Appraiser Appalled

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Pipeline — A roundup of credit market news and views
Thursday, June 11, 2009 American Banker
By Allison Bisbey Colter

Appraiser Appalled

Frank Gregoire, an appraiser in St. Petersburg, Fla., was appalled but not surprised to read in the Tampa Tribune last month that a property in Tampa was appraised by someone in Panama City — about 390 miles away.
As do many appraisers, Gregoire complains that the Home Valuation Code of Conduct is encouraging lenders to outsource the ordering of appraisals to management companies. In order to keep costs down and protect their margins, these middlemen often dole out assignments to appraisers who are inexperienced or unfamiliar with the local market, he and other appraisers say.

In picking appraisers, “the first criteri[on] is price … the second is turnaround time and, if it is considered at all, competency is the third and least” criterion, Gregoire told American Banker this week.
Appraisal management companies typically want appraisals delivered in 24 to 48 hours, he said. “I don’t believe that in today’s market you can produce a well-prepared document in that period of time.” Gregoire said he takes four days to two weeks to prepare an appraisal. “The amount of work and documentation necessary for an appraisal now is unbelievable.”

For example, short sales, in which distressed borrowers, with lenders’ consent, sell their homes for less than they owe on their mortgages have made it harder to compile data on comparable sales. “It’s very difficult … to extract from the market data an adjustment that reflects how much below market that [property] sells because those people were under the gun” to sell, Gregoire said.

He sits on the appraisal committee of the Realtor group, which is drafting a proposal to regulate appraisal management companies under the Financial Institutions Reform, Recovery and Enforcement Act of 1989. The valuation code, which took effect last month for all home mortgages sold to or guaranteed by Fannie and Freddie, bars loan officers, mortgage brokers or real estate agents from any role in selecting appraisers.

Appraisers aren’t the only ones complaining about the code. On Tuesday the National Association of Mortgage Brokers issued a “call to action,” urging members to contact Fannie, Freddie and the Federal Housing Finance Agency to explain how it has affected their business. The NAMB estimate the code is costing consumers over $2.8 billion a year in extra fees created by long delays and higher appraisal costs.

  1. John R

    Throughout the real estate boom of the current decade Fannie Mae and Freddie Mac have been effectively exempt from many of the appraisal guidelines otherwise applicable to most all other regulatory agencies. Now in haste they may have adopted the Home Valuation Code of Conduct (HVCC) as a poor substitute for the otherwise well-established and market-tested appraisal standards based in Uniform Standards of Professional Appraisal Practice (USPAP).
    Although New York Attorney General Cuomo’s efforts to battle mortgage fraud and appraisal distortion are admirable and greatly appreciated by the industry, the HVCC has been met with widespread criticism even before its recent adoption las month, from professional associations and regulators alike, because it causes confusion and uncertainty resulting from its failure to synchronize with existing federal regulations and established appraisal standards. The practical results of which may just now be coming to light.
    Unfortunately for the individual appraiser, the reduced fees being offered by AMCs (Appraisal Management Companies) together with the increasing costs (e.g., time and compliance), basic economics will continue to drive veteran appraisers from the available pool of certified professionals and, therefore, continue to adversely affect both the quality and cost of an appraisal.
    How can any business enterprise expect to remain economically viable by having to expend 25% more work effort while receiving 50% less revenue? Appraisal is a service business not generally subject to outsourcing due to uniqueness of location and the requirement for geographic competency. However, it is rapidly being perceived by the market as a product that is readily conducive to commodity pricing pressures.
    Another element not discussed, but of equal concern, is the mortgage industry’s prolific acceptance of AVMs (Automated Valuation Models) and use of BPOs (Broker’s Price Opinions) and their prevalence in the origination process in lieu of a full appraisal developed by a certified or licensed appraiser. AVMs may have reached the point at which they are universally trusted over certified appraiser’s opinions that are developed under more rigid and transparent USPAP standards. For the most part, Broker’s Price Opinions are not subject to appraisal standards at all. Certain government agencies and several States have already recognized that such “sidestepping” and increased use of AVMs and BPOs is a trend that warrants scrutiny.
    With all of our collective experience over the past 20 years, particularly since the Savings and Loan Crisis of the 1980’s and FIRREA legislation, we should be much smarter and not doomed to repeat the mistakes of the past relative to the current crisis.
    Also see the recent Wall Street Journal Article (June 9, 2009):
    “Appraisals Roil Real Estate Deals – Conservative Approach to Home Pricing Makes It Harder to Refinance or Sell”


    I have been a Certified Residential Appraiser in CA for over 15 years. Since 5/1/2009, I absolutely refuse to do any more appraisals for half the price I am use to receiving and now require more forms and additional work. I would be considered a fool do an appraisal using an AMC with the experience and knowledge I have as an

  3. J. Daniel Neumann

    One of the more egregious examples in my area comes from an appraiser friend of mine who had (past tense) a long term client who was lost on 5/1 when his firm started doing business with a random AMC. This AMC pays only $200 in an area where $350 is a standard minimum fee. In this county there are 80-90 registed appraisers but none are signed up with this AMC. My friends lender client is now having many of his loans appraised by a guy 3 counties removed from him. The results have been disasterous for him and his borrowers (i.e. low values, poorly written reports).

