Thursday , 17 October 2019

The Appraiser ‘Shortage’: What Can Be Done?

This article was originally published HERE for more articles from Patrick Barnard or Mortgage Orb, you can visit mortgageorb.com.

The number of active real estate appraisers continues to shrink, raising questions for mortgage lenders and servicers about how quickly they will be able to get home appraisals in the future and, perhaps more important, how good the quality of the reports will be.

Recent research from the Appraisal Institute shows that the number of appraisers will shrink over the next five years due mainly to a mostly older workforce that will soon retire. Many appraisers got out of the business in the aftermath of the economic downturn that began in 2008. Since then, some have jumped back in, but they are finding themselves increasingly hamstrung by an onslaught of new regulations that not only have made the training, licensing and fees associated with appraisal work more expensive, but also have given rise to appraisal management companies (AMCs), which take a slice of an appraiser’s fees. Many individual appraisers report that they are now having a hard time making a decent living.

According to the Appraisal Institute, there were about 78,500 real estate appraisers working in the U.S. in the first half of 2015 – down nearly 20% from 2007. The group forecasts that the number of appraisers will decrease by about 3% during the next five years.

Although the number of transactions today is nowhere near what it was in the pre-crisis years, there is a question as to whether there will be enough appraisers working in the industry to handle any sudden increase in volume. One statistic from the Appraisal Institute seems to strongly indicate that the industry is now set up to experience a shortage: About 62% of appraisers are age 51 or older, while 24% are between 36 and 50, and only 13% are 35 or younger.

This raises a serious question: How can the industry attract new talent? Technology also looms large in the industry’s future, changing the way appraisers will work in the field and in the office and, subsequently, changing the way it goes about recruiting and training.

The appraiser shortage is apparently the worst in certain rural areas of the U.S. So far, however, there have been few reports regarding delayed appraisals holding up the closing process directly as a result of the shortage; so, the trend is difficult to measure. In fact, many appraisal companies operating in urban areas say they aren’t experiencing any shortage at all. Others say although there might be a slight shortage, it’s a regional issue and that it should be no problem to fill the void.

MortgageOrb recently interviewed several appraisal industry experts to find out, first and foremost, if there is a shortage of qualified, licensed appraisers nationwide and, if so, what impact it might have on the mortgage industry moving forward.

Sam Heskel, president of Brooklyn, N.Y.-based AMC Nadlan Valuation, says, in his view, there is most definitely a shortage, but it is more prevalent in some areas than others.

“For example, rural areas seem to be suffering more from a lack of appraisers than the big cities,” Heskel tells MortgageOrb.

“I talk to appraisers all of the time, and a lot of them are simply getting burnt out,” Heskel says. “Increased regulations are part of the problem. While I support the government’s efforts to increase education requirements, some of the newer regulations and guidelines have had the unintended consequence of being very burdensome for appraisers.

“Another issue is qualification and licensing requirements, which stipulate that appraisers in training must apprentice another appraiser for two years,” he adds. “Yet, most lenders don’t accept an apprentice’s work, so the question becomes, ‘Where will they find the work, and who is willing to take them on as an apprentice?’ There isn’t always a feasible process for apprentices to get in the required hours of training.”

Greg Stephens, chief appraiser and senior vice president of compliance for Metro-West Appraisal Co., agrees that the answer really “depends on who you talk to.”

“Case in point: In a recent poll conducted by the Illinois Coalition of Appraisal Professionals, 80 percent of respondents indicated they did not believe there is an appraiser shortage,” Stephens tells MortgageOrb. “However, the Illinois Appraisal Board data reveals that the annual renewals from 2014 to 2015 were down 11.4 percent. In 2005, there were 1,231 trainees pursuing licensure or certification in Illinois. In 2015, that number was 55.

“The same data also indicate that historically, the Illinois Appraisal Board had an upgrade pipeline of approximately 50 applicants,” Stephens adds. “In 2015, that same pipeline had nine upgrade applicants in process. Contrast that with the State of Texas, which has been experiencing an economic boom for several years, and the number of licensed trainees has increased from 520 in January 2011 to 795 in December 2015.”

Stephens agrees that the shortage is basically a regional phenomenon.

“Lenders and appraisal management companies are reporting challenges engaging appraisers to complete residential valuation assignments in certain non-urban/non-metropolitan areas and certain metropolitan areas such as Denver, where turn times and appraisal fees have increased significantly due to an imbalance between the demand and the existing supply of appraisers,” he says.

Over at valuation technology firm Veros, Adrienne Ainbinder, vice president of sales and marketing, says, “We hear consistently there are not enough appraisers to fill the demand and, further, that the demands on the appraisers continue to mount.”

“We recently spoke with an appraisal team in Oregon who shared with us that the requirements are continually contradictory,” Ainbinder tells MortgageOrb. “For example, they cited pre-delivery requirements, which almost violate USPAP – they have a four- to six-week backlog of assignments, yet the required turn times are tighter than ever before, and in order to consider an assignment, he needs to charge a commensurate fee, yet the AMCs they work through continue to maintain a ceiling on their fees. While this story is just one anecdote, there are many more like it, and it is no wonder that stories such as these do little to encourage a growing workforce.”

So, what are the primary factors that are keeping new people from entering the industry?

“The cause of the shortage – either current or long-range – is three-fold,” Stephens explains. “First, there are economic challenges facing appraisers who would otherwise consider taking on a trainee. Second, regulatory barriers are creating a disincentive for someone considering entering the profession, as well as those in the profession attempting to upgrade to certified status.

“On Jan. 1, 2015, the Appraiser Qualifications Board added a college degree requirement to the certified appraiser credential,” Stephens says. “There are thousands of licensed appraisers who were not able to upgrade from licensure to certified status by the deadline. The economic hardship for those appraisers is, in many instances, insurmountable, as demonstrated by one Texas appraiser with only an associate degree who took a sabbatical from appraising to obtain his four-year college degree. He estimates it will have cost him approximately $85,000, between the lost income and the college costs. With no alternative provided by the regulators, those state-licensed appraisers are facing insurmountable financial barriers, as lenders engage certified appraisers due to the prohibitions by the U.S. Department of Housing and Urban Development to include licensed appraisers on its panel.

“Third are the misperceptions within the lending industry relating to trainee involvement in valuations for mortgage-lending activities,” Stephens continues. “For example, the Dodd-Frank Act contains language specifically requiring a lender to select an appraiser from the Appraisal Subcommittee National Registry. Trainees are not listed on the national registry, so as an unintended consequence of the legislators failing to mention trainees, many lenders have expressed a belief they are prohibited from allowing trainees to be involved in the development of an appraisal. In an effort to counter that misperception, the federal agencies included language in the AMC Rules published in 2015 that specifically states the agencies continue to support the use of trainee appraisers as long as they work under the supervision of a state-licensed or state-certified appraiser.”

Then there is the not-so-little problem of compensation.

“Regulations and guidelines implemented since the mortgage meltdown have added a good deal of additional work for appraisers, yet their fees have not gone up accordingly,” Heskel says. “Today, when someone asks me if they should become an appraiser, I advise them to become a lawyer because it will be easier and more profitable.

“If nothing changes, I believe the number of appraisers will continue to shrink over the next 10 to 15 years,” Heskel adds. “A lot of appraisers are older and they’re retiring, yet younger appraisers are not coming in to take their place.”

So, what impact could this appraiser shortage have on the mortgage industry?

“Left unattended, I believe the shortage of appraisers will have a disastrous impact on the housing market,” says William Fall, founder and CEO of valuation and analysis firm William Fall Group. “There’s no substitute for a professional appraiser. Without enough appraisers, we may see the industry become overly reliant on non-appraiser valuation models, which will have a negative impact on quality. Keep in mind that poorly valued real estate was a significant factor behind the last housing crisis. Fewer trained appraisers only increases the chances of this happening again.”

“A serious lack of appraisers could be devastating for the mortgage industry,” Heskel adds. “It is basic supply and demand: Appraiser fees will start to skyrocket. Already, I see appraisers in some rural areas where there are very few appraisers charging $800 for an appraisal, yet the banks are only willing to pay $400.

“A shortage of appraisers will also delay closings, as all parties to a mortgage transaction may need to wait several weeks for the appraisal to be completed,” he adds.

So, what can be done to reverse the trend? What can be done to make the job of appraiser attractive again?

“Again, I believe appraisers’ compensation needs to go up when the amount of work required of them increases,” Heskel says. “Also, the industry needs to re-think the way it treats apprentices, who are required to put in two years of training with a certified appraiser. They often find it difficult to find the hours. Most banks require that the supervisor appraiser should physically inspect the property. Banks typically won’t accept an appraisal signed by an apprentice.”

“I think we need more options to becoming an appraiser,” Fall says. “Other professions, such as doctors and attorneys, use career development structures that are based on competency, and I think the appraisal industry should, too. For example, attorneys must meet certain requirements before they are able to practice in specific courts of law.

“I think one possible solution is requiring appraisal candidates to complete basic coursework and then complete a minimum of 25 property inspections within two months, under the oversight from a certified appraiser,” Fall adds. “This is significantly less intensive than current requirements, yet it would still provide prospective appraisers the skills and experience necessary to appraise properties under $1 million in value.”

