As most of you may know, the Appraisal Qualification Board held a panel discussion on October 16, 2015. A hot topic discussed at this event was whether the standards have been set too high for future appraisers pursuing the profession. The Illinois Coalition of Appraisal Professionals presented a survey that asks the question, “Should there be alternatives to fulfilling the appraisal experience?” Rich deVerdier, Immediate Past President of ICAP, joins us today with more.
Buzz: Thanks so much for joining us today Rich, firstly, tell us a little about your background in the appraisal industry and how you got started.
deVerdier: I started my appraisal career at a residential appraisal firm (Citywide Services) located in one of Chicago’s northwest suburbs. From there I went to work for two other residential firms until I got hired at Argianas and Associates, a commercial appraisal firm specializing in unique and special purpose commercial properties. I’m currently the Assistant Vice President (AVP) of MB Financial Bank’s Appraisal Review Department, Rosemont, IL.
Buzz: For those of our readers who are unfamiliar, can you tell them a little about the Illinois Coalition of Appraisal Professionals (ICAP)?
deVerdier: ICAP was founded in 1994; its mission is to promote the appraisal profession and its image to the general public and to users of appraisal services. It’s made up of the Illinois Chapters of the Appraisal Institute, American Society of Appraisers, National Association of Independent Fee Appraisers, the American Society of Professional Farm Managers and Rural Appraisers, as well as hundreds of appraisers who are not affiliated with a professional organization. We currently have over 1,400 members.
Buzz: What are some of ICAP’s recent accomplishments; in other words, why should I become a member ICAP?
deVerdier: ICAP represents our member’s interest at all Illinois State Appraisal Board Meetings, the Association of Appraiser Regulatory Officials meetings; the Appraisal Foundation Advisory Council meetings, as well as other state and national meetings. In 2015 we’ve had meetings with the Sectary of the IDFPR and the Illinois Lt. Governor. ICAP made recommendations for the proposed changes to Illinois Administrative Rules and we’re currently involved with the IDFPR’s Truth-in-Lending Working Group. This year ICAP held a lobby day where we conveyed our member’s interests to over 20 different Senators and Representatives. We’ve also represented our members at every meeting of the newly formed Network of State Appraisal Organizations.
Buzz: A hot topic now within the industry is how the “under supply” of appraisers could change the experience requirement for new professionals. ICAP completed a study (mentioned above) to answer the question, “Should there be alternatives to fulfilling the appraisal experience?” What results did the study yield?
deVerdier: The majority of the survey respondents feel that the experience requirement should not be removed; however, the respondents do feel that appraisers should be allowed to fulfill some of the experience requirements in other ways.
Buzz: ICAP was recently at the Appraisal Qualification Board’s (AQB) hearing and panel discussion regarding the “lack of appraisers” in the industry. What is ICAP’s stance on the issue?
deVerdier: The general consensus of the survey respondents (80%) said that there is not a lack of certified appraisers in their market. In fact, the recent declines of residential appraisers indicate an oversupply, as the current fees are not enough to keep and attract appraisers to the industry.
Buzz: At the AQB discussion, a recommendation involving a model was discussed; can you explain this further to our readers?
deVerdier: Under the current system, it is not apparent to the consumer, or sometimes even the lender, how much compensation the appraiser receives. This creates issues with ethics and transparency. ICAP recommends a model where the appraisal management company’s fee is itemized, disclosed, not taken from the appraiser, but one where the lender pays the appraiser the full customary reasonable fee along with any AMC cost (if necessary).
Buzz: What do you think is the largest threat to consumers and creditor’s safety and soundness today with regard to the appraisal process?
deVerdier: As long as appraisal management companies are allowed to maximize their profit by simultaneously broadcasting appraisal orders to dozens of appraisers searching for the quickest and lowest fee, without regard to qualifications, experience, or professional record, consumer’s and creditors safety and soundness will continue to be undermined.
Buzz: Is there anything else our readers should be aware of that could be done in the future?
deVerdier: It’s important for appraisers to understand that they are a necessary and valuable part of the most important role of the US Economy; that their services are in demand and in most cases, required. I also think it’s important for your readers to remember that the AQB establishes the minimum requirements for certification and licensing of real estate appraisers. I encourage all appraisers, if they are not affiliated with a professional organization, to join and get involved.
Buzz: Where can I read the entire survey?
deVerdier: The entire survey is available at ICAP’s blog, HERE
Buzz: Rich, thanks so much for joining us today. Once again, if you would like to see more information on the survey conducted by ICAP, the survey can be found here in its entirety.