  4. David

    Nathan Bedford Forrest (a civil war general) was widely considered to be an uneducated genius. When asked what his key to success was on the battlefield he simply said “Get there the firstest with the mostest”.
    I believe that AMCs should use the following motto:
    “Providing the fastest & the worstest appraisals in the U.S.”.

  5. As a realtor, I do appreciate when an appraiser is selected for an area that that apprasier is very knowlegeable in. Having a lender pick an appraiser for an area he/she knows nothing about effects the sellers and buyers in a big way as well as effecting the market values. This just happened to me, with my own property and an appraiser that I believe didn’t have experience in that area. So I was cut short. And, so now, so is that market in that area. Somehow there has to be a standard of choice of appraiser, maybe by way of the realtor, and a standard price for all appraisals. Some realtors have taken appraisel classes. Offen realtors aren’t given the credit of knowledge in their specialty areas of the market value. Especially when given an appraiser that has none or not much area expertise that shows to prove them wrong. Oh and listen to this. Some credit unions send out a drive by appraisel of value. Get that. And those appraisers use the counties assessed value to determine value. Now this is a shame.

    The appraisers who agree to cooperate with blatant violations of ethics should be immediately reported to their state licensing board. If the appraisal agency is truly incompetent or unethical, it is our obligation to protect the public and expose the problem. REALTORS work on the “frontlines” with sellers and buyers and witness the drama; and, once again, are unjustly and negatively associated with the havoc made by such lenders, AMCs and associated appraisers. This issue has a direct impact on our industry and national economic recovery progress.

  7. J. Brand

    In the metro Atlanta Area property values continue to drop as other Metro Areas areas have experienced. Foreclosed properties are selling. This should be encouraging. The objective was to offer incentives to Buyers in order to clean up the defaulted inventory… is not working. The whole process is a vicious cycle. Sellers are unable to sell before foreclosure because of the appraisal process. Appraisals are now based on “distress sales” not on “fair market”. Many Buyers are looking for homes other than foreclosures and expect to pay a lower price based on suupply and demand for a comparable property… Buyer’s cannot buy (LTV) and Seller’s cannot Sell because the Appraisals are coming in so far off neither party benefits and the Market continues this cycle of devaluation. What happened to change the Appraisal criteria to give more importance to the distressed sale or to even use it? In most cases foreclosed properties are in poor condition and had problems that prevented the original owners from selling in the first place. This practice has not accomplished the goal of helping Sellers or Buyers. All will agree, this is not a time for “trial” and “error” politics, it is time for responsible, knowledgeable and reasonable leadership.

  8. Jon

    With over 25 years of both residential and commercial appraisal experience; years of continuing education and doing the best appraisal that experience, education, market understanding, would honestly allow me to do,,,I just quit. Too many hands envolved, with too litle understanding of how to arrive at an accurate “Estimate of Value”. Then along comes the AMC’s who take much for so little. I have made the right decision.