And what about the role of technology in the field and in the office? How might this result in a “new breed” of appraiser and a “changing of the old guard”?

“I believe technology helps appraisers and makes their jobs easier,” Heskel says. “From being able to use lasers for measuring to uploading data in a smartphone, technology can help appraisers work more efficiently. It has really changed the way we write and deliver reports over the past 10 to 15 years.”

In this respect, many agree that technology could be the catalyst that brings younger workers into the field.

“I don’t know if technology is creating a new breed of appraisers, but [it] is an important tool in the appraiser’s toolbox and has been for years,” Fall says. “Quality is always the chief ingredient in every appraisal report. While nothing can replace the skills and judgment of an experienced appraiser, technology can provide an added layer of quality assurance by verifying the data in reports and uncovering additional factors that affect value. Technology is also creating a smoother appraisal ordering and delivery process, which can remove friction for both appraisers and lenders.”

Comments

About Patrick Barnard

Avatar

Check Also

REO Activity’s Ups and Downs

Foreclosure activity has continued to decline, but these markets are bucking national REO trends. The …

114 comments

  1. Avatar

    Maybe if banks and mortgage companies would start to pay a decent salary for our services. I make the same amount per appraisal as I did 20 years ago and even that they want to cut in half. Yup- retiring this year.

    • Avatar

      We appraisers can earn more managing a Starbucks store than running our practice. And one of our own, the crooked Appraisal Institute, keeps picking at our fees even when we’re not members by fees for electronically delivering appraisals, fees for electronically quality checking our appraisals. We are being stolen from on all sides, fees are still less than I made 15 years ago. The GOOD news is that the management companies make more for each appraisal than I do. And in the past, sure loan officers hinted about value, but hey that’s all gone now. Now it’s the lenders who send a list of 10 sales after you don’t give them the value they derived from their computer model with instructions to use these comparables or explain why you won’t. We can thank Barney Frank, Cuomo and the DC Mafia for our loss of income, loss of respect, loss of support and higher operating fees for our office. And last but not least the wild sue the appraiser game out there. Thankfully I’ve not been sued but lots of appraisers have, and it’s most often unfair. The question that’s really being asked here is HOW CAN WE CONTINUE TO CONTROL AND ABUSE THESE SCAPEGOATS AND STILL KEEP THE INDUSTRY AFLOAT?

    • Avatar

      That’s the peril of selling! If you don’t sell, you don’t eat!

    • Avatar

      ….and what is cutting your fees is the AMC that the lender is using. They take as much as 1/2 of the appraisal fee and no one has a clue because it’s not disclosed on the closing documents.

  2. Avatar

    Ridiculous turn times, low fees and incompetent “administrative” reviews that create “scope creep” are it. Were it not for those three many appraisers in this area would rise to the occasion and solve any perceived “shortage” around here, period.

    Requiring minimal appraiser competence via obtaining college degrees is indispensable to the future of this industry and its growing dependence on technology. I only hear complaints about educational requirements from those who don’t have it and don’t want to get it. But then, the financial rewards of appraising in the secondary mortgage market simply do not justify any investment in the job of appraising. Indeed as the author alludes, secondary mortgage market assignments encourage cutting many of the USPAP corners and avoiding the best practices we have all been taught to follow.

    Just follow the money, or the lack thereof, and you have THE reason appraisers and potential appraisers are doing something else other than appraising.

  3. Avatar

    Pay enough money and I’ll do the appraisal. The problem is compensation!

  4. Avatar

    The Lending community is all about Supply & Demand, its been shoved down my throat for 16 years. Why would you pay me $450 when you can have the ex-dog groomer for $250? So now they are worried about a shrinking appraiser base. ITS ALL ABOUT SUPPLY AND DEMAND AND THEY ARE GOING TO FIND OUT WHAT ITS LIKE TO BE ON THE WRONG SIDE OF THE CURVE.
    The Appraisal Institute (the scientologists of the appraisal community) would not exist without HUGE inputs of cash from the National Association of Realtors. Which causes all kinds of ethical questions as to the direction of any research attempted or produced.

    • Avatar

      AI has zero connection with NAR. Many years ago, it split from NAR due to a various differences that were not beneficial to appraisers. Most of the income comes from education, the sale of books and dues.

      • Avatar

        And probably the NRA!! If I still had to survive by relying on my income from appraising I would buy a gun…! Luckily I was able to fall back on my original profession of engineering in 2010 and am now waiting on the sidelines to hopefully jump back in, if fees ever become commensurate to the added scope of performing an appraisal nowadays

  5. Avatar

    I don’t think there is a shortage. Maybe for amc’s who don’t want to pay very much and are to demanding. A lot of appraiser’s are out because they could not survive working for amc’s. If there is a shortage it’s because of the amc’s. Senior appraisers can no longer hire trainees because there is not enough fee split to go around. My business is now 95% banks, relocation, legal and other non amc related. I do work for only 1 or 2 amcs which pay my fee and have a reasonable turn time and no BS reviews.

  6. Avatar
    Kimberley Burton

    I personally do not think there is a shortage of Appraiser’s. The biggest problem is the fee. Yesterday I received an order on a 1.9 million dollar purchase – they lender offered a fee of $320. You cannot tell me that they did NOT know that this was a complex property. I turned it down without countering the fee. The day before I received an order for a purchase of a $600,000 lakefront home with a fee of $320 – I countered back with a minimum fee of at least twice that and was told the lender would not approve any fee increase, even if the property was complex, so I turned it down. These both were just this week and it is only Wednesday. Also a friend of mine told me he was having a hard time getting his loan because the lender could not find anyone to do the appraisal. In this particular area there are more than 20 appraisers. I told him that it was the fee being offered as it is not a complex property. He called some appraisers on his own to get a fee quote and was able to find an appraiser to appraise the home – he paid the difference out of his own pocket just to get it done. He was furious when he found out all this time was wasted just because the lender would not offer a reasonable fee for the order.

    • Avatar

      Fees cannot based on a property’s value, which of course by the way isn’t known until it’s actually been appraised. If you’re a practicing appraiser, you should very well know that it’s a USPAP violation to quote a fee based on the projection of a property’s value, so it’s inconceivable that you are having conversations like this with your clients, and especially at this late date.

      Management (ETHICS RULE)

      The payment of undisclosed fees, commissions, or things of value in connection with the procurement of an assignment is unethical.
      Comment: Disclosure of fees, commissions, or things of value connected to the procurement of an assignment must appear in the certification and in any transmittal letter in which conclusions are stated. In groups or organizations engaged in appraisal practice, intra-company payments to employees for business development are not considered unethical. Competency, rather than financial incentives, should be the primary basis for awarding an assignment.
      It is unethical for an appraiser to accept an assignment, or to have a compensation arrangement for an assignment, that is contingent on any of the following:

      the reporting of a predetermined result (e.g., opinion of value);
      a direction in assignment results that favors the cause of the client;
      the amount of a value opinion;
      the attainment of a stipulated result; or
      the occurrence of a subsequent event directly related to the appraiser’s opinions and specific to the assignment’s purpose.

      • Avatar
        Kimberley Burton

        Nowhere did I state that it was based on the value – get off your high horse. It is based on the complexity of the assignment. If you want to appraise a 1.9 million dollar 50+ acreage/farm property for $320 – go right ahead. I have been appraising for over 20 years and have NEVER based my fees on the contract price or market value. In my area where the typical home is $250,000 to $350,000 on average, it is very easy to tell at first glance of a $650,000 contract that something is unusual or complex about the property. It is called knowing your market area. My fees are based on the complexity and the time it takes to actually find comps of that magnitude and the time it takes to write a credible report.

        • Avatar

          Read what you wrote, and you just did it again. How do you know a property is worth 1.9 million if you didn’t actually appraise it? As to the other property, you’re basing a fee increase request on a contract of sale? Are you serious? Sounds like you’ve got 20 years of customary bad habits.

          • Avatar
            Kimberley Burton

            You are entitled to your opinion. In 20 years, I have never had a USPAP violation or a complaint filed with my E&O or state board. I do everything by the book, including basing my fees on the overall COMPLEXITY of the appraisal. Since I do not get a contract until AFTER I accept an order, most of the time I have no idea what the contract price is, and I do not care if it is $1.00 or $1.9 million – the comps will reveal the value once the report is completed. My fees are based on the number of comps I will have to get and how far I have to drive to get the comp info.
            I have wasted enough time on you – going back to work now.

          • Avatar

            That you haven’t had a USPAP complaint or violation doesn’t mean anything. If a deal gets done and/or no parties have a reason to get a bee in their bonnet, there’s no incentive to take a closer look at an appraisal, so a clean record fundamentally means only that you haven’t been challenged yet; in no way is it a testament to the quality of your work as an appraiser. If it were, then you must be inclined to assume that any appraiser who has ever been formally challenged is de facto incompetent? Your contradictory statements belie your fundamentally flawed methods.

            And regarding your feebly backpedaled assertion of not having been sent a contract until after you’ve accepted an order, then why in your original post did you say a fee increase was warranted for “…an order for a purchase of a $600,000 lakefront home with a fee of $320”? And even in a situation where you hadn’t been provided the contract price, you still easily could – and would – look up the listing, even FSBOs often can be found online. Just stop.

