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HUD needs to define normal appraiser fees before AMC's do!
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HUD has stated that in addition to adopting HVCC language, that appraisers should be paid their normal market fees for FHA appraisal products.
Well after my discussion with a well known. long standing AMC (Appraisal Management Company) who most appraisers know as they have been around forever, here are their exact words to me as of yesterday "
"The new national debate will be over exactly what is "normal", and as I understand it, that is a question that will be answered market by market. "
This same Company also tells all appraisers that Appraisers set their own fees, they have control over their fees the AMC does not......That language sticks in my craw BIG time. Why? Because if Appraisers set their normal market fees they will NEVER get work from AMC's. AMC's DO set the appraisers fees as the appraiser is forced to reduce their fees in order to get work from them. I know this because I do NOT get work from them because I refuse to work for 1/2 my NORMAL Fee. I complete a very thorough report and I know the value of my work.
BUT here is the issue.....If HUD asks AMC's what is the normal fee for FHA appraisals in their given market, that NORMAL is reduced by anywhere from $100-$150.00 per report because that is where they set their FHA fees in order to get work from AMC's. So HUD may in error think that this is the true NORMAL fee, when in reality it is not. If they were to call an appraiser and ask what is your normal fee for FHA appraisals they would give you a totally different number than if they were to ask what is your fee for an AMC..
So Realtors, Buyers, Sellers and BANKS need to take control and know the value of a good appraisal and that one has to pay the fee for a truly accurate and meaningful report.
Our mission in life is to protect the BANKS risks, this is HUGE...Let me repeat Appraisers exist in this world to protect the Banks Risks, by analyzing and reporting their findings. WE DO NOT DETERMINE VALUES. This being said would you want an appraiser whose fee has been cut in half doing appraisals for YOUR BANK? I think not!
The trend is to standardize all appraisal reports and automate them as much as possible, based upon software that will essentially produce reports with a great deal of numerical analysis, unbiased reporting and market based adjustments for variances in comparable sales vs. the subject property. BUT you cannot automate the entire process.
SOME AMC's want to automate and standardize our process as much as possible so that the time it takes to complete a report is cut in half and yes you guessed it keep our fees LOW. But when you appraise in an area like ours, you are not dealing with cookie cutter properties and you cannot automate the entire process. You still have to be adept at determining which neighborhoods are really comparable, which sales are really comparable and to do this you have to know your market WELL.
There is a shift toward using appraisers who live close to the subject property and who regularly appraise the area. I am all for that shift. When appraisers drive 30+ miles to homes they just do not know the ins and outs of that particular county and neighborhood, unless they work in the area on a daily basis. But it happens all the time as that is where the work is for many appraisers.
So my request of HUD is this, do not use AMC's fee data to determine what is normal market rate. It is far from normal. They essentially drive down and dictate our fees FOR us as they pit appraiser against appraiser for the best fees. We do not have control of our fees with AMC's. There are a very few AMC's that do pay FULL fee to appraisers and I commend them for this. I hope most banks work with them. SOLIDIFI is one of them. www.solidifi.com They do not feel the need to dictate fees or dictate every step of the appraisal process to the appraiser and how it should be completed. They look for experienced, well seasoned appraisers to get the job done....as it should be!
It is very important that all parties understand the importance of good appraisal reporting
The housing industry will rise again or fall based upon the quality of a GOOD appraisal. BY good I do not mean make the number work, I mean to report the REAL value of the property in question. Remember we are protecting the Bank's RISK.
Anyone have direct contact with decision makers at HUD, pass this along please as all consumers doing business with BANKS will be affected.