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To ask the
question “Are the standards set by the appraisal qualifications board too high”
is to not truly understand the big picture. To become a CA certified appraiser,
you need a bachelor’s degree, 100 + hours of appraiser education, you need to
take and pass the trainee, residential, and the certified state tests. In
addition, you need to work under a certified appraiser for no less than 2.5
years, document thousands of hours of work and submit to the state for review,
complete 30+ hours a year of continuing education, criminal background checks,
etc., etc., etc.,. Upon completion and receipt of your license the appraiser is
then often confronted with demands for experience requirements of 3, 5, and 8
years depending on the lender/client or AMC. In addition, appraisers in my
heavy VA loan area often have to wait 5 to 10 years to be added to the VA panel
after receipt of your license. If the total time commitment to become eligible
without restrictions for the appraiser is in the range of 10 to 15 years, then
the rewards should equal to the journey. Are appraisers being compensated at a
rate that is in line with other professions that demand similar 10 to 15 years’
worth of work? The standards are not too high but to attract new recruits, the
pay needs to be doubled or tripled, the liability needs to be reduced, the
appraiser truly needs to be independent, and lenders need to take direction
from the appraisers. As the lenders control the money and have the lobbies to
control the industry, the appraiser will again be the puppet and get played.
The lenders will figure out a way to reduce the requirements to the national
average for real estate agents (only 70 hours), reduce pay, increase liability,
and work towards replacing the appraiser with an automated AVM. With appraiser
numbers declining at a rate of 2 to 4% per year and the average age 5 to 7
years away from retirement, I look forward to those thousand dollar paydays and
take it or leave it 3 week turn times after inspection.
Overall agree with Bill Johnson, but in some ways I’m already living his projected future. Problem isn’t so much the standards, but the fees. Out here in the west, several regional AMC coordinators have told me that they are having extreme difficulty finding Appraisers. The shortage is already here. I am currently 6 weeks out, and when I give out my turn time (currently as of 10/28 it is in early December), I’m told that it is typical for this region. — The fees are already up by about 30% here – because like Bill projects, it is a take it or leave it fee quote. Nearly every order on my desk started with a request that I first rejected due to both fee and turn time, and then had the AMC call me back and ask me what it would take to get it done. Lenders aren’t happy about the fees. I often get three or more AMC’s asking for quotes on the same property, indicating that the Lenders are shopping around. There is one Appraiser I know of in Portland that only takes rush orders. The way its going, fees will easily be double what they were two years ago next year. ~~~~ Economic question: If (when) appraisal turn times get to four or six months, what will that do to the housing market? In this region, back in 2001/02 turn times were once up to 3 months, and I see it easily headed that way this next year. So, what happens when the Appraiser shortage causes longer turn times, lets say at 6 months? Answers: In the housing market cash will be king. Sellers will take a discount for a cash sale rather than wait 6 months. But since the definition of market value is in “cash” terms, that “discount” is not adjustable, it is the market value. Very likely that between the contract date, and the appraisal date, values will decline if sellers opt out of contracts to take discount cash deals. THE APPRAISER SHORTAGE COULD CAUSE A DOWNTURN IN THE HOUSING MARKET. Appraisers will start to keep some appointment times free for “rush orders”. Rush orders will sell at a premium. (Even at 6 weeks out, I’m offered up to $200 more for a “rush” order even now.) This will drive appraisal prices up. As I find myself saying to AMC’s now, the theory of substitution applies: Why would I take your published rate for an appraisal six weeks in the future, when I can wait a day and get an order for that same time slot in my schedule for twice as much? Out here in the west, the Appraiser shortage is happening, turn times are increasing, and fees are up. Once fees are up for awhile, it will become economically viable for a supervising Appraiser to have an assistant, and slowly with higher fees we can again see people attracted to this field. Higher fees will solve the Appraiser shortage.
Steve, thanks for the reply. What I have often found is that the problems we face as a profession are very state, city, and local issues. In San Diego County where there are several thousand certified appraisers within a few hundred miles of each other, the problems we face may be different from what others experience. To be at the top of the lists for work in my area I must quote 3 to 4 day turn times and have no excuses even when others in the process can’t perform (borrowers, agents, tenants). With a reduction in overall loan numbers, the lenders and AMC’s have been trying to increase their margins and continue to push down appraisal fees. We as a group need to understand all of the issues and make a push to better the profession.
Market volatility is in part a function of market size. One County I deal with has a population of 1,440 in an area of 1,710 square miles. — From when I first saw that County 21 years ago to present, there has been very little change in that market. It barely registered the housing market collapse in 2008. I have noted over the years that the large California markets can have dramatic changes in numbers of sales/loans. But what we are both talking about is that long-term arch that underlies the markets. I am in complete agreement that we will see a continuing reduction in the number of Appraisers, and eventually throughout the Country, there will be a shortage. My comment is offered as evidence that this is in fact happening exactly where you would first think it would – in our more rural western regions. We have always been spread thin in these areas. From where I sit going east, you’d have to travel 225 miles to find the next Appraiser. But the three Appraisers that routinely cover this area are all in our 60’s. I will retire in 2 1/2 years, one fellow appears already semi-retired, and the last one probably will work into her 70’s – at least 10 more years. E.g., in 2.5 years the available Appraiser time for a region of about 30,000 square miles will be cut in half. Because the system is complex between AMC’s with a business model of offering the quickest turn time for the lowest fee, Lenders with new time driven regulations, and the Appraiser education/training requirements on top of the regulations and requirements of the actual appraisal process – we cannot expect new people to come into this profession of appraisal until there is a sufficient economic incentive. In this region, the crisis time that will trigger a shift in the economics is already started. It is apparent to any observer that turn times are up by a factor of three versus two years ago, and fees are up by a third to half again as much as they were two years ago. That curve is escalating. Next year we will have longer turn times and higher fees again. I have no idea when the San Diego area will actually feel this. But it is actually happening.