  9. Tim

    As I have posted here often I to have no sympathy for the AMC model. However, I have also posted that they will not be able to continue as a viable business model. Lenders are just starting to feel the pain and realize the liability they take on when using an AMC. The most recent reported numbers show that AMC’s have lost a significant market percentage for the first time. This will continue. The problem with the appraisals that are currently affecting Realtors are easily explained. Slow turn over times for appraisal assignments are not the individual appraiser taking their sweet time. It takes a while for an AMC to find an appraiser who will work for the “discounted” fee now that an increase in appraisal orders at full fees have most appraisers busy. It may take an AMC a full week just to find an appraiser. When they do the “rush” is full on then. With little time for consideration and knowing the AMC will will torture the appraiser for any reporting outside of the lenders firm compliance “standards”. However, I can tell you this is not just an AMC thing. Full fee assignments ordered directly from the lender carry similar standards and guidelines. Attached to the order may be 4-6 pages of “instructions to the appraiser”. As far as appraisal fees go this is also across the board. AMC’s are now having to compete for appraisers and many have recently increased the “split” to around 60% – 65%. Of course this was passed on to the borrower. The AMC profit structure has been set for so long they can hardly afford to decrease that margin. Again, full fee lender direct ordered assignments reflect an increase as well. Appraisers, for the most part, have not had a industry wide fee increase in many years. While MLS, software, gas, data and currently almost double the reporting requirement has gone way up. The HVCC is here to stay and it will be the AMC’s who will be gone. Much of what we are seeing now was discussed in 2008 while the comment period was open on the HVCC. Mr Coumo is probably going to tell mortgage brokers and Realtors if they do not like dealing with AMC’s then choose not to. Again, there is no requirement.
    With low appraisals I can only comment that it was to bad there were not more of them from 2003 – 2007. We would not be in this mess now. While its true that Realtors and appraisers have differences in valuation opinions and techniques all must recognize that is by design. Realtors market and sell HOMES, appraisers value HOUSES. The lenders are looking at residential structures as a pure risk based investment. Borrowers see homes as lifestyle choices and conviences. In the 20 years I have been appraising (and the 5 years before that as a full time Realtor) I can tell you appraisal courses for Realtors education is the best idea. We used to do that. In the last decade or so there has been no appraisal education either prelicensing or continuing education for Realtors and a fundemental misunderstanding of the valuation and financing process exist. Every Realtor and Mortgage Broker I ever met who completed appraiser education came away a better professional for it. Appraisal training also used to be mandantory for Underwriters and we got away from that to. Now the lenders use computer scans and underwriter “techs” with a check list to go through a appraisal report without the benefit of a basic understanding of real estate terminology, valuation process, or even a definition of market value. The system has gotten away from the basics to a profit driven at the expense of quality business model. What we are seeing right now is the process of change. Going back to appraisers being compensated for a legal document they produce and are given the time to compile and analyze data to complete it. Lenders will have to maintain the quality control instead of “outsourcing” it. Reviews, both pre-funding and post closing will increase as well as the time it takes to close a mortgage loan. In 1985-1995 it took 30-45 days to close a loan once the appraisal was received back to the lender and nobody died from waiting. We will return to that business model one way or the other and the process of change is always painfull.
    The lenders must realize that when you pay peanuts you get monkeys. They made plenty of money during the boom years and profit margins were favored over competent employees and vendors. That party is over.

  10. I’m a licensed real estate broker and state certified appraiser who specializes in litigation assignments. i am horified by the quality of work i have reviewed over the past three months. 50% of my offices residential sales have had appraisal issues. in most cases it cost the borrorow more money to purchase an additional appraisal. this was necessary because the first appraiser was from out of the area and in my opinion not competant to complete work in the area. to defend the appraiser a little bit i will agree my local market is difficult due to the high land values as we are located by the beach. however, the amount of errors has recently increased along with the severity. i point out one case that an out of the area appraiser comped an ocean front 50×150 parcel to a highway 40×100 parcel approximately 1/3 of the value. i first thought the gentlemen had mental issues and it became appearant i was only half right. he was also lazey as he never drove by the comp so he didn’t even know it was on the highway. he used all the comp photos from the mls. the excuse was i dont receive enough money to look at every house. i should mention his statement of limiting conditions explained all comparable sales were inspected from the exterior. i’m can not describe how mad i am at this appraiser. however, i’m more upset at the bank who did nothing and to my knowledge still uses the company.
    i understand why the AMC’s exist and dont have a problem with them. they can protect a bank from the refi’s ridiculous pumped up appraisals. i understand why they need to be seperated.
    i have appraised for over 20 years and i firmly believe a smart buyer along with good local realtor will know more about the market than most appraisers.
    i beleive the new rules that detract from the bank and or mort. broker from contacting the appraiser directly hurt the buyer, banks, and market in general. it has to be looked at as a lessor of two evils. do we continue to allow low priced non competant appraisers to handle customers largest investment or do we return to old way and have local appraisers complete the assignment and risk a few bad apples pumping refi loans. i suggest the later and go after those bad appraisers for any one of the hundred USPAP violations we all know they committed.
    respectfully submitted,
    eric j birchler

  11. I too have recently experienced the wrath of the HVCC.
    My Orange County, CA borrowers appraisal was ordered through Provident Funding’s website. The appraiser doing the report came from 60 miles away. The good news was the report was delivered in 3 days.However, was the worst report I have seen in my 28 years of mortgage lending experience. I pointed out the blatant errors in the report and was told I had to spend $300.00 to have it reviewed. I asked why we were spending more than $700.00 ($400.00, plus $35.00 service fee for original report and $300.00 to review errors) for a deficient report. This appraiser simply ignored sales comps. I was told if the powers that be decided I was right they would refund my $300.00. The $300.00 is just enough of a stinger to make me think twice about my challenge. The implementation of HVCC promotes poor quality in appraisals being done by inexperienced appraisers.