            BTW, defensiveness and hostility speak volumes.

          • Avatar

            Like I said only a fool orAH would do a $1M+ home for $320.

          • Avatar

            No one said anything about it being OK to do an appraisal for $320. That was not the point of the thread, it was that she was basing a fee negotiation on an undeveloped assumed value of $1.9M, which is not only a USPAP violation – which you are required to adhere to – but wrong for several other reasons and if you truly don’t understand that, you and Detroit area problem child are very much a part of the what is fundamentally wrong in this industry.

          • Avatar
            Detroit area appraiser

            You are right “AH” … I’ve seen the error of my ways, and I bow to your superiority. I am humbled (and also quite entertained) to have been one of the participants that was subject to your vitriol and eternal wisdom pertaining to all things in “appraisaldom”. I have learned so much. After all, it is not often that one is exposed to the truly “Smartest One in the Room” for such an extended period of time without being charged a fee for such enlightenment. So therefore I am truly grateful for your invaluable insight. I hope that you will be able to get out from behind your computer for enough time to give yourself a break from bestowing such valuable knowledge to the rest of the peons in the world, as I know that must be such a tedious task. I for one will take what I’ve learned here today, and go and shout it from the mountain top for all to hear … that is until they start to throw rotten tomatos at me … Toodaloo!!

          • Avatar

            Agreed. Want to throw up reading this crap from a sanctimonious, do-gooder know-it-all. Wah! Wah! You can’t do that, you are violating USPAP. Wah! Wah!

          • Avatar

            And I’m sure she’s a great appraiser in her own mind.

          • Avatar

            Quit when you’re behind only this much, AH. You are sounding angry and arrogant and well, not too reliable. If we wanted lectures we’d go to confession. You’re inappropriate.

          • Avatar
            Detroit area appraiser

            Geez … look in the mirror when it comes to “defensiveness and hostility “AH”.

          • Avatar

            Point out where I have been defensive or hostile.

            And meanwhile you say that you’re “not much for name calling,” yet it was the very first thing you did in your initial comment directed at me and you have continued to do so, so in actuality you are very much for name calling. Why not choose to have a rational conversation in a professional manner instead of turning into a testy meatball? If you disagree with what someone says, your counter should support the point you’re making, which isn’t at all clear but it doesn’t matter.

          • Avatar

            Is AH the sleeper AMC person????

          • Avatar

            You are being REALLY inappropriate. Listen to yourself.

          • Avatar
            Detroit area appraiser

            You are right … do not waste any more time on “AH”. You know how there always seems to be “that person” in continuing education classes that is a pain in the — for the rest of the class who are trying to discuss REAL issues? Well, … “AH” seems to fill that void in this discussion. Move on and don’t worry about “AH”.

          • Avatar

            Who cares. It’s selling for $1.9 million, and she knows it’s a complex assignment, whether it’s worth $1.9 million or $2.2 million or $1.5 million.

          • Avatar

            The point is that is not how she characterized it. She used her estimated undeveloped ballparked value of $1.9M to justify a higher fee, and not only is that not enough of a justification, it’s a USPAP violation.

            If in fact it was a complex assignment due to A, B, C, and D factors like external or functional obsolescence, or planned development nearby that could affect views and/or water rights, or there are unexpected mineral rights on the land, or there’s some other weird easement etc., then those factors are to be clearly communicated to the client so it is understood by all parties exactly what the assignment involves and why a higher fee is being requested. If the client at that point refuses to increase the fee, it behooves the appraiser to inquire as to why because the client might have genuine constraints they have to work within, and then the appraiser is in a much more informed position to make a business decision.

          • Avatar

            Can you stop yourself please?

          • Avatar

            Maybe there is a way we can figure out who she really is, report her to her state board, and have her license revoked. That will show her!

            Has there ever been such a nerd appraiser as Air Head?

          • Avatar

            The last of your marbles has officially rolled out of the building.

      • Avatar

        Ok Air Head, a higher valued price range generally means larger homes. A lot more to measure and some times you have to look at many more comps, and travel a lot more. Only a complete fool would do an appraisal of a 1M+ home for $320. and only a stupid lenders would even offer this. In general high priced homes require a lot more writing than typical tract home.

        • Avatar

          Your point is what, Brownstar? And you are fundamentally incorrect that a higher-value property is automatically more difficult to appraise. I have appraised $10M+ properties that were actually quite straightforward, while $300K properties have involved exceedingly complex and time-consuming development processes. Many factors come into consideration when determining the complexity required in the valuation of a property; knee-jerk assumptions based on unsubstantiated values is not one of them.

          • Avatar

            Air Head – Were you able to get a higher fee for that complex 300K property? Of course you weren’t. And stop the BS about the straightforward $10M property. No such thing. Either you are an AMC plant, or a complete fool.

          • Avatar

            Yes rutabegabrains, a higher fee was obtained for the $300K property.

            You say “And stop the BS about the straightforward $10M property. No such thing.” You either lack a variety of experience, are a boob, are provincial, or all of the above.

            Regardless, as pointed out in another thread, the issue here is not about whether or not $320 is an acceptable fee for an appraisal, it’s that it is a USPAP violation to negotiate fees based on estimated value, developed or otherwise. Another way to put it is that the value of a property, either ballparked or developed, isn’t testament to the degree of complexity of its appraisal.

          • Avatar

            We got your point several arrogant posts ago. And we think you protest too much. And finally, we are laughing at you. Stop yourself.

          • Avatar

            You really think it matters whether or not you and your ilk are laughing at me? You have less than zero gravitas. And anyway, it is clear you are not laughing. You have actually gone out of your way to repeatedly issue single-sentence attacks at me yet have contributed nothing substantive to any conversation. Facts have obviously made you feel inadequate and you are lashing out.

            My best advice to you is to be very careful about your behavior online; you never know to whom you are talking. You’re welcome for this simple advice, although given you and your fellow barnacles’ affinity for rancid squawkings, I doubt it will help.

            Carry on, and do it way over there. Way way way over there.

          • Avatar

            Really? Where do you live where there are straightforward $10M properties. I can just imagine this subdivision of 100 15,000-square-foot houses, with lots of recent sales. Right.

          • Avatar

            As I said, given that provincial perspective, it seems your experience in property types is limited and this has narrowed your perspective to the point where you assume every market is like your own. It’s not a crime that a $10M property in your market would cause your eyeballs to fall out but that’s not true across the board. This is a huge country.

          • Avatar

            I vote for complete fool.

        • Avatar
          Detroit area appraiser

          “Air Head” is an appropriate descriptive in this case, albeit I’m not much for name calling. However “Mr./ Ms. Handler” (referred to as AH from here on) seems to clearly be coming from a tunnel vision sense of pure academia, as opposed to coming from a sense of actually running a profitable business in the real world. I’ve heard such pathetic drivel from bad USPAP teachers in the past as well (no offence to the good teachers out there). The fee is based on complexity AH, not value. Nowhere did Ms. Burton specifically state that her fee was based on a pre-determined value. To understand that a more complex property requires a higher fee is simply a matter of common sense. Unfortunately, common sense seems far too uncommon these days. USPAP was designed to help appraisers in their day to day business … not hinder them as you seem to suggest. However I suppose you must be very busy, as I’m sure you are swamped with AMC work of 5000+ square foot homes for $200 each. In fact, I would think it appropriate to turn the table of your logic back on you. For example, you suggest that Ms. Burton has violated the USPAP Ethics rule … however I submit to you, that you have in fact violated the Competency Rule. Anyone that would accept an assignment for any of the aforementioned complex assignments of $320 is clearly out of their league, and should turn down such an assignment so that those of us who actually know what we are doing can step in and make a living.

          • Avatar

            USPAP was not as you say
            “…designed to help appraisers in their day to day business”, but was
            developed to set ethical and professional standards for the appraisal
            industry.

            The abject inanity of your comment makes one wonder if your appraisals read the same way.

            Carry on, yet please try not to destroy any fiduciary lives, although I suspect it is too late for that.

          • Avatar

            Your posts are inappropriate.

      • Avatar

        “Fees cannot based on a property’s value, which of course by the way isn’t known until it’s actually been appraised.”

        How clueless can you be? You look on the MLS and see the listing, you’ve been appraising in the area for 20 years, you know it’s an oversized and fairly unique property, and you know it’s not a cookie cutter appraisal. So you charge more.

        And don’t tell me that before you walk into a house, you have a pretty good idea of the range of value. Because if you don’t, there is something really the matter.

        AND THE SALE PRICE WAS $1.9 MILLION. YOU THINK THEY OVER PAID BY $1 MILLION?

        • Avatar

          You missed the point: a property’s value cannot be determined until it has undergone an appraisal. That’s why appraisers are warned about the potential liability for even casual verbal mention of a property’s value, particularly to a party of interest. Additionally, if you go in with a preconceived notion of a property’s value, you could easily overlook some unexpected value factor due to bias. This job requires that you remain objective from A to Z and you cannot do that with a pre-set number throbbing in your little turnip head.

          And your last sentence, “AND THE SALE PRICE WAS $1.9 MILLION. YOU THINK THEY OVER PAID BY $1 MILLION?” doesn’t make any sense.