Your situation Steve is the exact opposite of mine and proves my point that the issues facing this industry are state, regional, city and neighborhood specific. Rural appraisers in my state of CA can make twice as much per appraisal while living in areas that are half as expensive as mine. If the big box AMC’s in my urban/suburban area are offering $275 to $300 per assignment, but the rural guys can get $500+, will they be in support of obtaining independent fee studies that puts the typical fee at $400? It may be short sited for the suburban appraisers to want the enforcement, but if a pay floor is set at $400, this will overnight represent a bump of $30,000 to $40,000 per year. Although the appraiser coach (Dustin) will wonder how I get anything done by voicing my comments/concerns, in his entire state (Idaho) their are less than 500 certified appraisers, while my county of San Diego has over 1,000.
All I’m really saying is that some trends start in rural areas. I think it is highly unlikely that AMC’s will use the same standard fees for urban and rural. By the way, your “under 500” appraisers in Idaho (pop. 1,634,000) compared to your “over 1,000” for appraisers in San Diego County (pop. 3,095,313) is about the same per capita. In fact, we have about 1,000 appraisers in Oregon (pop. about 3,200,000), which is also about the same per capita. I don’t get where you were going with this population thing. I really don’t know where you are going with your comments. Sounds like you are either arguing that there are no solutions, in denial that a shortage of appraisers is coming, or tend to argue with everything???? Back to work….
As it relates to my point of bringing up population you make a statement referring to 3 known appraisers covering a single county and the next appraiser being 225 miles away. Although obviously their is less work to go around in these cases, the fact that you are competing against 3 appraises is completely foreign to ALL big city appraisers. Although there is more work to go around within 225 miles from where I live (20,000,000 people), could you imagine being one of 4,000 appraisers on a list and hope to get work. Although we can hold the same license levels, be in the same state, the issues facing each regional area can be different. If we as appraisers can’t agree on the issues, how can we come together and improve the industry.
30,000 square miles is actually parts of 6 counties…. 225 miles to the next appraiser going east is 112.5 miles to the mid point. More appraisers to the west of me. But the underlying issues of the Appraiser shortage (on a per capita basis), applies equally. I can see it and you can’t. This is typical of the urban/rural divide. In rural areas we get all the information from the urban areas (Dish or cable TV, newspapers, Internet) and our local information, but rural information does not penetrate into the urban mind-think. So let me be plain: I am telling you something you don’t know. The first place many trends start is in rural areas. The Appraiser shortage has started here. Sooner than later it will get to you. Listen. This is not different issues for different areas, this is evidence that the Appraiser shortage has started.
I believe you that your local area has a shortage, and the question being asked “Are the Standards Set by the Appraisal Qualifications Board too High” is directly related to your individual situation. The standards to entry will eventually be lowered to address your situation long before my big city sees a shortage. With the demand to fix your area, the result will just speed the decline in mine. I also disagree with your assumptions about our situations being equal (per capita basis). Even if there is more work to go around, with 4,000 appraisers all seen as equals by the lenders of the world in my area, I have to beat out 3,999 to get the work. Its a death spiral to the bottom for most, and those that don’t play the game are out of work. If you are getting higher and higher fees in your area while we are getting lower fees in ours, this again proves my point that there’s no consensus to the problem.