  12. Suzanne Hart, SRA

    I’m an appraiser with 33 years of experience who, for ten years, taught a basic 40-hour appraisal class at a community college. This was long before appraiser licensing was implemented in the late 1990’s. I also taught reviewing skills to PMI underwriters.
    I approached NAR several months ago to see if they would be interested in offering some appraisal-related classes in either a continuing education format or as a college/broker level course. I’ve received a resounding “NO, our members are not interested in learning about appraisals.” This blog tells me different. If anyone, but most especially the education folks at NAR, would like me to teach a really good class on appraisal theory and techniques, I’ll be happy to dust off my course notes and workbook, and start traveling. I can promise you it will be one of the best classes you’ve ever taken. Education is the only way you can fight poor quality appraisal work. Realtors need to know what an appraiser should be doing so they can explain the process to the client, as well as how to challenge a poorly prepared appraisal. I can guarantee an appraisal class–only if it is taught by the right teacher–will help a Realtor market and sell property with much better results.

  13. Todd Nace

    I had an interesting conversation with the person(AMC) who is in charge of the fee appraiser panel for more than 5,000 lenders . I was being asked my fees(which were way to high)when we came up on the 1004D. I ask which section did she want a price for completion or update or both. She had no clue what I was talking about. And to think they are getting half my fee.

  14. Todd

    If you think a competent appraiser is going o leave the office for $200 or 8.00 a hour,,you are sadly mistaken…
    Fannie mae needs to register AMCs and allow appraiser ownes AMCS to market their services instead of the lender owned and lender kickbacked AMCs..
    One point you are forgetting is the AMCs are owned by the lenders….
    Your basically screwed as long as the current HVAC is in place…
    Welcome to the new reality…

  15. Larry M. Smith

    I have been a full time residential real estate appraiser in NC for 22 years. I have had a very good working relationship with several lenders in my area. The majority of my business has gone and I see no sign that it will ever return. One of the lenders told me that he had 20 applications and of that 20 only 2 were acceptable because of bad appraisal work. When the work goes to 1st the lowest bidder, 2nd the quickest turn time then the most impotatnt hing “quality” is lost. I am strongly considering finding another business.

  16. Nabila S. Zakharry

    My house last year was appreased at $194000. This year to refinance at a lower rate of 4.5 APR with the same bank,the house appraised at 180000.I have done comprables and took pictures.The house came up to 190000, I do not know what to do who to contact,I will get the loan but it is not fair for other people.

  17. Carrie Reid

    I have recently read two appraisal reports where the property in question was seriously undervalued do to the appraisers lack of knowledge of the area and neighborhoods. A little research on the MLS may have avoided this issue but certainly knowledge of the area would have. As most realtors know its location location location. If the appraiser is unfamiliar with the area it unfairly hurts both sellers and buyers.

  18. As a Florida appraiser, I have seen and heard of these experiences. I have also learned not to take any assignment from an AMC that is not a cookie cutter. In addition to the low fees, pressure on turnaround, the AMC’s do not know how to review a complex property. I recently performed an appraisal for a well known AMC with pages of text describing the subject, need for adjustments and where adjustments came from. They didn’t even read it. If your text exceeds the standard form, they don’t even see it. So for me, if there are perfect sales which fit guidelines, I will do them as filler. Otherwise forget it. Too much grief.

  19. Catherine Wilson

    I very much appreciate your efforts. I have been a broker and REALTOR since 1976, and a General Certified appraiser since 1993. I have maintained my broker license but I do not sell anymore, except for my own.
    The appraisal business has been very frustrating in the past year. AMC’s are almost impossible to work with. They do not concern themselves with my value, but with my language, it must be exactly the way they have interrupted all the rules and regs we have.
    It seems I spend a great deal of time teaching them terms and physical attributes, such as, what is a crawl space, is the attic a part of the house.
    They do not have to follow the same rules as a lender, they do not have to have a S.A.R. (secondary appraisal reviewer) review our work, they are allowed to have untrained and uncaring people review our work, and demand changes that have no basis in our rules, which I believe is harmful to the public, not to mention the additional cost.
    Just recently the HVCC directed a new rule; The lender has to send a copy of the appraiser’s report to the borrower within 2 days of receiving the report. The borrower does not understand the report and does not understand it’s implications. I can see that if a property sells below the appraised value and the borrower tells the seller, the seller will think he has lost that income and will certainly come back to the agent involved, which could cause law suits for all of us.
    I know in the past some lenders were “in bed” with the appraisers and there were a great many problems, but the new rules seem a bit extreme.
    I have tried all my career to be as fair, honest and unbiased as possible. The AMC’s do not care about that, they only care about perpetuating their jobs and making money. I too have stopped working with the AMC’s, even though one of my best clients has chosen to use a service.