          • Avatar

            You sound like the type of guy that when you were in school, the teacher would ask a question, and you would be raising your hand and shouting out, “oh, oh, call on me, call on me.” You probably were also the class tattle-tale. Now you are probably on the USPAP committee.

            Give me a break. Just about every property I walk into I have some preconceived notion of what it’s worth in a range. Sometimes I’m wrong, but usually I’m right. And so is everybody else.

      • Avatar

        What an arrogant response. Shame on you.

        • Avatar

          Wow. Can not believe what I am reading. If only we could use all this anger for our own good instead of this diatribe. The USPAP mandate that we can not base our fee’s on the property value is correct but misleading. If you know your market, the sales price is just the jumping off point to determining how much work and time it will take to complete. I am looking at a fee schedule from Landsafe that lists a fee tier schedule based on the sales price and that is what they pay, no more, no less. I know that they are allowed to do this and we can not but we all have a starting price point for fee’s and “most” homes selling for more than the average range in my area will be complex. I’d like to point out that when HVCC was implemented one of the first requirements was we were not supposed to know the sales price of the home so as not to be influenced. That was one of the many jokes of HVCC since analyzing the sales contract is part of the appraisal. Just another hat to put on our heads. We didn’t go to law school but, analyze this contract. We are not electricians, roofers or plumbers but put your signature on this appraisal stating everything is working properly. And last but not least make sure the kitchen appliances are in proper working order. I don’t know why we are fighting each other as appraisers instead of banding together to stop the madness. If we could agree to work together as a group and not accept any assignment with a fee that is less than acceptable or refuse to put in bids, we would all benefit. I know this is just a fantasy since there will always be that one appraiser who will undercut the others. Recently someone asked me if I like my job. My answer was, I used to. Sure I would have bad days but in the past year I have sat at my desk and said to myself I hate my job. 20 years invested and I have nothing to show for it. I feel like I have been treading water since 2009. Reading all these posts have not made me optimistic

        • Avatar

          Your comment is floating in the middle of nowhere so it’s impossible to know what specific response you’re referring to. Regardless, people will shriek arrogance when facts make them feel inadequate. I am sorry you feel inadequate but you can always improve if you have the capacity. Or interest.

      • Avatar

        How is basing fee on value a USPAP violation?
        The AQB says:
        The Licensed Residential Appraiser may appraise non-complex 1-4 residential units having a transaction value less than $1,000,000 and complex 1-4 residential units having a transaction value less than $250,000.
        So, the AQB has decided that anything having a transaction value over these limits is AUTOMATICALLY COMPLEX because they have required a higher license level just to perform these appraisals. Based on the simple rules of supply and demand, I should charge more for appraisals that can only be completed by a Certified Residential appraiser.

        • Avatar

          Your point is arguable, but again it wasn’t the point of the original thread which is simply that no matter a property’s estimated value, developed or otherwise, that figure cannot be used to negotiate a fee. It’s part of the Ethics Rule.

          • Avatar

            You guys can go back and forth about fees being set according to price, but the lenders and AMC’s will do what they want. My former trainer is a staff appraiser (since 2007) who has worked for B of A (Landsafe) now owned by Corelogic. Their daily compensation is entirely based on gross appraisal fees as SET by the lender. The lender sets appraisal fees by way of $500,000 and below, $500,000 to $1,000,000, and $1,000,000 and above. The median price for the greater county is $480,000, however his zip codes average around $900,000. THE LENDER/AMC SETS APPRAISAL FEES BASED ON PRICE AND PAYS ACCORDINGLY. Loan officers know of the price breaks and based on there provided estimated values (not necessarily seen by the appraiser) its miracle how many properties are worth $499,000, or $999,000. On a side note, he was part of the class action settlement where 365 staff appraisers were not being paid accordingly to there tax identification code (not paid overtime) and received over $130,000 as a settlement. Who knows, maybe there is another class action lawsuit in process to address the illegal practice of setting appraisal fees solely on values, purchase price, etc..

          • Avatar

            Great points. However, since Landsafe isn’t bound by USPAP requirements, not sure what class action lawsuit, if any, could be mounted against them since they’re not actually acting illegally, but maybe there is indeed some kind of legal inroad.

            In the classic labor strike scenario that we’re all weary of, fee appraisers would have to band together and refuse work to drive the company to its knees via halted production, however as we all know, replacement workers are readily available and there’s no control over that slipstream.

            More importantly, missing from this conversation about fees is how lenders’ business model for loan origination has been affected by the new Integrated Mortgage Disclosures via the Consumer Financial Protection Bureau requirements. Lenders – and there are many fair ones who pay appropriate appraisal fees – now have to be wary about losing a deal if a new Truth In Lending Statement has to be issued because of an appraisal fee increase. Lenders do not want to scare off or turn off customers, much as they might genuinely want to pay an increased fee for a complex property, or even a decent fee on a straightforward property. Lending competition is fierce, and loan originators work incredibly hard in a exceedingly competitive market. It seems many appraisers are not aware of this, or how these ongoing introduction of regulations are affecting either their lending clients or, by proxy, themselves and remain angry at what has become a straw man, which doesn’t move the conversation to a more productive win-win place. And although there are options in that scenario – like the borrower opting to waive notification of fee changes, but the numbers aren’t in yet as to how many people are actually opting for that. I would guess not many. I wouldn’t.

            It seems the takeaway here is that appraisers generally must broaden the scope of their understanding of the lending industry if they’re going to mainly engage mortgage-based work. Also, we all are painfully aware of the continuing steady stream of sub-par appraisals for which appropriate and/or high fees were paid. The grift definitely goes both ways.

            Not sure what solution there is at this point.

    • Avatar

      The issues we have in this industry Kimberley, are federal, state, area, city and local. I work in San Diego along the coast and with my primary zip codes my average sales price is just under a million dollars. This is not meant to be some show off but is simply reality in my area. Within a few hundred miles of my office I have over 5,000 licensed Southern CA appraisers competing for work. The average AMC split fee to the local appraiser is around $275. Wells Fargo gives work out for under $250, BOA is under $300, if you want to quote your fee with Streetlinks it had better be under $250 to get your number called. I recently went back and forth with Dustin Harris “The appraiser coach” about how fees are not in line with the cost of living. In his area the average house is less than $180,000 but VA fees are $450 (the same in my area), the houses in my area are $900,000. To be equal (my area is 80% more expensive) the VA equivalent fee should be $810. The banks are going to focus the media on the rural areas (limited appraisers) where there maybe a shortage (higher fees), however they never mention my area (thousands of appraisers) and the low pay that is typical.

  7. Avatar

    The qualification process is finally at a level that should have been in place in 1990 when FIRREA was enacted. We DO NOT need to amend the appraiser credential qualification process.

    The solution is simple. Fees were compressed during the 2000s as AMCs leveraged appraisers to fund their operations. Since 2013 we have not accepted any work that is not at retail fee level which allows us to house two trainees in our organization. At the same time we lost an experienced appraiser to the sales side. Why??? Money. When we present potential income to new college grads who are seeking an appraisal position most will tend to land at sales, property management, lending or other real estate related positions. Why? Money. Solution? Fees need to rise by a minimum of 50% from current levels. Period.

    • Avatar

      I disagree. What good is a college degree in art going to make a better appraiser? Really??? Come on guys. If the educational requirement was to have a college degree in courses such as real estate business. Law or heck even construction I might agree. The degree must be job related to have an impact. Oh it sounds professional to say our certified Appraisers have degrees, but in what field? I think it deminishes the license. Make the license upgrade based on experience n actual and course study in valuation disciplines. Make it mean something. So you are telling me an appraiser with two year degree who is certified with two years experience is better qualified than a licensed appraiser with 20 years experience. Hell no he’s not. You know that. I know that n anyone with a brain knows the that. Let’s use logic guys not parroting what we see or hear someone else say

      • Avatar

        Damn typing on a cell phone sucks

        • Avatar
          Detroit area appraiser

          You are right about the training aspect. I have thought for many years that a model similar to Florida’s makes the most sense. Provide the needed education for appraising, as electives in a college class setting, and then the prospective candidate is ready to hit the ground running upon graduation. This seems like a no brainer to me.

      • Avatar

        I’d be willing to bet that Scott doesn’t have a degree of any kind and will never do the hard work to get one. And, like many uneducated people, will never understand its value and mock those who have one, whether it be in liberal arts or the sciences.

        Math, statistics, engineering, architecture and economics would all be highly relevant courses. Real estate sales, not so much. But, getting a degree just so you can get a specific job is absolute nonsense, that is done in high school and vocational schools.

        This mess will not change from a cottage industry to a profession.until it attracts and holds educated practitioners with college degrees.

        Incidentally, the residential mortgage end of this thing looks like it has only two to five years of remaining survival. I once believed appraisers would come together and demand more pay and insist on enough time to follow USPAP, but instead most just throw one another under the bus competing only on the basis of cheaper and faster.