You can’t argue both sides of this. The AQB will not lower admission standards because it takes 6 weeks to get an appraisal in Burns Oregon. They don’t know where Burns is. They might tweak standards a little if they think there is going to be a shortage of appraisers. That is what they are discussing – at best a tweak. This does not change the fact on the ground in your area that there is currently a surplus of Appraisers. The core reason that there is a coming shortage of Appraisers (everywhere) is that Appraiser’s are not paid enough to attract college graduates into the profession. Same is true in San Diego or Mitchell Oregon. The AQB holds no power over the AMC’s. The AMC’s are controlling fees paid to Appraisers until they can’t. They can’t control my fees because I can say “no” and keep busy. The business model of AMC’s (e.g. lowest fee and quickest turn time) will squeeze the very life out of you and all the Appraisers in San Diego until you too are in the position to say “no”. It is a “death spiral” until it isn’t. One day you will wake up and find you have a week’s worth of orders on the desk. Then a day will come where you have two weeks orders on the desk, and the phone will keep ringing (or emails will arrive) with the AMC’s screaming at you for quicker turn times. You will then have an amused smile on your face. You’ll think to yourself, should I take AMC # 1’s request that will take me 6 to 8 hours for $350 or AMC # 2’s request that will take me 6 to 8 hours for $450. Guess what, fees just went up. When you get to about 3 weeks of work on the desk, you will find yourself laughing out loud when a AMC calls and demands you turn around an order in one week for $200. ~~~~ and I know this because it has happened to me. ~~~ All that I have been saying here is that the Appraiser shortage is real. I don’t think that the AQB can do anything effective to change that. The shortage was in the works before the BA requirement. It is all about the AMC business model that really got going with the HVCC. That is when the entry levels into the field dropped off. That and the pressure on the supervising Appraisers to show all files to the State regulators for assistant’s work. What I have consistently said, and this applies directly to San Diego, is that the visible start of the trend to a recognized shortage has already taken place. No one in their right mind will currently get into the appraisal field in San Diego. That won’t change until a shortage drives up the report fees. When fees finally get to double to triple of what they are now, then the benefit/risk ratio for supervising Appraisers will change enough to take the risk and implied more time to take on an assistant to do work. If you are paid $1,000 for an appraisal, you can spare an hour to really read and review what that assistant did. So, just like here on the east side of the Cascade Mts. in Oregon, San Diego will eventually get to the tipping point where the demand for appraisal reports exceeds the supply of Appraisers, and turn times start to go up. Somebody from San Diego will move here, giving you more work (an Appraiser from Sacramento recently moved here). Appraisers will retire and a few unfortunately will die. ~~~~ You can actually create an artificial environment where this happens faster for you as an Appraiser. Get on more AMC lists now. You will find that even at a 3 day turn time situation, the fact that you are turning down work will have an effect upon the AMC’s. If you end up not being able to accept or rejecting 10 assignments a day, that ripples out into the AMC world. If every Appraiser in San Diego got onto more lists, and was rejecting 5 to 10 assignments a day due to turn time, well, something will likely happen over at the AMC end of things. But when the real shortage happens, the more lists you are on, the better you can reinforce and back-up sticking to the fee you want versus the fee that is offered. In time, San Diego will get to “no”, and then the world will change for you as an Appraiser.
Steve, I live within a few hundred miles of 6% of the entire US population, and although you say the AQB will not change their policies based on where you live, the system will change long before there’s the perception of some kind of free market in my area. The lenders, AMC’s, and real estate lobbies will never allow my area to develop like yours. Appraisers like yourself to some degree want the current environment (rising fees, set turn times, etc.) but appraisers like myself are desperately fighting to stay alive.
Magical thinking on your part. The “Real Estate Lobby” which you have a membership in, is not pushing appraisal fees down. The Lenders pass this expensive through, they don’t pay it directly. The AQB if anything will work in the better interests of Appraisers. The only villain on the field is the AMC’s, whose business model is (I repeat) competing with lenders for the lowest fee with the quickest turn time. That is the sole source of downward pressure on fees, co-dependent with Appraisers accepting low fees. The AMC’s, Lenders, AQB, and “real estate lobbies” do not even have a mechanism to conspire to keep fees low. ~~~~ As Real Estate Appraisers, we are trained to recognize market dynamics. The appraisal market is just like any other. Supply / Demand. If you take away the economic incentives of any activity or enterprise, then people will not join. Back two years ago when I was in a similar position as you are now, I often said that I would not wish upon my worst enemy the fate of becoming an Appraiser. Given overhead expenses, the low end of the low fee world is close to if not below a minimum wage situation, especially if anything unexpected is discovered in the course of doing an appraisal. So, no one (or certainly not enough people to replace those leaving the field) will become an Appraiser. USE YOUR HEAD. There has to be a tipping point in the future where the demand for appraisals exceeds the supply of appraiser time. Simple economics. What exactly could change that as you project? It is not the experience or education requirements that the AQB can change that stops people from joining a low fee profession, it is the low fees. It is not the desire of the “real estate lobby” for low fees, if anything they want better appraisals. It is not the Lenders, they make the borrowers pay for appraisals. It is only the AMC’s. You have said/written nothing in this exchange that makes economic sense. The AMC’s are cutting their own throats in the long run by starving you and the rest of the Appraisers now. But, the day will come, when like I do now, you will have the opportunity to simply say “no” to a low fee order. In fact, if fees are so low you can’t make a living at it, I would advise you start saying “no” now. If you have an empty day in your schedule because the work does not pay enough, do something else. Mow the neighbors lawn, deliver newspapers, pick up cans for deposit along the roads, flip a burger, or whatever it is that will make you a buck if appraisal fees are that low. If you only take appraisals that pay you enough, whatever you consider to be enough, then at least you won’t be subsidizing the Appraisal Management Companies with your low cost labor, which is what you do when you accept a low fee assignment. If you believe as you are writing that there is no hope in San Diego and the low fee situation is permanent, then you owe it to yourself to either: 1. Relocate, or 2. Find another job. Period. I’ll not listen to any more of your whining. End of these exchanges.
With your rural location Steve, either the clean air is affecting your thoughts, or you are in a fog because of the horse manure you are standing in.