  20. Jerry Hodges

    A good appraiser can appraise anything anywhere provided they put in the required research. Most arguements that appraisers purposely “low ball” value is not logical. We typically find most times a value is below asking or sales price the amount is usually 3-5% (realtor fee / lender bonus amounts included.) There are many obtuse appraisers as well as realtors in this business… If your appraiser is willing to work profesinally with the realtor and vice versa – there should be little confusion in regard to the actual current market value. With the low AMC fees out there and the multitude of daily phone calls of reports needed yesterday; putting in the required time to familiarize is often not completed. There are many lazy appraisers out there who should not accept assignments not due to lack of being close in proximity, but due to lack of diligence. We have government, banks, lenders, realtors, lawyers, prior borrowers, send us all over our state because they know all information is verified and the opinion of value is fully supported. And we charge higher than anyone we’ve ever reviewed. Clients will pay for quality, AMC’s included if it is provded consistently. You do get what you pay for in this business.

  21. Brenda Corona

    I am an appraiser in Southern California for 15 years. I agree with all that has been posted but the looming question that I have is when do the lenders or loan officers motivations and credentials come into questions? As an appraiser I averaged about $350 per appraisal, whereas loan officers averaged $5,000 or more per deal. We as appraisers have 56 hours of continuing education every 4 years and the qualification to become an appraiser have come to a point that if you do not have a BA or at least an AA it is not worth while to get into the business. I may be misinformed but my understanding is that loan officers are only required to have a real estate license. And after the origial real estate license expires a 15 hour course to renew for another 4 years is the only thing that is required. No mandated AA or BA degree, there is no math class or finanacial planning course
    requirements. And what about the follow up on the loan process. Who qualifies and verifies the income for these loans? I have been told by many people including a judge, lawyer and loan officer that they all lied about their income on loan applications. Our job as appraisers is to determine an estimated market value for a home not to decide whether the buyer can qualify for the loan or make the payments. I started as an appraiser at about the time 100% financing was just becoming the norm for loans. When you are offering someone some place to live with no investment from the borrower what is there incentive or motivation to work hard to retain their home/investment. In many cases the homeowners live rent free for a year or more in a house for less than renting a property and then just walk away. I have seen many homes in my reviews of MLS and public record that people are still qualifying for loans, purchase a home and 12 to 18 months later they are in foreclosure, does that mean they just moved in and made no payments. The appraiser works hard for their license, I know I did. And through negligence or fraud can lose their license and possibly go to jail. I can tell you what I tell most of my clients when I can not bring in value ” I worked hard to get my license and I will not go to jail for anyone.” But, what do you hear about lenders sanctions? I agree that there are some unscrupulous appraisers as I have been told that if I could not come up with value the lender knew another appraiser who would. I hear they have tightened the criteria on qualifiying for a loan but what about the loan officers and the loan processes? I consistantly hear that housing prices went up because of the appraisers valuations, but if the people who could not afford the houses to begin with were not approved for the loans then the “housing boom” would not have spiraled out of control, not as many buyers, not the demand, lower values. If a valuable dime sells for more than a dime, the value is created by demand with qualified/knowledgeable buyers. Not by an appraiser appraising it for a dime.

  22. Ron in Illinois

    Appraisers are really not complaining about HVCC, and none should sign any Petitions against it. What they are complainging about is the AMCs. If an AMC picks an appraiser 300 miles away, that’s their choice, most likely because of a low fee he will accept. Most places can search for Appraiser web sites on the internet, and an appraiser can be chosen by zip code or Town. All knowledgeable about the areas. A lender only needs to create a new Department, to search and choose appraisers, totally apart from the Loan production dept., within the same building, and with no other contact than, requesting an appraisal, or receiving an appraisal. AMCs are not needed. If HVCC will keep the pressure, coercion, and threats OFF of the Appraisers, then WE are all for it. NAR should be loudly “applauding” Appraiser Independence, for the Benefit of Buyer, Seller, Owner, and Lender. Also, the whining about foreclosure comps is hogwash. We have all the tools and analysis available to adjust for some of those. However, IF foreclosures dominate a neighborhood, and they are selling, then “that” is your Market.

  23. I fell its unfair for appraisers to be so heavily regulated and AMC’s can practically do what ever they want without licensing or strict regs. They are obviously over charging for inferior appraisals. It’s not only unfair its a dis-credit to the appraisal profession. Appraiser appear to have no voice for the industry that we run! What happens if Appraisers go on STRIKE? You’ll probably have AMC’s fraudulently producing reports with your license & E&O since they hold thousands of them in their database. AMC’s are like viscous dogs without a leash. Soon Fannie & Freddie will just accept as an accurate appraisal & really screw up the market. Whom ever created the HVCC code should have more work added to their desk for 60% less of their salary!

