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Customary & Reasonable Fees for AMCs

April 19th, 2016

TUESDAY, APRIL 19, 2016

“Heartless AMCs”

The more things change, the more…

While reviewing some old issues of AppraiserNews.com, we bumped into the 10/7/13 issue which was entitled “Heartless AMCs”.  That issue included some of the many emails we were receiving at this time which expressed the utter exasperation felt by many (most) appraisers in dealing with AMCs.

The general consensus amongst appraisers is that while some modest improvement in fees has occurred since then, the current AMC/appraiser relationship model is far from satisfactory.  While we favor the elimination of AMCs and a sweeping change in the way that appraisals are ordered, lacking such a restructuring we suggest turning the existing relationship upside down: how about Customary and Reasonable Fees for AMCs?

It’s kind of like buying a new car: rather than starting with an inflated offer from a car salesman, some suggest researching the dealer’s true cost and making an offer slightly above that figure.  The AMC function, with some minor exceptions, is essentially an administrative or secretarial type role and pales in comparison with the truly important job performed by the appraiser.  Hence, we suggest that the AMC fee be based on what is “customary and reasonable” for such secondary type work.

So, we are conducting the first poll to help establish “Customary and Reasonable Fees” for AMCs.  Appraisers constitute a large percentage of the readership of AppraiserNews.com and who knows AMCs better than appraisers, so here is our question:

CUSTOMARY AND REASONABLE FEE STUDY FOR AMCS: QUESTION #1:

AMCs (Appraisal Management Companies) should receive what percentage (%) of the overall amount allocated to appraisal services:

a) 5%

b) 10%

c) More than 10% (please specify percentage)

d) Less than 5% (please specify percentage and indicate, if the figure is a negative one, whether AMCs should be entitled to a tax write off for their losses)

We will publish the results of this truly scientific poll in our next newsletter!  In the meantime, here are some of the emails that we received back in October of 2013, hopefully we won’t be seeing the same thing 2-1/2 years from now:

Connecticut appraiser Renee Healion writes:“…Like your Chase/Sagaponack article!  I doubt (Jamie) Dimon would rely on a $265 appraisal with his own purchase of a nearby property.”

Seaford, New York appraiser Tim Faso writes:
“…I used to work for a large AMC as a staff appraiser.  In May they decided to eliminate the Staff appraisers and put us on their preferred appraiser list.  I was able to charge $325 for a single family appraisal in Nassau County.  Two weeks later they came back and said that I would have to accept $275 per appraisal to remain on the preferred list and receive work.  I figured that I could live with that. I was getting about 30 appraisals a month.  Since 10/1, I noticed that I was receiving less work.  I knew it slowed down a bit, so I asked my former boss what was causing the decrease in the work I was receiving.  He told me that since there were less orders, the jobs were going to appraisers who were charging less”.  The response that Tim received indicated that there was one appraiser willing to perform a 1004 appraisal for $175.

Mount Vernon, Washington appraiser Dave Towne writes:
“Regarding your first-hand account about Chase – it sounds much like a process that (unnamed) AMC uses in sending broadcast orders to zillions of appraisers in an area.

But the real problem is ‘us’… not some big bank (as much as I don’t like C), although ‘they’ (meaning all lenders) certainly are culpable for part of the fee issue.  Far too many of ‘us’ accept low ball fees just so ramen can be purchased for dinner instead of filet mignon.  Appraisers are their own worst enemy in understanding how accepting low fees just keeps the fees at the bottom of the barrel.  The regulators don’t give a crap about this because appraisal work is being done at the low fees.

The only real way to solve this is for the several appraisal organizations to band together and do an advertising campaign to explain to consumers why low ball fees controlled by others is a detriment to our profession … but they won’t.

Secondly, appraisers have to be convinced to boycott any assignment that is below the real cost of doing business.  But that also entails teaching appraisers what that really means, because too many don’t have a clue about that either”.