(1) By supporting HVCC and Dodd / Frank along with being in bed with the banks, the real estate lobby has never pushed or supported anything to address our concerns. If given the opportunity, they would pull the plug on us in an
instant if given the opportunity.
(2) AMC’s are the puppets of the lenders and do not set appraisal fees! I would not care if my client the lender raised the fess $400 gave that portion to the appraiser
and in turn used the AMC of their choosing.
(3) The purpose of the AQB is in part to establish barriers to entry, and as a result, they have a direct mechanism to control supply. The standards from 10 to 15 years created an explosion into the field; however in raising the standards now, they have a direct mechanism to reduce the supply.
(4) Sorry to break the news to you Steve but you get an F for you Economics 101 grade. The industry we work in is NOT a true free market and it’s not as simple as supply and demand. With multiple changes in our regulation polices, the government can create winners and losers overnight regardless of the supply and demand that has been established.
(5) Again, being in a rural area you can get on your high horse (or is it donkey) and preach to the masses, (relocate, find a new job, flip burgers), however YOUR survival may depend on the success of the urban/suburban fighting the fight.
P.S. What is the IRS mileage allowance for a horse these days?
Since you decided to engage in weird personal attacks, I
thought I’d share this country story with you and any other readers.
There once was a rancher named John who had about 800 head
of cattle up on Beaver Creek about 10 miles out of Paulina. After the Federal Government started requiring ear tags and other record keeping, John became concerned that State and Federal regulations could cost him a lot of money, so he started going to the Oregon Cattlemen’s Association meetings. After a couple meetings, he realized that with his wife and son able to handle the herd while he was gone, he could be an officer, and he got elected.
Later that year it came time to go to the National Cattlemen’s
Association meeting in San Diego. So, John got up at 3:30 AM, drove the 80 miles down to Redmond, and caught the first flight over to Portland where he could connect to San Diego.
After an hour layover in Portland, when John got on the plane he thought he’d get a chance for a nap, because he’d already been awake for a long time. But just then down the aisle came a fellow that sat next to him. The fellow introduced himself as Bill, a real estate appraiser from San Diego, who was on his way home after some continuing education classes. Bill said to John, “since we will be together for a couple hours on this flight, I thought I could tell you about being an appraiser for awhile”.
John looked over at Bill and said, “well, that might be okay, but first I need to find out something. I’m a cattle rancher. I grow a
lot of grass on my property. I’ve got 5 types of irrigation including flood irrigation, hand lines, set lines, wheel lines, and a pivot. I see that sometimes deer come down and eat my grass, and when they do, they shit little pellets. My wife has a couple horses she keeps for fun. They eat that same grass, and when they shit, their shit looks like biscuit piles. But when my cattle eat the same grass, their shit looks like big pies laying on the ground. So, since the deer, the horses, and the cattle eat the same grass, why does their shit look different?”
Well, Bill didn’t know what to say, having never heard the like. He said to John, “well, I have no idea why the shit comes out different.”
To which John said, “well, since you don’t know shit, why
don’t you keep your mouth shut and let me get a little rest.”
After telling me I should get a new job, you question my competence and you tell me to USE MY HEAD, we may disagree on who flung the cow patty first. However, although it looks like I made an exception in your case Steven, the people I choose to speak to about my concerns, must generally have an open mind to solve problems. I welcome the opportunity to hear all sides (rural versus big city) and am disappointed by you wanting me to keep my mouth shut. I know of several parties that also want to keep me silenced. Many of my lender clients want me to keep quiet when I bring up assignment complexities and thus want a higher fee (TRID / declined). When I voice my concerns about the HUD-1 statement indicating a $525 appraisal fee while the split to the appraiser is 50% (shhhhh this is a secret). When I receive an assignment due in 5 days but the finish line gets moved forward to reflect 24 hours after inspection, nobody wants to listen. Good luck to you Stephen. Ssssssssssssss, is that your perfect appraisal location bubble losing air? I/we will continue to fight for this profession Stevie and your welcome when our succes in the future benefits you.
In taking on a different issue as it relates to your situation Steve, here’s a comparison to what I face in my market area of San Diego. A nationwide top 3 appraisal company (Solidifi) demands 3 day turn times (from assignment date) to be part of their Perfomax program. The fight to be on this appraisal list comes with some volume, but with the promise of work, the fees are in the $275 to $300 range. The orders need to be accepted within an hour, appointments need to be made in 24, 90% of all assigned orders must be accepted, etc. In an effort to compete for residential loans, many of my non AMC clients have also changed to a 3 day turn time and same day rush orders for (+$75). Again, when different areas face different problems we as a profession are divided on the solutions. If you can demand 8+ week due dates while others are given hours to compete their work, the AMCs and lenders of the day will highlight to the world the issues with you and avoid the issues of my area.