  24. I still get AMC’s and some appraisers asking for the purchase agreements, disclosures, addenda and other personal documents that the appraiser is not entitled to. What do any of these documents have to do with determining the true value of the property? I have asked some of the requestors and on more than one occasion, been told “well, we have to know what figure to put on the appraisal”. I would have thought that given what has happened in recent years this procedure would have been eradicated. Another appraiser (F.H.A.) just told me that he did not want to do the appraisal unless I could assure him that if his appraisal came in low that the seller would reduce the price accordingly as he would not be paid if the transaction didn’t close. Comments, explanations please.

  25. Jane

    I am a Real Estate Broker in Iowa and I do BPO’s for a large number of major lenders and asset companies. My bpo fee is close to what the appraiser fee is and I have NO problem staying very busy, probably because I am bluntly honest about the condition, location, amenities and value of the subject property and all 6 comps. Any real estate agent who has any actual knowledge of their market will never sink to giving away that knowledge for the $45 or so that these companies offer.
    Of this number of companies, there have been a few that have passed an interior bpo off as an appraisal. I am not a licensed appraiser and I have stopped doing any business with those who have represented my bpo as an appraisal. However, I find that very few of our local appraisers really have any clue on the market value of most of the properties they’ve worked on. If a lender has called them, they immediately want the purchase agreement so they know what values will work and find properties that fit the sale price, not the subject property. If they are working for a FSBO seller, the property is usually so overvalued, the poor guy can’t sell it on his own. When the agents start their pitch, the guy says “But the appraiser valued it at….”, like he/she could never be wrong! If you really want an honest opinion, don’t give them the purchase agreement! The subject should have all amenities verified at time of walk-through instead of using the Assessor’s information – it’s rarely correct. Most of these appraisers have never dealt with the hard facts in selling real estate and do far more guessing than knowing. That’s a fact of life here – and that’s sad.

  26. Laraine Curtis

    It is a relief to hear (& read) that the blame is NOT being placed on the overall appraisal community, but actually on the AMC’s who could care about anything but how much money they are going to make off each appraisal. I have been an appraiser for 15 years and would undoubtably say I was and am an appraiser with morals and prided myself in writing a complete report, even though I was told (and it was obvious) the report wasn’t read accept for the bottom (value) line.
    I watched my business crumble through the crash of the market and then the establishment of AMC’s, who are not even in my state and have no clue about my market. At one point I called an AMC to ask what I had to do to receive some business (or was it just slow?) I was emailed a list of appraisers and their fees and it was “suggested” that I adjust my fees in order to be competitive. By the way, there was more than a handful of appraiser fees UNDER $200 per appraisal and they were based more than 2 hours away from my market location. Keep in mind, when this AMC company was put in place they claimed it would be based on timeliness and quality, of which I was 100% on time, and my reports (as I previously mentioned) were of high quality… but still nothing.
    I find it a shame though that the overall general population (& brokers) perception is that the appraisers are killing deals and coming in low due to not knowing the market. When it is actually two-fold: 1) it is the AMC who is choosing appraisers for fee alone, to benefit ONLY the AMC’s pocketbook, & unfortunately 2) it is unskilled and unmoral appraisers who are willing to go to areas that they have no business being and violating USPAP. They have under-cut the fees of competent appraisers who won’t sell their souls because they are professionals and won’t work for pittance.

  27. William Padove

    I don’t need a sales contract to estimate market value of a home. However, the Uniform Residential Appraisal Report form (URAR) has a yes/no check box asking if I have reviewed the sales contract. The URAR also asks if the Owner Of Record and seller are the same person. Additionally, it asks if there are any seller concessions involved. This is all information found in the sales contract. I can almost guarantee you that if I say “The sales contract was not made available to the appraiser” the appraisal will be kicked back for it at underwriting.

  28. CM Certified Appraiser for 24 years

    Question – WHY ARE THE AMC’S TAKING THE FEE FROM US APPRAISERS who are already doing more hours of work, traveling, carrying more overhead and require more education than the lenders who are getting the huge commissions? Why are they not CHARGING THE LENDER for their services? The lenders are charging the borrower often TWICE what we are being paid. The borrower has no idea how little the appraiser is actually paid from the fee they pay. They think they are paying $450 or so for an appraisal, when the appraiser is only receiving $200-250. THE LENDERS SHOULD BE PAYING THE AMC FEE – NOT THE APPRAISER!!!!! IT SHOULD BE COMING OUT OF THE LENDER’S COSTS. It’s their fault that we even have to use AMC’s. WHY ARE WE PAYING FOR THE AMC’s????? I suppose because we appraisers are foolish enough to pay them out of our meager appraisal fees. Until appraisers are willing to turn down these AMC orders (which I have), we will continue to be taken advantage of.