        • Avatar

          Scott might not have a degree but why would you say that he is uneducated, that is stupid of you. Or to say that he would never do the hard work to get one when he has spent 20 years crafting his skills, that sounds like hard work. It is you sir that mock the people that do not have degrees you think you are better with a liberal arts degree, how? I do not have a degree, 20 years ago I came from an extensive background in residential construction and remodeling into the appraisal field. I knew more about quality and construction than most any college graduate. One does not need a degree to be smart, anyone can learn. Furthermore over the past 20 years I have reviewed numerous reports completed by college educated certified appraisers and I can tell you that many do not put in half the time and analysis that this stupid uneducated appraiser does.

          • Avatar

            You express the general bias the uneducated express toward educated with all of the usual defensiveness. Even mentioning an education strikes a raw nerve and sets off the distraction of ad hominem attacks.

            Surely in your review work you have seen an equal number of poor appraisals from uneducated appraisers. Are you holding the educated appraisers to a different standard? If so and you claim to have integrity you should decline any further review of the quality another appraisers work since the certification you sign requires your objectivity (which is the absence of bias).

            Come on. Let’s get the fees up and take back our industry. Get an education to add to your extensive experience and help this cottage industry become a profession.

          • Avatar
            Detroit area appraiser

            “Edd”, In Brian’s defense, your latest message / argument to him about the superiority of the “educated” would carry much more weight (albeit with the continued stench of your hypocritical narcissism) if you would actually take the time to proofread your latest text for grammatical and/or syntax errors before you actually hit the “send” button. Look in the mirror sir before you begin casting stones about the “uneducated” … just saying … By the way, I have a college degree, and I feel that Brian is by for the more critical thinker of the two of you. Seriously, there is no need to be such an unsubstantiated and rude snob!

          • Avatar

            No need to put my name in quotes, it really is my name. Like Brian and Scott, I chose not to hide my identity. Edd is my name.

            However, that being said and aside from characterizing me as a snob, criticizing the way I write, finding me psychologically dysfunctional and lacking in intellectual abilities, what’s the beef? Maybe you just needed to vent your frustration and decided I was to be the target.

            I genuinely believe my education and that of the appraisers I know who have a master’s degree is valuable. I respect your right to disagree, although I am surprised by the visceral level of your defensiveness.

            Do you want the appraisal industry to stay the way it is or are you looking for improvement? If education won’t help what will? Maybe you disagree with the author and see no need for change.

          • Avatar

            Amen!

          • Avatar

            Well said Brian. You and u have similar backgrounds. I still do some small construction projects. My degrees have not helped me in the appraisal business. My construction experience definitely has. Ed is a legend in his own mind. People like that with no clue as to give any insight as to how a guy working 60 hours per week can suddenly stop and go back to school. Most Appraisers cannot financially afford that. The loss in income in order to go back to school would be devastating. He is so out if touch with reality. I am not mad at him, I just feel sorry his ignorance about this subject flows so freely from his mouth like an overflowing toilet. Ok maybe that was low, but sometimes you just can’t fix stupid.

        • Avatar

          Once again an example of someone who doesn’t know what they are talking about. I actually have two. Associate degree in engineering graphics and bachelors degree in computer technology. I’m currently taking classes in business management. Do you know how much those helped me in becoming an appraiser? Very little. The thing that helped me more than anything was my over 30 years construction experience and owning my own construction business. See Ed you miss the point. Education is great, I recommend anyone get as much as possible. My point was is if you want better educated Appraisers, then create real estate appraiser degree programs. Would you go to a dr who has a degree in history?? I know I wouldn’t. The comment about being lazy is a total lack of respect for all those Appraisers who are out there busting there ass 10- 12 hours per day trying to support their families. When do we expect them to go to college? Who is going to pay for it? Now I am reminded why I never reply to these conversations. People can’t resist trying to bully others who have different opinions. This is why Appraisers never have formed any meaningful coalition’s. We’d rather attack each other. Very sad. Own it.

          • Avatar

            I loose my bet. I’ll buy you a meal when we cross paths. And I fully agree that there is no current economic incentive to becoming educated in order to appraise.

            Maybe the root of the disagreement is that I look at appraising as a calling, and the best it has ever been and maybe ever will be is a job. A job that is apparently diminishing in economic reward.

            So, what in my original post was a personal attack on you? Was it because I characterized you as sharing the uneducated opinion of the educated? My disagreement is with the opinion you expressed. I own that, but I don’t own it as a personal attack on you. That is yours to own. I do agree fully that these blogs are replete with personal attack and usually not worth reading. Your comments caught my attention because I think you are wrong. You’ve explained your thoughts and hit the reset button and you ask questions that need to be answered.

            Obviously my assumption about your education was an error and for that I apologize. I’m surprised to find that you are educated and not an advocate of it for appraising. Neither of my degrees have anything to do with real estate and both are indispensable daily in solving appraisal problems.

            A degree in appraising from a university is a possibility, but my guess is that the economics of establishing one is prohibitive. If you were advising the AQB would you be willing to provide a list of the specific existing courses an appraiser must enroll in and pass?

    • Avatar

      Yes, I could not find any college grads willing to be trainees either last year. So I gave up looking. Not my problem if new blood is not entering the profession.

      • Avatar

        Why would a graduate want to become a trainee? Maybe in the commercial side of the business but not the residential side. 50% or less of the fee, no benefits, long hours, no weekends, unreliable work and pay sounds great to a 22 year old that thinks he/she is worth $50,000 dollars a year after their 4 year party.

  8. Avatar

    Two simple solutions to the appraiser shortage: 1. the banks must allow trainees to inspect on their own again. 2. the fees must catch up to the cost of living, so that the appraiser can once again afford a split with the trainee.

  9. Avatar

    There is no appraiser shortage. There is a shortage of appraisers who are willing to work as slaves, however. Furthermore, why would ANY young person with a normal IQ and a college education want to get into an “occupation” like appraising? A young person with a decent degree can immediately get a job making two to three times what appraisers typically “make”, along with benefits, no risk, no liability, not having to burn a vehicle up every two years, not having to work seven days a week, not having to deal with the emotional problems, tantrums, rage, threats, etc. of lenders, agents, builders, buyers, sellers, not having to wake up in a cold sweat at 3 AM trying to remember if you dotted that “i” on page 62. etc., ad nauseum. Odd, huh, that appraisers are typically the most highly educated people in any given real estate transaction (of loan officers, loan processors, AMC types, real estate agents/brokers, builders) and we’re the ones treated as if we don’t have a working brain cell.

    When lenders start paying all appraiser expenses instead of using us as hidden, shadow, undisclosed profit sources for themselves (which should be illegal to begin with), charging borrowers $700 for the appraisal and paying us $300 of it so that we walk into a house with an already angry borrower who thinks we’re making ten thousand dollars a week, then we can talk about an “appraiser shortage”.

    • Avatar
      Retired Appraiser

      AMEN. That was one of the most concise & precise prayers I’ve ever heard. Consequently you described nearly every problem facing the appraiser today; problems that the Appraisal Foundation, the AQB, & the Appraisal Institute refuse to acknowledge after 30,000+ have fled the “profession”.

    • Avatar

      Full disclosure: I’m a commercial appraiser, have been active in the state wide advocacy board and friendly with a number of resid appraisers. I think you hit the nail on the head. As Rodney Daingerfield used to say “I get no respect”. Many appraisers have huge banks or institutions as clients. Many appraisers are in small businesses or on their own. That does not make for an efficient market. No doubt this varies among the regions and is dependent on market conditions. However, it sure seems like shooting fish in a barrel for the clients. Only problem is that you are killing the fish eventually. Ideally the price would go up due to an under supply of appraisers. Now it sounds like the AQB rather than focusing on the financial issues for appraisers which is not within their purview anyway, is looking at how to lower the bar so that more fish will be thrown in the barrel so to speak. Not that I have a solution if clients aren’t willing to pay a sufficient amount for individuals to get into the industry and have the personal risk involved in their income being based on maintaining a license. Sure other professions have this as well, only that it seems like more of a microscope is put on appraisers than other licensed professions.

      Now if we want this industry to be a trade rather than a profession, maybe that is the course to take. But if you want public trust, lowering the bar isn’t the way to do it. Sure I feel very badly for those who were slammed by the college requirement. It would seem that there should have been a solution for those already in the biz.

      Not that is is equivalent, but I sure hope the FAA does not consider doing that with pilots or that the med schools lower the bar for their graduates.

      • Avatar

        In the same thought you wouldn’t want your electrician to only have a 4 year liberal arts degree but which field is more similar to the appraisal business the doctor or the electrician? Those of you thinking it is a doctor are fooling yourself. The residential side of the business is more trade related than professional, few professionals with a degree will ever enter the residential field. I also agree that the state agencies should have made a solution for those already in the business.

    • Avatar

      I could not have said it any better myself, very well written response…

  10. Avatar

    Why bother training some one for a profession that can’t support a family without a second income, has no health or retirement benefits, no job security, boom or bust income levels, not eligible for unemployment insurance, ever increasing regulation and liability, ever changing work and time requirements from multiple bureaucratic middlemen, laws, rules and interpretations made by non-residential appraisers and those in other professions, and degrading high stress business practices. Once some of this goes away it would still would take 1-2 years with significant surplus income before I’d think about training or be able to risk expanding again in any way.