Funny you should mention Solidifi. The assignment I started yesterday and will finish tomorrow morning is a Solidifi order. I had a cancellation in my schedule, so on 10/14 I accepted this order for a fee of $650. (The order before it that I accepted on 10/13 will be seen on 11/6, and the order I accepted after it on 10/15 will be seen on 11/10.) My next current “best turn time” in my schedule book is 12/04. But what you are saying is talking past my points. Again, the Appraiser shortage is not qualifications based, but is based on the business practices of AMC’s that keep fees low and put pressure on you for turn times. The very thing you are complaining about is the thing that is causing the Appraiser shortage that sooner or later is coming to San Diego. I work with all the major AMC’s including RELS, TSI, Nations Valuations Services, Streetlinks, RVS, Corelogic /Landmark, LRES, PCV Murcor, etc. etc. And sure they “demand” a 1 or 4 hour response, so what… If I’m around the office I’ll respond, if not, either I lose the order or they call back. They want me to schedule the site visit within 24 hours of getting the order. No pain there, it is a phone call. That the site visit is 4, 5, or 6 weeks in the future is agreed to before I accept the order. You need to get on more lists so that the few AMC’s you are dealing with are not in the position of being a bully to you.
I didn’t respond to the Perfomax program part of you post, and I meant to. It’s a hoax. Sure, they claim they’ll send orders elsewhere, but they really don’t. All the major AMC’s have some sort of scoring system. I mostly ignore them and always have – only looking at these scores on a random basis to see what they say. I even argued with Corelogic about the “logic” of their scores one time – they made apologies, but went on with business as usual. Oddly, I have high scores with all the AMC’s in spite of my long turn times. Scores have not affected order volume. Again, get on more lists and the AMC’s can be put in a position of competing for you time.
Based on your power position Steve, you can choose to ignore the requirements that Solidifi wants, and keep getting orders. In your world you have the power and they will continue to give you work even when you DON’T meet their scope of work REQUIREMENTS. In my world its no hoax, if you don’t meet every scope of work requirement, than its easy for them to move onto the next 4,000 appraisers in my greater area. When I make an argument for greater appraiser independence in my area, it is my hope to be like you. Based on our lack of power we have no independence.
You obviously don’t know what the term “scope of work” means.
The scope of work does NOT just refer to the Solidifis typical 6 to 8 page appraisal requirement document at the time of assignment, but also refers to the general standards you agreed to at the time of sign up. You are in a position of power based on the shortage of appraisers in your area and have the luxury to “ignore” what is being asked of you. When there is an oversupply of appraisers in an area (San Diego) and the AMC’s can pick anyone they want, I/we can tell you their scoring system is no hoax. Consider yourself lucky when you can ignore what is being asked of you, can demand your turn times, can demand your fees, and can expect increasing fees in the future.
Thought you confused scope with contract. Please see line 134 on page U-4 of the 2014-15 USPAP. I do not ignore what is asked of me, I have an upfront agreement (contract) regarding what I will do in terms of fee and turn time. Scope refers to how I do the assignment. The scope decision is made by the APPRAISER (not anyone else) based upon the degree of research and analysis needed to create a credible appraisal. ~~~~ When we started this exchange I took you for an over burdened but competent Appraiser in an urban area. You have now shown a couple times, including this scope of work comment, that there are questions about competence….
Don’t pat yourself on the back to hard Steve as you only have to be the 4th smartest appraiser within a few hundred miles to get work. My point in this entire exchange relates to the article and the industry in general and how we seem to have no heading because the issues we face are often times different from appraiser to appraiser, city to city and state to state. If I live in one of the nations most expensive cities and big box AMC’s find it okay to offer $200 to $275 per assignment, I may write my congressman and join originations to actively encourage setting a minimum floor (customary and reasonable fees) per Dodd / Frank. But if you are getting $600 plus from the same AMC then there’s no reason for you to join my cause and actively pursue what is a non issue for you. If you have true appraiser independence and can take and set appointments weeks and months in advance, are you concerned and expressing your opinions when much of the industry is demanding 24 to 36 hour turn times from issuance of assignment? If in your area you can ignore general guidelines set forth by the AMC’s and call their system a “hoax”, but still receive work while others have no independence and get blacklisted with minimum cause, this is not an issue your going to campaign for. If the AQB tweaks, reduces, or in general makes entry into the profession more easy thus creating more supply, will you care if locally my fees are reduced? Those of us being adversely effected the most are the ones fighting the hardest while appraisers like yourself insult those who bring up the issue. Good luck to you sir, and I hope the perfect appraisal bubble you live in doesn’t pop anytime soon.
Steve, I too am on many or have been on many of the AMCs you mention, but their pay is horrible. I live in one of the most expensive cities in the nation, and routinely do properties over a million dollars (average MV is $850,000), but RELS wants to offer $245, PCV Murcor (as low as $200), Streetlinks no work for more than $250. My issue is like many in my local area, I have turned down 3 orders today but ultimately took a complex 2-4 unit assignment that pays $495 with a $28 delivery fee that I’m responsible for (due in 5 days). My standard fee for a form 1025 from year 2000 until HVCC in 2008/2009 was $700. 15 years later and the best assignment I could get pays me $233 less today. With 4,000 appraisers waiting behind there is never an option to not provide an update within an hour, schedule an appnt, etc., or EVER be late.