  29. Shelley Bogenhagen

    Thank you Laraine, your comment is perfect, it tells all. I have been told by borrower’s whose appraisal is being done thru an amc, that I make too much money and the entire lending industry is just scamming the borrower. I discussed what I could with them. I simply cannot afford to do business any longer with AMCs. Appraiser’s need to do a “break even” analysis of their business they would be shocked at how many hours they would have to work just to pay fixed expenses, and then there’s Uncle Sam to pay.

  30. jean

    I completed an appraisal for the property owner. Seven years later a Realtor decided my appraisal was too high in value. The Realtor sent a consumer complaint to the
    Attorney General Office. The Realtor wanted me to pay 1/2 the difference between my value and another appraiser’s value. A copy of the low appraisal was never included. The Realtor was not the client I did the appraisal for and it was difficult to find the report from the information from the Realtor.
    The Realtor did not disclose being a Realtor on the claim. The Realtor claimed to be an uninformed buyer 7 years ago, and paid to much for the property. The Realtor made many unsupported claims, plus did not have the correct legal description or address for the propery they purchased.
    The Attorney General Office ordered a review appraisal on my appraisal. The review appraiser was not licensed at the time of the appraisal 7 years ago. The information used on the review report contained several serious errors.
    The legal desciption, zoning, comps used and the cost approach contained many errors. The review appraiser picked up a sale on the property next to the subject and referred to it as the subject property recent sale.
    The review appraiser used the cost of a pole building, for a conventional built garage with a finished workship. The subject property was a newer ranch home on a finished basement located on 12 wooded acres bordering a small lake. Two golf courses were nearby.
    The comps used by the review appraiser were:
    One comp was located on one acre lot with one side bordering a highway and had been on the market over 2 years. There was no basement. The property was a spec home and the location was not similar to the subject.
    The second comp was located on a 5 acre narrow tract of land with no garage or buildings. The house was smaller than the subject property.
    The third comp was located on a smaller tract of land. The review appraiser got this information from the court house records (This information was not available at the time of the appraisal 7 years ago). However, I was aware of the sale, but I knew the seller and had checked the sale for a comp. I found the seller had found a farm that was for sale by owner and a bargain price, but he was required to make a quick sale of his house to buy the farm. His sale was split into two tracts at the time of sale, but sold as one price. The review appraiser relied on the court house records, but didn’t notice there were two parcels in the sale. I called the owner after I received a copy of the review and he said no one had ever contacted him about the conditions of his sale.
    The review appraiser stayed near the subject property, instead of finding comparable properties.
    My reported stated the comparable sales extended the desired guidelines, but do to the property being unique, I selected comparable sales that a typical buyer for this type of property would consider. Two of my comparables were in the same school district as subject property. The other comparable was in a comparable school distict. There was only small adjustments required on my appraisal.
    The review appraiser commented on the heavy adjustments required for their compoarables, that should have indicated the comps were not comparable. There was another comp near the subject property that was not considered, because it was too high for the other comps used value. The review appraisal came in at the assessed value, and this was higher than the original Realtors low appraisal.
    I live 75 miles from the subject and the review appraiser came from 45 miles.
    However, you can not determine from my office address that today I still own property in subject county, lived in subject county for over 45 years and was a prior co-owner of a real estate office in the subject property county.
    I had to meet with the deputy state attorney at his office and defend my appraisal. Half way through explaining my appraisal and determining the fair market value, the deputy asked to stop. After discussing my information with the appraiser education and licensing representative, they decided to accept my value and charges against me were dismissed with the suggestion I write N/A on things no answer was required.
    No action was taken against the Realtor that sent in a fraudulent complaint. Nothing was done about the review appraiser (The license information for the review appraiser was wrong on their report). Their report contained actual errors and their value was not supported by the comps they selected. This was the same reason they originally found my report unacceptable.

