Thursday , 3 December 2020

Customary & Reasonable Fees: The Elephant in the Room

If you did not receive a print version of the magazine, fill out a sign up form.

It’s here! Our second print edition of the Appraisal Buzz magazine is now available. Our goal has always been to provide real estate appraisers with valuable industry information through our free e-Newsletter and now we continue that effort with our free print magazine. We received such a great and positive response from the release of our first print edition last spring; we hope you will find this version every bit as informative and interesting.

In this edition of the magazine we provide a few tidbits on new technology to help you when appraising in the field and some leading financial industry books to help get a summer reading list together. Here is a sneak peak at some of the articles in this spring’s edition.

C & R – Elephant in the Room
The debate over customary and reasonable fees emerged after the proliferation of Appraisal Management Companies in mid-2009. In this article, Ernie Durbin explains how we as an industry can show this “elephant” the door!

Valuation 3.0
Mark Linné explores how to combine your traditional experience with advanced computing and analytics.

Diversify, But Verify
Is your clientele helping or hurting your business? Woody Fincham explains how to make sure you are starting a new business relationship with a good client.

A Conversation with Ed Pinto
The American Enterprise Institute hosted the Fourth Annual International Conference on Housing Risk last fall. In this article, Ed Pinto provides a recap of the conference.

HUD Handbook 4000.1
The pressure is off! Author Bill Waltenbaugh gives a brief run down of the guidelines in the new and improved single source for FHA single-family policy.

Appraising in the Cloud
Our 2016 Valuation Visionary, George Opelka, discusses the changes in the appraisal industry, from the “Green Hornet” form to computer based reporting.

Litigate This
Francois Gregoire explains the top five “to-dos” before accepting assignments as an appraiser expert witness or litigation consulting.

DIY Business
Are you wearing the hat of both the technician and CEO? Dustin Harris notes five steps to correctly build and maintain a flourishing appraisal business.

Valuation Expo 2016
“B’More is way More!” Find out what the host city of the East Coast Valuation Expo event has to offer. Valuation Expo will be held July 11-13th at the Baltimore Marriott Waterfront. Many of our contributing authors will be in attendance, this is your chance to meet face to face and provide feedback directly to them. Find your discount code in the magazine and register today at valuationexpo.com.

A special thank you goes out to all of our contributors and authors for the amazing articles and self help guides. We would not be where we are today without them and we appreciate the value they contribute to this industry. We would also like to thank all of our ad sponsors. It is with their help that we are able to provide this source of valuable information free to appraisers.

You can view our digital version HERE. If you would like to reserve your ad space in our next edition this coming fall, please contact Jim Morrison at jim@appraisalbuzz.com or call 513-919-4700.

Have content of your own that you would like to submit? Email comments@appraisalbuzz.com

You are encouraged to leave relevant comments but engaging in personal attacks, threats, online bullying or commercial spam will not be allowed and will be removed and/or blocked from our website. All comments should remain within the bounds of fair play and civility. Feel free to express yourself but keep an open mind toward finding value in what others say. To mark a comment as inappropriate, click the flag symbol in the upper right corner of the comment.

Comments

About Appraisal Buzz Staff

Appraisal Buzz Staff
Keep up with the latest news, interviews, and topics with the Appraisal Buzz. Email comments@appraisalbuzz.com with anything you would like to tell our staff.

Check Also

Rising Sea Levels Threaten Affordable Housing Supply

Flooding and other natural disasters are increasing due to carbon emissions and climate change, scientists …

3 comments

  1. Avatar

    Customary to whom? Reasonable to whom?
    Neo slavery. Communism.

  2. Avatar

    I agree with Pray Hard. The AMC’s continually try to dictate our fees by stating “well someone else will do this report for $200.” This does not mean the $200 fee is reasonable or customary I explain and then tell them what my fee is. Typically it is more like $350-$400. This is reasonable and customary in my market.