The way it’s set up now with amc’s it’s very difficult to get into the business. Before you had a seasoned appraiser who would take on trainees and pay them a salary or a % of the total fee. As the new appraiser got experience that did dot require the owner/appraiser to view all the properties/inspections the new appraiser got a larger %. With the amc’s in the picture it’s hard for the owner/appraiser to stay in business let alone hire any trainees.
So if the amc’s want to control everything let them train the new appraisers entering in the business. Who really cares as it’s the lenders and the amc’s problem. If there is a shortage of appraisers in the field then the fees need to go up and that makes the profession that much better for the appraisers who have survived.
When people indicate to me that they want to be an appraiser it tell them to “FLEE!!!”
I firmly believe that everyone wishing to earn $3.00 per hour (net pay) should be held to these higher standards.
Don’t just run appraiser wannabes. Run like L.
It took me a long time to find my niche, but I did. My business is better than ever! I have been an appraiser for 30+ years and love it most days. I think the key is finding the right mix of clients. In regard to experience, the AQB allows for 50% of your experience to be a demo report. In other words, 50% of your work can be for a non client. I proposed a training program in Texas several years ago and the board did not know what to do with the idea at the time, but now some states are on board with a mentoring program that can accomplished through several trainees working for a supervisor and earning experience while doing other jobs. That is not the final answer, but gaining 50% of your experience is a good start. Thanks Joan for asking relevant questions. Craig Julian
Of course the standards are too high. A good start would be to have practical experience of a certain number of years be a substitute for the educational requirement. A licensed appraiser with five+ years of experience is without question a more qualified appraiser than a certified appraiser with less than a year of experience.
Finally, an appraiser in a leadership position is speaking some sense. My concern for him is the implication and even assertion at some points that the secondary mortgage lenders care about “quality” in appraising.
If I understand the AQB motivation correctly it is move this industry from what has been allowed to be a cottage to that of a respected profession. That costs somebody money and the banks involved in the secondary mortgage market have proven adept at passing everything onto somebody else. That system is at once critical to home ownership and an obstacle to professionalism in real property appraising.
Unfortunately, there are appraisers (see other posts) who seem to specialize in taking the opportunity to exploit the existing system and thereby perpetuate it. We appraisers are our own worst enemy to progress and I support the AQB effort to insist that at a minimum we are educated manipulators and not simply experienced opportunists.
Refuse AMC work folks and embrace education and professionalism, period.
As many have already pointed out, the real issue is; does the pay reflect the level of expected expertise in our industry. During the recession I took the time off to finish my BA degree (San Diego, CA appraiser) to be sure I wouldn’t have any issues with the current education guidelines for a Certified appraiser in CA. Thing is, when I returned to try to find full-time work in 2010, I had to work through an AMC or find attorney/CPA work. By then, most appraisers had already figured out the amount of “stips” by the underwriters made AMC work a low-paying drudge and fled to the attorney/CPA work that was available. Basically, I found it very difficult, as a college-educated experienced appraiser, to find local work. Given we have thousands of appraisers in San Diego County to handle the existing SFRs here, coupled with the fact that most the housing going up is rental/lease units above commercial, we won’t have a shortage in San Diego for quite some time. And, I honestly wouldn’t encourage anyone in this county to try to break into RE appraising until the trend of building rentals instead of SFRs has reversed…unless you can find a commercial firm that will take you on.
Other areas of the country are looking more and more attractive to relocate to, especially since the price of everything in CA is going up, but our fees haven’t (in at least 15 years since I joined the ranks)…thank you, Governor “Moonbeam” Brown and banks nationwide. In the short 15 years I’ve been appraising in southern CA, I’ve seen the federal government botch an attempt at regulating the “collusion” between the lender and the appraiser…the relationship only has an appearance of independence, but many of the same “sweat-shop” appraising firms are still in business and thriving here. And the $350.00/appraisal fee has not changed since I began appraising in 2000. You still see appraisers fighting over whether to accept the AMCs bid at $325…and, some of them still lose at that price!