  11. Avatar

    I have had people that have shown interest in becoming an appraiser. I told them to FLEE. It’s not worth the time, trouble or the aggravation for what we take home after all the research, insurance, office supplies, wear and tear on a car, this list is very long as you know. This does not take into account all the laws, regulations, expanding “scope of work”, “qc people” who think they are appraisers because the “computer shows a flag.” Oh, btw why didn’t you use these seven “sales”? Please comment in detail why these were not used. FLEE!!!!!

  12. Avatar

    A goal of most professions is to keep people out of the profession so that a shortage can occur which will drive up fees.
    The elites in the appraisal business started this about 25 years ago and they have continued their crusade until 1/2 of all appraisers have left the business.
    Licensing, continuing education requirements, mandating Appraisal management companies, have all contributed to a numbers decline in appraisers.
    It’s politics. European style politics.

  13. Avatar

    I received my Residential License in 2015 after being a trainee for 2 years. Now that I have the license, I’m running into problems where many AMCs require that new appraisers registering for their roster are Certified Residential. I do not know how one can move forward in the appraisal licensing process if the AMCs will not accept a Residential License for homes under $1 million and allow a supervisor to sign off on more complex, over $1 million properties. I’m basically still proceeding as a trainee, which is very frustrating after doing appraisals for 3 years (2 as a trainee and 1 as licensed). I’m not surprised that there is becoming a shortage in appraisers entering this field as it is a tough field to enter!

    • Avatar

      After 20 years in the business I can say this is my biggest fear. Years ago I could have taken income courses and easily gotten my CG license but I had no time and now in my fifties why would I get a degree, to continue in this field? Maybe if I were completing commercial assignments I could see seeking a degree or requiring one but not on the residential side. I had a thriving FHA business until they required a certified license. I can see Fannie making it a requirement too, I guess when it does become a requirement it will be time to hang up the clipboard. These state boards need to get off their high horses and grandfather the residential license to certified residential.

  14. Avatar
    Retired Appraiser

    You’ve all heard of zombie businesses, this my friend is a zombie “profession”; it has been since 2009. Few appraisers are blind to the fact that 30,000+ have left the business within a few years. These were not due to retirement age folks, but rather some of the best minds out there. They saw the writing on the wall and they fled for greener pastures early on. If you want to hear a brief speech that describes the mess you’re in Google: “other peoples money danny devito speech youtube” Larry The Liquidator (Danny Devito) puts it in clear, precise, no BS terms.

    Like it or not. You’re a member of a Zombie Profession guys. It’s been dead for 7 years, you guys are merely the twitching muscle cells within a corpse once known as the “residential appraising profession”.

  15. Avatar

    I can answer that. I’m a licensed in NJ. I can’t get bank or mortgage work because I’m not certified. Nor at my age (56) am I going to get a 4 year degree. Also no one will hire an apprentice because, again, no one will accept their work. I know someone in NJ with 30 years as an RA and he’s lost 2/3 of his clients for the same reason.

  16. Avatar

    Compensation period. Our residential appraisals have doubled in size/pages & the fee we’re offered is the exact same as in the 1980’s. Does that make sense in any other profession? The politics & swipe of a pen by a certain NYC AG wiped my entire client base out overnight. Yrs of hard work I put in driving all over building relationships w/various brokers. Reminds me of the “lets have lawyers & builders use an LMC or a CMC” & watch what would happen to those industry’s. Basic appraisal fees shouls start at $700 & go up in $100 increments depending on complexity. I’m out ASAP.

    • Avatar

      Exactly right. Fees paid to the appraiser should double to about $800 for a basic residential report, since it takes twice as long to complete a conventional or FHA report than it did 8 or 9 years ago.

      • Avatar

        And at that rate who if anyone would be able to refinance? While I would love to make $100 dollars or more per hour, you and I as residential appraisers simple are not worth it.

      • Avatar

        They already ARE doubled. The AMC the lender uses is getting 1/2. The kicker is nobody knows it because the “appraisal fee” on closing documents lumps both “fees” together. It should be separated into appraisal fee & AMC fee. But the CFPB refused to listen to appraisers who insisted this should be done while implementing the recent changes in the closing documents requirements for lenders.

  17. Avatar

    Just another BS article.

  18. Avatar

    Many issues have been touched on by the commenters, but nobody has approached it from a business first perspective. Appraising used to attract the entrepreneurs
    of the business world where thy could use there skillset to build a business. The owner could provide work, support, etc. to a team of staff of appraisers while managing the inflow of assignments. They were the appraisal mangers of the day! This approach did not put a cap on income for the owners and was a carrot (no ceiling on income) for new recruits to see what they could become. This potential to become bigger then oneself drove many a trainees to jump into the business. After implementation of HVCC the orders could not be transferred by inner office (the owner) and overnight the business model collapsed. Through regulation the industry leaders have put a cap on our income and removed the carrot that many saw when they first entered the profession. The AMC’s, title companies, software portal providers, etc. have NO CAP, and thus many former appraisers have moved on to the next business model.

  19. Avatar

    Greg Stephens, chief appraiser and senior vice president of compliance for Metro-West Appraisal Co and William Fall, founder and CEO of valuation and analysis firm William Fall Group probably have a shortage of people doing appraisals for $150 when they are taking a break from their temp job at H&R Block during tax season 😉

  20. Avatar

    THE BANKS CONTROL OUR INDUSTRY. THE ARE MAKING 10’S OF MILLIONS OF DOLLARS OFF OUR BACKS! THE BANKING LOBBYISTS CONTROL THE APPRAISAL SUB COMMITTEE AND FOUNDATION. APPRAISAL BUZZ IS PROPAGANDA! ALL THESE REGULATIONS, LOW FEES AND INSANITY ARE DRIVING APPRAISERS OUT OF THE BUSINESS. WAKE UP AMERICA!

  21. Avatar

    APPRAISAL BUZZ IS PROPAGANA FOR THE BANKING INDUSTY. THE APPRAISAL SUB COMMITTEE IS BOUGHT BY THE BANKING LOBBISTS. THE BANKING INDUSTRY IS MAKING 10’S OF MILLIONS OF DOLLARS OFF APPRAISERS BACKS AND SWEAT! VERY LOW FEES, COST OF BIZ, CAN’T AFORD TRAINEES, ALL THE DODD FRANK REGULATIONS ARE KILLING OFF APPRAISERS. WAKE UP AMERICA. AND BUZZ DON’T DELETE THIS POST AGAIN!

  22. Avatar
    Detroit area appraiser

    I have read all of the posts thus far, and I must say that this has been one of the most healthy and informative (and in some cases entertaining, along with ridiculous … see “AH” posts below) debates within this venue in recent past. That said, I am in agreement with most (… almost most) opinions offered so far. I agree that the fee issue is at the top of the individual problems that the original article points out. After all, if one can not make a living worthy of a professional (more on this later), then what is the point of being concerned with the outcome of this profession? Again, more on this in a moment. The additional points of excessive education requirements, over regulation, “scope creep”, AMC intrusiveness, extensive and increasing liability to appraisers, the inability to attract new and qualified talent to the profession, etc., etc. all fall under the aforementioned in no particular order. The bottom line is that if the “bottom line” in terms of profit can not be effectively achieved by those of us currently in the profession that are tying to run a business, then this field is destined to go the way of the travel agent … in other words, extinction.
    So let’s discuss fees and profits, shall we? I was astonished to read in the above article that various market participants were so up in arms about appraisal fees “skyrocketing” in certain areas of the country. Folks … this is Economics 101. It’s as if the interviewees in the article seemed to be concerned that no homeowner would ever be able to afford an appraisal again. This notion is absurd in my opinion. Rising appraisal fees are due to economics, a decrease in qualified appraisal personnel and deceptive billing on the part of the banks and AMC’s … period. In my opinion, to all of you … charge as much as you can get. There is nothing in USPAP that dictates anything about fees that you charge (which you all already know). Is anyone surprised by this circumstance? … I mean really? It appears that suddenly, the powers that be that originally intended to put the boot straps to the appraising profession are now suddenly beginning to see the “unintended consequences” of their actions … so be it in my opinion.
    This however brings us to the next part of this scenario, that all of us in the profession must recognize (even if you don’t want to). That is … if you are going to charge more and more for your product (which you should), don’t you think that it’s a reasonable market expectation that said product should be “better” to a degree that warrants the higher fees? In my opinion the answer is, “of course it … the appraisal product … should”. (I know, I can hear some of you groaning already … hear me out please … we are all on the same tem here).
    Having been in the profession for over 18 years, I am the first one along with many of you on the “battle lines” (so to speak) that would tell the AMC goofs that … “you know what? … you get what you pay for in this business”. So, if you want to pay inappropriate fees you will get an inappropriate appraisal product. I would also say that the constant issue of “Scope Creep” is something that should no longer be tolerated by those of use in the profession … unless of course, you are getting paid for your time. A good friend of mine used a great example of this in the recent past … and I subsequently invoke this with clients that try to pull this on me (you should try it yourself, because it works). Imagine that you have contracted someone to build you a 1 car garage. Upon completion of the construction, you as the buyer are 99% happy with the outcome … with one exception. Once your new beautiful 1 car garage is done, you decide you want a 2 car garage … Who among us would have the nerve to walk out to the contractor and say, “you know, that’s a beautiful garage, except now I want a 2 car garage … and I’m not going to pay you any more for the additional work …” What do you think the garage builder is going to say at that point? (rhetorical question). My point is this … we as appraiser’s are placed in similar situations every day, and what do we do? … WE BUILD THE SECOND CAR STALL FOR NO MORE MONEY!!! This is the definition of insanity folks.
    So how do we command and support higher and justifiable fees for ourselves? Well, it begins with doing just a little extra (and I mean a little … this is not hard … and again, I can hear you groaning). It also involves growing some “stones” and being comfortable with telling your lousy clients “no”, and also knowing your value (I’m not talking about market value … more on this later) as a professional.
    As someone who was instrumental in developing the current industry standard format for the GSE’s for forensic review in year 2006 (that is still industry standard today), I can tell you without hesitation that there are still those of us in the profession that continue to pump out crap work (hence the “get what you pay for” scenario I previously mentioned), and all of those folks continue to affect all of us in terms of diminished respect from other market participants. So try this … include some PDF samples of market data in your reports. Most of our MLS systems now include such data within their web sites. This data can help support your conclusions, and thus make you appear to be much more of a star than you think. Think about it … how hard is it to create a few PDF files and add them to your work file? All of this can be done with a few “clicks” of the mouse without burning ink and paper. A simple thing like this will enable you to demand higher fees. If the clown AMC that you currently work for refuses, then the answer is simple … FIRE THEM!! The article above already indicates that you can get higher fees if you persist, so what are you afraid of?? Do you always want to have to build that second car stall for the same money as the one car garage? Seriously, ask yourself these questions.
    Finally, the ultimate answer to the fee issue is to “know your own value”. Obviously I’m not talking about market value here (although obviously you better know your own market for obvious reasons …), I’m talking about knowing your value to “the system” as a professional in a field where demand is increasing and the supply is diminishing. Stand up for yourself! Don’t be afraid to fire clients / AMC’s that are comfortable in exploiting you! If you are not fully confident in your skills, take an extra class or two or consult with other appraisal peers and become familiar with some new techniques. None of the aforementioned will cost excessive money. Yes, producing appraisal reports with more data support will take more time … but this goes 100% to my point … you WILL be able to charge more money for such a report, and you WILL be able to cut your volume in terms of time in favor of more profitable fees, and hence, more time to enjoy your life … which is why most of us got into this business in the first place, right? So what is the moral of the story today folks? … (repeat after me …) KNOW YOUR VALUE!
    Thanks for reading … I hope this was helpful to any of you … I would appreciate any feedback or suggestions. GOOD LUCK AND BEST WISHES TO ALL OF YOU!!

