 days the appraisal becomes null and void and I delete it.If I am going under it will be on my terms

  33. Chris

    I propose a national “Appraiser Day” on May 1, 2009. On this day all appraiser’s should not submit any appraisal reports. On this day we should meet online for a national discussion. Please enter your ideas and support for Appraiser Day.

  34. As appraisers we are not represented as we need to be in the political world, if we had a real organization with clout or an organization that would really stand behind us, this HVCC issue would not even be an issue. Sure we have the institute & NAR that say they are on our side and helping? but why is it that we are in this position? Talk is cheap and actions are weak.I don’t see any regulations on lenders or realtors affecting them like us appraisers, thats were the politics come in and money talks.I don’t see the appraisal business getting any breaks anytime in the future, with the AMC’s little regulations will be established, AVM’s are being utilized even more, they have all the data we have plus alot of them are paying the same dues for local MLS and hiring qualified appraisers to help improve their system’s. No matter how you look at it, residential appraisals is were 90% of us make the bulk of our revenue and we know what direction that’s heading. Technology will be are worst enemy in the future as the housing industry continue’s to be hightlighted with valuation problem’s. What about interior inspections? sure, that will be a need, but at what scope of work will be involved and at what cost? There are company’s out there already instituting AVM’s coupled with human interaction modeling the future appraisals.In short we are heading for some major changes in our profession.

  35. Jorge

    I have a real problem with the HVCC. After years of advertising my business and working to become a professional, I feel that I have been ripped of my capitalist ways. I feel that what has happen is a mix of a monopoly with communism. This is not fair I speak English very well and write also as well. Nevertheless I feel that AMC’s don’t send me work because of my accent. They have had a few complaints about people not understanding me to well. I know appraisers born in this country that don’t have an accent and where certified after me and are doing very well I don’t understand. I worked with a lot of Spanish speaking people and clients. I am very familiar with my area in Miami, yet I lost it all. I am in the break of filing bankruptcy lost my wife and family. I am truly lost, so many years lost. Thank you Fannie and Freddie in the end it was the ninja loans that destroyed the market no more 100% loans and this will never happen verify people assets and income and ask for money down.


    The only thing Cuomo has accomplished is turning the appraisal industry into a shambles, like Obama is doing to the entire economy and our country. This is what happens when legislators run to implement new laws and programs in an effort to “look like they are doing something”. Thanks to Barney Frank, Chris Dodd, et al for implementing the programs that were forced on the lending industry to provide a “house for everyone”! Now all those idiots are busy trying to cover their asses with these new regulations – guess what – the system just got worse because of them, not the other way around.

  37. Andy

    I’ve worked for several different AMCs. NONE of them required a fee to be included as an independant contractor, and contractors set their own fees.
    It’s a marketplace. you set your own fee. You are in competition with others. I’m so sick of hearing about ‘Fast and cheap’ appraisals.
    Name ANYTHING you’ve ever bought that you’ve told the salesperson ‘I want it expensive, and take your time.’
    When all those banks merged, most appraisers went from scores or hundreds of local banks, to less than 10 AMCs with whom to do business. I’m sorry you did not prepare for the inevitable economics here.
    I’ve quit a couple management companies because I saw the practice of pumping values. In fact. just over a year ago I worked at GAC/ Fiserv, and I saw all those Bear Stearns reports coming through… I wouldnt touch that with a 10 foot pole.
    The fact is that 80% of appraisers have worked or do work with AMCs, so these appraisers who think they are above AMCs are really alienating themselves.
    I feel for appraisers, but the industry has changed dramatically over the last 18 years I’ve been in it. Notice, adapt & survive.
    In USPAP we trust.