So, the question should be (IMHO); Are the Standards Set by the Appraisal Qualifications Board Commensurate with the Fees Being Paid to the Valuation Expert? If that were the question, the answer would be an emphatic NO! And, it’s a slippery slope if you try balancing either one. If you lower the standards and don’t require as much in-the-field experience hours, you’ll let loose a VERY inexperienced appraiser who’ll resort to cutting corners to keep up with the demands of the banks (we’ve seen it happen so often the industry has given them a name, “Skippy”…well-intentioned or not). But, if you raise the education and on-the-job experience bar and raise the pay to compensate for that level of expertise, the banks will find a way to work around it (i.e., more in-house alternative valuation models being used, proxy 3rd party firms using in-house appraisers, etc…we’ve all seen how those have affected our industry AND our pocketbooks) because they know where the weak spots are in our fragmented industry, and they’ll exploit those until the appraiser caves in because they know we will. Now, this isn’t always the case in areas where there is a dearth of appraisers, say in rural areas, but for the urban, semi-rural appraisers out there this is a familiar horror story. And, it’s a story that shouldn’t exist in a “profession” of valuation experts who’ve paid dearly in time and $$ to enter and maintain themselves in a very competitive industry. The title of this article reflects the flaws in our industry, but is an all too familiar ploy to get folks used to an idea that has already hit the boardroom running…before the appraisers are able to raise the fee bar due to a shortage of appraisers in even the urban/semi-rural areas (and manipulate the AMCs and lenders on turn-times), let’s visit the idea that we should shorten the experience hours required to get “newbie” appraisers in the door. In fact, let’s throw it out there as an article title to get the “Buzz” started, that way they’ll all get used to the idea and forget about the fact that they all had to do their 2000 hours at less than minimum wage in a “sweat-shop” environment that will never be adequately regulated because we’re already used to the fact that anything government is broken. What’s next, cut back on the CEU hours necessary to maintain our licenses, and have trainees watch YouTube videos to gain theoretical and practical field experience? I suppose if you look at it from their perspective that might make sense; since we don’t really have to pay them as professionals, why should we expect them to be treated as professionals!
That’s not my cynical way at jabbing at the industry professionals that hire us; it’s my way of creating our own “Buzz” about what the real issue is here. The truth is we’re underpaid for the current level of Qualification expectation by the state boards and national AQB. Unless what they’re really trying to tell us is; since no one will ever be able to reconcile your pay with the level of expertise we require the independent fee appraiser attain in order to remain an objective valuation expert, because those people responsible for paying you will never recognize you as professionals…in their eyes, you’ll always be a fragmented, malleable rabble without cohesive representation, we’ll just have to lower the bar to meet the vision of your employer (the banking industry). I hope this isn’t the case, but if history tells us anything we’d better pay attention to the steps they’re taking at the national level that are affecting our industry. I’ve heard rumors that there are groups around the country that are trying to reach out and form local “Meet-ups” and discuss ways to thwart this kind of mentality and rejuvenate a cohesive spirit amongst appraisers that we’d only see in our CEU classes once or twice a year. I’d love to see regional “Meet-ups” of appraisal groups (not AMC representation, or AI cronies, but real feet-in-the-field folks) who could potentially take their discussions – or even resolutions – nationally, and straight to the AQB, ASB, and our elected officials to make real substantive changes that are felt right in our own business offices. Until then, blog discussions are helpful…and I’ll keep commenting until these article titles start reflecting “Our” reality and not their vision, for the future of our industry.
The only way there will Appraisers in the near future and beyond is the elimination of AMC’s and their skimming the fee that belongs to the Appraiser. It’s real easy to get all the AMCs you want since they’re not trained to do Appraisals but harder and harder to find Certified Appraisers to work for little
more than minimum wage when you figure in all the cost involved to maintain our license. I get calls all the time to take assignments from AMCs but I decline.
An appraiser is much better equipped to do the job with Appraisal experience than having some four year degree just to have a degree. No degree actually prepares one to write a credible Appraisal report. Only experience does that and the more experience one has, the better Appraiser they are.
Jerry Morgan
Certified Residential Appraiser
Morgan Appraisal Service( since 1983)
Bill Johnson, thank you for your wise discussion of the challenges of appraisers. If we as a profession submit to acting like clerks, we will only be paid like that. Our experience, education and professionalism must demand respect. That includes calling lenders, AMC’s and regulators on the carpet. That will only be done with membership in some sort of coalition of professionals (local, regional, national) with an agenda of looking out for our individual and collective professional standards. After all, those 10-15 year educational and experience requirements puts us into a “professional” category deserving of more respect than that of a clerk. ~Leon Danforth, CGREA (CA & AZ)
The requirements exceed the incentives and respect a body would expect for the endeavor. As a mentor, the time and responsibility invested in a candidate typically falls short of expectations when candidate realizes the time involved in becoming accomplished in the profession.
Six plus months of time is nothing to invest in a candidate. The first few months literally means splitting a fee and doing 90% of the work.
Real estate sales people with a few years of sales experience have a greater advantage than a college degree with no real estate experience.
Forty, verifiable sale transactions should equal an associates degree easily. Eighty, should equal a bachelors degree. This will induce people with experience to take a greater interest and pride in the profession.
As the number of appraisers dwindles, the void will be filled by more avm, desk top and limited products that require less skill and experience, that can be delivered in short order time. It’s already happening.
The absence of authority, negative perception and unqualified review of work product is demeaning to a professional.
Sadly, this stigma is not without merit. The certified designation is broad based. I’ve reviewed certified work product only to be appalled at the quality, (misleading or lack of theory and methodology) present in the report.
The next decline in the economy and real estate will likely bring more failed policies that further reduces the number of good appraisers and candidates with unnecessary and burdensome measures that further exacerbates a pro.
FIRREA, dodd-frank,uad, etc. . .have only created regulation that undermines the respect of the profession with counter productive measures aimed at making the qualified pro with good ethics an untrustworthy entity.
Expect more of the same measures.