Long Beach, New York appraiser Leigh Pollet writes:
“I too am a Long Island appraiser and have been for about 30 years (hard to believe that!). And I too was offered absolutely ridiculous fees by not only AMC’s but appraisal companies….A national appraisal firm (not an AMC) offered me… two jobs with them: one in Southampton the other Sag Harbor. They offered to pay me $145 for each… and then upped the fee to $180 or so.

Both houses were refi’s and both had sold for well over $2m within the past several years. Now, I was just in the Hamptons for a direct client – and received a fee more than five times (yes, that’s correct) that amount for similar properties.
So it’s not just the AMC’s but sleaze bag appraisal companies who try to take advantage of appraisers – and appraisers who let themselves be taken advantage of. And yes, I’ve had numerous AMC’s try the same ‘crap’. I will not work for any of them.

But really, the problem is appraisers who take $145 for an appraisal of a complicated multi-million dollar home that will take one-one & one-half days to write up correctly. Heck, the floor plan alone on one ‘major’ estate I did took me several hours – and I am pretty fast with my plans.

Or appraisers who take any fee offered just to work. I earned $150 per appraisal when I started in the business in the early ’80’s. So now we as appraisers are being offered less than what was paid nearly 30 years ago?

Sorry to rant – we are on the same page!”

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RedStone Advanced Analytics from Bradford Technologies


AppraiserNews is a FREE publication, supported by advertising and sales of products designed to help appraisers support and grow their businesses. Please consider supporting us today by seeing what we and our sponsors have to offer.

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AnchorRates & Dates

Freddie Mac, the Mortgage Brokers Association (MBA) and HSH Market Trends reported mostly downward movement in mortgage interest rates last week.

In their survey on April 14th, Freddie Mac reported that 30-year fixed-rate mortgages declined to 3.58% from 3.59% the previous week. They also noted that last year at this time the 30-year rate was at 3.67%.

Sean Becketti, chief economist of Freddie Mac, is quoted in the release as saying:

“Demand for Treasuries remained high this week, driving yields to their lowest point since February. In response, the 30-year mortgage rate fell 1 basis point to 3.58 percent. This rate represents yet another low for 2016 and the lowest mark since May 2013.”

The MBA reported on April 13th (for the week ending April 8th) that 30-year rates with conforming loan balances ($417,000 or less) fell, from 3.86% to 3.82%.   The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) moved downward from 3.76% to 3.74% while rates for FHA backed mortgages dropped from 3.73% to 3.66%.

Mortgage applications jumped by 10.0% from the previous period.  Refinance applications as a percentage of all applications increased from 54.5% to 54.9%. The FHA share of applications moved down to 11.3% from 10.8% and the VA share fell from 12.2% to 11.9%.

Mike Fratantoni, the MBA’s Chief Economist, is quoted in the release as follows;

“Helped by a persistently strong job market and low rates, applications for both conventional and government home purchase loans increased last week. The purchase index was at its second highest level since May 2010. Applications to refinance also increased as the 30 year contract rate decreased to its lowest level since January 2015,” said Mike Fratantoni, MBA’s Chief Economist.

On April 15th, HSH.com Market Trends reported that 30-year mortgage rates were unchanged from the previous week at 3.67% while rates for FHA-backed mortgages moved downward, to 3.52% from 3.55%.

Additional information from Freddie Mac can be found by going to: Primary Mortgage Market Survey PMMS – Freddie Mac

Additional information from the Mortgage Bankers Association can be found by going to their site at: Research and Forecasts – Mortgage Bankers Association

Additional information from HSH can be found by going to: HSH.Com

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Appraiser Help has Released its 2015 Directory of AMC’s and National Appraisal Companies. Click the link above to learn more and to download your copy today!


AnchorTell us what you think!

We invite your responses to any of the issues raised in this newsletter. Please e-mail us at: bill@appraiserhelp.com with your thoughts!

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AnchorWe really hope you find our newsletter to be informative!  If you have any input on future topics for discussion, please email me your questions and I will do my best to address them in the next issue.  If you want to look back at past issues you can see our archive at www.appraisernews.com

Regards,

Bill Collins, Appraiser Help Inc.

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