  3. Avatar

    The problem is one that is classic, it is called the Tragedy of the Commons. When the survey went out after HVCC, the lowest bidders became the defacto standard fee. I have reviewed reports that the fee for a URAR was under $200. The truth is that the licensed appraisal industry, specifically at the residential level, may not even realize the extent of the processes and procedures they are Certifying compliance with, and therefore, are not charging enough to cover the billable hours to actually comply.

    There is no part of the fee allocated to due diligence, from checking and verifying anything, on the subject or the comparables relied upon.

    If we all actually embraced and employed Verifying our Market Data with a party to the transaction to find out about Motivations, Terms, Concessions, Personal Property or to find out if it was a valid, bonified, arm’s-length sale and not a fraud, the fees would more than double. Delivery times would triple.

    It is a functional illiteracy within the ranks of licensees that allow for low fees. We are the problem, not them. OK, sure, They take advantage, but, why not, their are running a business, so what. We need to do such things as are necessary to stop being Dependent Appraisers, such as increasing our skill sets though advanced course work and training; so that we can actually perform at the level we are Certifying compliance with.

    Then, and only then, will We {as in our industry} be able to command higher fees. We might be being paid too much for what we actually do do, but we are way under paid for what we should be doing.

    I know, I started out doing my first fee work for $50 a report. We made it up on volume, cranking out 3 thought less reports per day, with no awareness of the need to Verify our Market Data, or have some market derived basis for our adjustments. It was like an army of Jiminy Crickets.

    Along my path, I learned that we have a responsibility to those who might come to rely upon our reports, Decades later FNMA added Cert. 23, and We did not understand the significance, how it upped the ante on our liability. Our fees should have doubled back then, which was way before the HVCC.

    Read HUD Valuation Directive 4150.8 on Verification of Market Data, And ask yourself how you would judge an appraiser if you were on a Peer Review Committee or on a Jury, or Grand Jury; if the appraiser never Verified any of their market data, ever,, in the subject report, or any report, because they did not even know what that meant?

    I have been involved in suits where the appraisers texts books and USPAP have been used chapter and verse against them, because they made no effort at compliance with the steps of the processes and procedures they Certified compliance with. .

    I have seen court cases dismissed when it was shown that the expert appraiser had made no attempt to Verify their market data, and had misused it, resulting in a misleading report. {sadly, many residential appraisers started taking litigation work and approached it with the same reckless abandon employed in their lender work}.

    I have seen appraisers get sued for negligence by their own client in cases where their work was discredited and they lost the case.

    So, it is not Them or They that are the problem, is us Us or We.

    I as an individual had to make a decision to either stop the insanity of what I was doing, and I was fast. I did 129 SFR’s Condo’s and 2-4 units plus 5 unit reports in one month at the Zenith of my ignorance.

    Now, I don’t do 129 reports in a year. And I don’t have to compete at the bottom of the fee chain. But, then, It was I who had to change. And, when I did, my client base began to change, but only after My skilled improved.

    Rather than complain, We should all look in the mirror and blame ourselves, and get ticked off enough to stop the insanity and help ourselves.

    No one is coming to help the appraisers. Not the license boards, they are there to protect the public from the appraiser, to judge us when complaints are filed.

    Not the Appraisal Foundation, they are a money making organization. They create the illusion to the public that all appraisers adhere to some standards, when in fact, most do not clearly understand the processes and procedures being Certified too.

    Not the governmental or regulatory agencies, they have a different mandate.

    When the S&L Crisis came to a head and FIRREA was enacted in August of 1989, the term Appraisal Fraud was entered into the Federal Register. Regulated Lender were instructed to turn in Appraisal Fraud to the regulators when they saw it. They were not told not to pressure the appraiser into inflating values or writing misleading reports.

    FIRREA created the need for licensing. USPAP and licensing were supposed to cure the problem. Instead, an army of prep school appraisers was born, conditioned to be helpful to get the loans approved. Misleading reports and inflated values became the norm. Lenders were happy again.

Leave a Reply

Your email address will not be published. Required fields are marked *