    • Avatar

      I think I almost agree, but before I do that, what is “excessive education” and how does it relate to the issue of making a decent living doing “good” appraisal work?

    • Avatar

      Wow.

      “If the clown AMC that you currently work for refuses, then the answer is simple … FIRE THEM!!”

      Clients or employers cannot be “fired”. Only employees can be fired. This was always a particularly tiresome rhetoric. Can’t believe appraisers still trot this out.

      ****************************

      “There is nothing in USPAP that dictates anything about fees that you charge (which you all already know).”

      USPAP doesn’t address fee amounts, or fair and reasonable fee amounts. It does address what fees can and cannot be based upon (which apparently only some of us know).

      *******************************

      “As someone who was instrumental in developing the current industry
      standard format for the GSE’s for forensic review in year 2006 (that is
      still industry standard today), I can tell you without hesitation that
      there are still those of us in the profession that continue to pump out
      crap work (hence the “get what you pay for” scenario I previously
      mentioned), and all of those folks continue to affect all of us in terms
      of diminished respect from other market participants.So try this …
      include some PDF samples of market data in your reports. Most of our MLS
      systems now include such data within their web sites. This data can
      help support your conclusions, and thus make you appear to be much more
      of a star than you think. Think about it … how hard is it to create a
      few PDF files and add them to your work file? All of this can be done
      with a few “clicks” of the mouse without burning ink and paper.”

      As an appraiser who was “instrumental in developing the current industry standard format for the GSE’s for forensic review” (which means what, that you participated in the design of a form?) that you would take a cajoling tone in an attempt to persuade appraisers to do what they are supposed to be doing and should have been doing all along is indeed curious. Providing developed and analyzed data is not something “extra” the appraiser provides as a courtesy; it’s the job. As an easy example, the 1004MC was developed in an attempt to force appraisers to do what they should have been doing all along, and many appraisers to this day either make up a feeble excuse in flimsy boilerplate commentary to avoid doing it, or do it incorrectly as a shortcut by taking a broad swath of the market instead of using actual comparable sales and listings because you know, who has the time (or the wherewithal) to do all that. In some cases the 1004MC can’t be done due to insufficient data, but some other comparable market analysis has to be done in its place; it doesn’t mean the appraiser gets a free pass to not provide substantive analysis or even analyses if necessary, yet it is not at all uncommon to see this.

      Again, we are dealing with fundamental concepts here.

      ****************************

      “This however brings us to the next part of this scenario, that all of us
      in the profession must recognize (even if you don’t want to). That is
      … if you are going to charge more and more for your product (which you
      should), don’t you think that it’s a reasonable market expectation that
      said product should be “better” to a degree that warrants the higher
      fees? In my opinion the answer is, “of course it … the appraisal
      product … should”. (I know, I can hear some of you groaning already
      … hear me out please … we are all on the same tem here).
      Having been in the profession for over 18 years, I am the first one along with
      many of you on the “battle lines” (so to speak) that would tell the AMC
      goofs that … “you know what? … you get what you pay for in this
      business”. So, if you want to pay inappropriate fees you will get an
      inappropriate appraisal product. I would also say that the constant
      issue of “Scope Creep” is something that should no longer be tolerated
      by those of use in the profession … unless of course, you are getting
      paid for your time.”

      Again, this weirdly cajoling tone of yours, but even worse is how abjectly wrong this part is:

      “…tell the AMC goofs that … “you know what? … you get what you pay for in this
      business”. So, if you want to pay inappropriate fees you will get an
      inappropriate appraisal product.”

      1000% false. This fundamentally flawed assertion is not at all defensible, legally or otherwise. Every single appraisal must be competently and substantively developed regardless of what fee was paid. There are genuine problems with A&C fees, but that someone purportedly with your lengthy experience would perpetuate the wholly incorrect and dangerous idea that appraisers have a right to provide an inferior product based on the fee they formally agreed to is very disturbing indeed.

      You’ve given very bad advice, dear.

      ***************************

      ” I hope this was helpful to any of you … I would appreciate any feedback or suggestions.”

      You’re welcome.

      • Avatar

        To begin with I suggest that both you and Detroit Area Appraiser use your names in an effort to be accountable for your opinions.

        And then I suggest that both of you abandoned your arrogance and just stop the focus on ad hominem attack. Stick to discussing the issues if you have any.

        Finally, after reading what both of you have to say, I think “Detroit” makes more sense than you do.

        Incidentally, I no longer accept assignments from any AMC. To my chagrin I now learn from you that I can’t fire them and I have been calling what I chose to do exactly that. So I looked up the definition of fire. I learned using it to describe the termination of employment it is slang and its use has morphed into terminating any relationship, such as marriage. So maybe its OK to use it to describe what I have done to AMCs.

        I think you are correct that if an appraiser accepts an assignment he or she is currently required to do a thorough job in complete accordance with USPAP. TAF has decided that the fee and turn time is a contractual provision and not a part of scope of work. Maybe the wisdom of TAF is infallible, but my opinion is that until appraisers acknowledge that they will produce junk appraisals for junk fees the AMC practitioners are stuck and the industry will shrink. So, for now low fees and unreasonable turn times deserve a NO! I’m told the reason appraisers don’t refuse “junk” fees is that they can’t afford it. Does that make any sense at all????

  23. Avatar

    I will return to the fee appraisal business again after the compensation equals the scope requirements and liability issues. $800 seems low for the business cost for a 10 hour production effort, overhead, software, transportation, data services, insurance and professional fees.

    • Avatar
      Retired Appraiser

      Dennis you and I are in complete agreement on the base fee for the typical cracker box appraisal today. With the work load and liability involved I would not touch an appraisal for less than $800. We do disagree on one point however; I wouldn’t return to the “profession” that I once loved for 100 billion dollars. It’s a dead end street boys; a zombie profession with an unsavory and undeniable fate. This was obvious in 2009 and it’s certainly obvious in 2016.

  24. Avatar

    The advent of CU added to my thinking that appraising will eventually be done by government agencies. A world of real estate data is now available out there. The appraisers that are required to do “re-visits” are doing so at the behest of Fannie and Freddie — without being able to increase their fees in doing so! Lender pays for the initial appraisal — no one pays for a revisit!

    Another gripe! The powers that be want to turn appraising into a science. There are many endeavors that cannot be turned into a science, and appraising is not one of them.