  31. Steve Spy

    Time for a dissenting opinion…. I am an appraiser. As an appraiser, I am required by USPAP to decline any assignment I am not competent to complete (geographically, or otherwise). If I accept an assignment I am not qualified for, I am in violation of USPAP and should be reprimanded.
    HOWEVER, I feel a good deal of these complaints are not due to appraisers working outside their geographical areas. I live and work in Chicago and do 75% of my business in the city. I have fielded several phone calls since the HVCC has come into effect from Realtors pressuring me to raise values. I have been accused of being incompetent and threatened with complaints to NAR, OBRE, etc. The majority of these “complaints” stemmed from appraised values coming in below the contract price. 9 out of 10 contained sizable cash concessions in areas of steep market decline. Several were FHA appraisals that were conditioned for safety issues that I was told to ignore. Others were requests that I count basement areas and rooms in the above grade count, or use “better comps” that settled over 6 months ago and ignore more contemporary sales.
    An earlier post suggested classwork for Realtors so there is a better understanding of the appraisal process. There are rules and standards appraisers must follow that seem to be unknown to Realtors. The lenders have imposed many supplemental standards in recent months, limiting the market data they feel is acceptable. For several major banks, a ‘Perfect Comp’ that settled 7 months ago would be rejected. Listings must have a sales price to list price ratio discount. Any sales over 90 days old in a declining market must have a downward adjustment based on the findings of the 1004MC form.
    In the past 3 months appraisers have been required to use new forms; Apply new FHA standards; Apply more stringent Lender requirements; Fundamentally change how we do business with our clients; Face increased liability stemming from several lawsuit decisions; lower our fees and turn-times …… And all this in a stagnant and in some cases rapidly declining market.
    I think this claim of incompetent appraisers is too broad and being used as a scapegoat. I have noticed greater appraiser independence since May 1st. I think we all need to entertain the notion that it is possible many of these lower value appraisals are simply a reflection of today’s market.
    A better understanding of the appraisal process and the tools we appraisers use to determine trends in the market could go a long way to smoothing out the bumps.
    A healthy and professional marketplace benefits all who work in real estate.
    Steven Spychalski
    Chicago, IL

  32. I am a very active, long-time California Realtor and wife of a real estate appraiser. I was also operations manager for an appraiser firm for one year in the early 90’s. Despite the obvious flaws in the HVCC, it comes as a result of countless instances of over-inflated values produced by countless appraisers over many years. At the core of this problem is the pressure and threat by loan officers to (mainly) fee appraisers to produce the right value to “make the loan work” along with the threat of “no more orders” if they do not perform. Coupled with this is the problem of producing a comprehensive, thoroughly researched evaluation within a very short amount of time for a fee that has only risen from about $250 to $400 in 16 years. It is true that USPAP and ethics should prevail, but the system of the past, due to the reasons listed above, is a breeding ground for unscrupulous appraisers-after all, they have to eat! I have reviewed over-inflated appraisals at the eve of listing a property, as I try to re-educate the clients as to the true market for their homes. I know who these appraisers are, and wonder how they can sleep at night. They are the ones bringing donuts to mortgage banker offices today…hoping for a bone. Although a middle manager, in theory, works to separate the loan officer from the appraiser, the shame of it is that a company such as Landsafe (originally owned by Countrywide, now BofA), takes a cut of a fee that was already too low to begin with. Look at the result–the attrition rate of qualified appraisers is increasing. It is a dysfunctional system that has not been made better by the new “code”. It is time for the mortgage industry to take a hard look at their own ethics in making loans.

  33. Tim

    Back some time ago the influence from Mortgage Brokers was present that is true. However, it was inefficient. The broker had to contact several appraisers, make the phone calls, ect. So that came one at a time and it was fairly easy to say no. Then a more efficient way became popular, put a bunch of trainees to work for low pay and give them enough work to qualify the experience credit for certification….then dicatate the “terms” of the assignment to the whole rotation list, hundreds of appraisers at a time. Those who didn’t like it …move on. Much more efficient. Later at the height of the “boom” it was much easier to just lift the appraiser’s signature and change the value to whatever you wanted. Lots of folks are letting this fact slide.
    There are no telling how much AAA rated mortgage bonds out there that have fraudulent info without the appraiser who sent it even knowing it was changed.
    Things may not have been so “efficient” back in the 90’s. But if I ever felt uncomfortable with an assignment I turned it down and did not have to worry about losing my whole income stream. I was certain that my report, as I wrote it and signed it, arrived intact. Trainees were educated properly and paid their dues in the field for 3 or so years before being allowed to sit for state certification examination.
    Lenders had Underwriters and production staff that were educated in appraisal theory and knew a good report from a bad one. Lenders did the appraisal reviews instead of letting mortgage brokers order them out themselves.
    And we didn’t have a meltdown of the entire financial system. Pure and simple ….get banks out of the valaution services industry. HVCC (if they ever get around to the IVPI) will be OK. HVCC does not mandate use of an AMC. This little gravy train nees to go.
    In regards to the other posts, on a purchase USPAP requires the appraiser to review the contract to identify the legal desctription of the property to be appraised, parties to and any concessions or contributions. HVCC does mandate that this contract is to be provided FROM THE LENDER to the appraiser. Another lazy business practice of the AMC’s. Do little, profit much.

  34. C. mayhew

    Everyone, stop complaining. It’s time to stand together. Sign the petition. STOP HVCC completely. Go to, watch the video and sign!!!