  25. Avatar

    Not that there is a shortage of appraisers in my area, but the following information as pulled from mortgage news daily (MND) is the reason many will choose a different path. “This week the commentary had plenty of appraisal chatter. An announcement from Wells Fargo Funding yesterday certainly received some attention as it is changing its tack regarding correspondent client appraisals. Starting April 4th “We’ve got two big process enhancements coming soon for Non-Conforming Loans…Sellers will have the ability to order direct – order appraisal products for Non-Conforming Loans directly from any Wells Fargo Funding-authorized appraisal management company (AMC): Clear Capital, PCV MurcorTM (NEW! Authorized AMC beginning April 4), Rels Valuation, and ServiceLink”. The idea that the largest residential lender in the US has chosen some of the lowest paying AMC’s in the business, is an indication they could care less and our voices are STILL not being heard. Here come the blast e-mails for under $250 wanting the fastest appraiser for the job. Good luck in the state of VA Wells Fargo where the minimum appraisal fees are now based on the VA schedule ($450) and the scope of work will also be based on VA standards. If you want a cost approach, the state of VA says that will cost extra (pay up). If you demand upfront a 4th or 5th closed sale as part of the scope of work, again you will need to pay for EACH extra comp. If you want ANY active or pending listings again, open your wallet. Not that I’m saying more state or federal regulation is the answer, but I applaud the state of VA in setting a minimum fee ($450), and setting boundaries on the scope of work.

  26. Avatar

    Why have the dozens of commenters on this article not given their voice to the other articles on this site that show up almost daily? It seems as if I’m the only one who has constantly given my thoughts and opinions by commenting as I see fit (read my past comments). I welcome all, but most of you are very late to the party that I call “Exposing the Truth”. Has anyone even noticed that the Buzz Feed section says that you can “Leave a Comment” but several weeks ago this option was deleted (not available). Is this because of negative feedback to the authors and with the comments open, no author wants to be exposed. If the authors have separate sites with the same article/blog, then follow them to express your opinions and concerns. Click the “Around the Web” link to get access to other outside mortgage/appraiser news and provide your opinion. Does anybody understand the connection of Joan Trice, Clearbox, imortgage, and Flagstar as it relates to the state of LA $10,000 fine for not paying customary and reasonable fees? I was hoping Joan would provide an update and set the record straight soon after the disclosure, but we have heard nothing. Did she in part provide Flagstar by way of Clearbox an appraisal fee survey that was then given to the hired AMC, imortgage? Not sure? How did imortgage come up with a fee of $200 for a form 1004 and an FHA assignment? Unknown. We need to Expose the Truth and form a single voice. We should have 100+ comments on every article.

  27. Avatar
    TripleFees@a_minimum

    Bottom line it’s all about compensation! That’s all there is to it! I cannot make a decent living at all and am seriously considering quitting the industry because of that alone! The current fees need to triple and, I guarantee you the industry will attract all the quality people it needs and then some! Very simple and obvious solution! We need to keep the new requiremnts or even increase them and, at least triple the fees! Quality and performance will naturally increase and attract quality educated people! The quality of many of the current appraisers have no doubt decreased and we need to purge them.

    • Avatar

      The issue Triple is that MANY upon MANY appraisers are making a killing in this industry as things stand NOW and are not interested in joining together to fight what they consider OUR issue. I have communicated with Dustin Harris via his blog site about how individual fees mean nothing until you apply them to the expenses of YOUR area (Cost of Living). In short, his area of Idaho Falls is 80% cheaper to live in than mine (San Diego/Carlsbad) but yet the VA loan fees are the same ($450). To have an equal life style the pay in my area should be $810 (80% higher) or if he wants to understand what appraisers in my area are going through, his fees should be 80% less than mine ($90). Bankrate indicates the average rent in his area is $604 per month verses $2,054 in my area. The median home price is $185,380 in his area but $802,495 in mine. The average mortgage payment is $604 versus $2,937. To walk in OUR shoes Triple, the Dustin’s of the world should work for $90 per appraisal (80% under me) so they would need to complete 7.3 appraisals per month to pay their mortgage. At $450 per assignment to be able to pay the typical mortgage in my area I need to complete 6.52 appraisals per month. Those that are living like kings where it takes only 1.46 appraisals per month to pay the mortgage ($659 / $450) have no idea what its like to live in our areas ($2,937 / $450) 6.52 appraisals. If you really want an extreme comparison then apply the typical AMC fees paid in my area ($275), verses the fees in his area ($375). One could also say that the issue relates to a shortage of appraisers in his county (he has quoted there are ONLY 30) versus the 1,037 in my SINGLY COUNTY. In full disclosure, Dustin has indicated he will in part address the C of L question I brought up in a future podcast.

  28. Avatar
    TripleFees@a_minimum

    AMC’s have finally out lived their self-worth and, are probably one of the primary contributing causes of low compensation. As you all know, they are ripping off appraisers and are the only ones making a killing! The “bidding system” only benefits them. They need to be more regulated and allowed only to have a minimal fixed fee per appraisal assignment otherwise, get rid of them! They have created so many more complexities for appraisers just to project a pseudo image that they’re providing a needed service and should exist in the industry. All we really needed was the independence part and we finally got it! As long as that can be retained, sayonara to AMC’s!!!

  29. Avatar
    Rachel Riggs Short

    There is a huge shortage here in Central Florida. Most reputable lenders or AMC’s will not use anyone without 10 to 15 years experience. Which is great for a borrower. However, I personally received 73 appraisals in 1 day. Which I can’t do….the problem is there is a real shortage of “qualified” appraisers.

    • Avatar

      Living in San Diego county I compete against 1,037 other appraisers and against nearly 5,000 within a few hundred miles (Orange, Riverside, LA counties, etc.). The big box AMC’s pay in the range of $275 and expect the work to be scheduled in 24 hours, done in 3 to 5, etc. You can’t quote your fee or have a backlog of work for weeks out due to the oversupply. Several clients consider 3 days to be the typical turn time and one day to be a rush assignment while counting Sat. and Sun as working days. Lenders will express their concern for the small Central Florida problem (limited population where appraisal fees may be high) (shortage) but ignore my area (7% of the United States population) where fees are from the 1980’s. The state of CA is losing 500 licensed appraisers a year due to low pay as compared to the VERY high cost of living.

  30. Avatar

    I left one thing out. I have a new rule for USPAP and any other authority. To run a management company they should require the same education and licensing requirements as appraisers. Then we can get rid of the pimps who do not understand what we do.

  31. Avatar

    While our overall “number of appraisers” may have gone down, that does not equate to a “shortage”. And like others, I believe it’s regional as to declining numbers of appraisers.

    However, we all know that AMCs have contributed significantly to the stories being spread around about appraiser shortages. The truth is the shortage is of appraisers willing to work for “the-super-cheap-super-fast” crowd of AMCs! Appraisers are waking up and realizing that WE are able to say NO.

    If AMCs have their way, there will be lower standards for getting into the appraisal profession so that the AMC can continue to pay lower and lower fees. An appraiser with a degree will not do business with them, while a new appraiser that was able to be licensed in 1/3 the time, less cost and no degree will hop on the AMC wagon no matter how low the fee.

    AMCs who are paying the appraiser $250 while charging their lender client $500-$600 realize they have hit the limit of what the lender is willing to pay for an appraisal. They can’t continue to raise their fee and still keep the profit margin they’re accustomed to, so the only option is to figure out a way to promote the “shortage of appraisers” to the point that an entire reduced standard and process for becoming an appraiser can be put in place. Surely we all realize who would be the first to become a “certified appraiser” under a new easy fast track process, right? ALL THE AMC’s EMPLOYEES. Not to mention tons of real estate brokers as the NAR is pushing to have a Realtor’s “experience” count as education credit toward an appraiser’s license.

    Before AMCs came into being, any cost associated with ordering and reviewing appraisals was part of the lender’s “cost to do business.” So why is it that the appraiser is actually paying the AMC fees? The lender should pay the appraiser’s fee directly to the appraiser and if they want to pay an AMC to take care of the administration of ordering and reviewing the appraisal, then they can hire them and pay whatever they agree on.

    I don’t think the appraisal profession….yes I said profession…is a dying breed. In fact, I believe just the opposite. I believe that appraisers, who are used to being so independent minded and are famous for isolating themselves, have FINALLY woke up and are joining forces. We are NOT each others competition, but are each others ally. Join your states appraiser organization and add your voice to the ever increasing numbers of us who are standing up to fight for our profession. There is also a growing group of state appraiser organizations joining forces to address appraiser issues and to advocate for appraisers.

    They are the Network of State Appraiser Organizations / NSAO. Currently 23 member states strong. Read about them here;
    https://www.facebook.com/stateappraisalassociationworkgroup/
    https://www.newswire.com/press-release/the-network-of-state-appraiser-organizations-meets-in-the

    Join your states organization and if your state is not a member of NSAO, have them join! It’s not the END of appraisers, but the BEGINNING of appraisers taking back control of our profession!

  32. Avatar

    I found it interesting how the root causes of the decline of appraisers have to do with economics and regulations. A friend of mine has been interested in a career in appraisal due to his infatuation with old items and homes. I will definitely pass this on to him and encourage him to keep trying so that the wonderful career of appraising can stay strong!

  33. Avatar

    Your style is unique in comparison to other people I’ve
    read stuff from. Thank you for posting when you
    have the opportunity, Guess I will just book mark this
    site.

Leave a Reply

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