April 1, 2011 is supposed to be a big date for the real estate appraisal industry. Over the past couple of years, there has been much re-regulation in the profession, some good and some bad. April 1st should be a happy day for residential real estate appraisers.
In the aftermath of the recent mortgage meltdown, the government passed something called the HVCC (Home Valuation Code of Conduct) that was supposed to increase the quality of home appraisals. The HVCC basically created a middle man in the appraisal process that acts like a buffer between loan officers and appraisers. The appraiser was then forced to split their fee with the middle man and it ran a lot of professionals out of the business. With the appraisers hands tied, these middle men (aka appraisal management companies) took advantage of the situation and were low balling appraisers with no respect to quality at all. In a lot of situations, these management companies were not even bothering to pay appraiser and the industry was turning into a joke.
The government finally had to step back in and add some policies to mandate a minimum fees that management companies have to pay appraisers. These new policies are supposed to go in effect on April 1st. The Woodlands TX real estate appraisers are all anxious to see if the April fools joke will be on them again this year. Even though The Woodlands Texas housing market has held strong, local appraisers have felt the wrath of all the national housing mess. April 1st marks the light at the end of the tunnel.
If you think that appraisers will be celebrating on April 1, 2011 you’re in for a big surprise. AMCs opted for an end play early on to get around paying fair fees to appraisers. They have been busy hiring staff appraisers for beans ($30,000 or less) for the past year. They have literally taken over the Appraisal Institute’s job page looking for appraisers to hire. At first they were honest about saying they were AMCs; only later did they become a more crafty with their ads. Today they advertise themselves as “appraisal groups” and other such names in order to dig out the last of the low dollar appraisers.
The question remains: Will INDEPENDENT APPRAISERS be paid fair fees after April 1st? Certainly they will…it’s the law.
Will INDEPENDENT APPRAISERS see any significant volume of work from the AMCs (who now control over 85% of all appraisal orders)? Not a chance. AMCs will farm the vast amount of orders out to the out house staff appraisers for around $90 per order.
My suggestion to appraisers it to develop a taste for bankster butt and latch onto them just as they latched onto to yours. Start a bank management company within your state to assist banking customers in finding the best deal in banking today. Let bankers start bidding for their business by bidding the highest interest interest rates on CDs & savings accounts while also bidding the lowest fees on mortgages and business loans.
Gotta love the boomerang business model.
I hope not all the management companies try and follow that business model. I would think the quality of the reports would be very low with an appraisal house full of newbies working for peanuts. Hopefully the lenders would recognize this and change over to another management company who uses quality independent appraisers.
The HVCC let these management companies sink their claws deep into the profession and they don’t want to let go. The industry will forever be changed but I think with these new laws we will see some balance return and hopefully appraisers will be able to make a descent living.
Looks like the April Fools joke is once again on the Independent Fee Appraisers. I have seen no changes since the calander passed from March to April and it’s dubious that any real change is on the horizon. Much like everything else in the country, corruption and greed by corporate America have overtaken our industry. Worse, they have enslaved the vulnerable, weak, and inexperienced appraisers who now work for peanuts to produce sub-par appraisals. How can anyone believe that this will be good for America, the mortgage market, or the appraisal industry? “They” fixed the housing industry, like “they” fixed the school systems by lowering the bar and limiting accountability. AMC’s have no accountability and no standard beyond the bare minimum. When the mortgage crises escalates as it will inevitably, the AMC’s will pass the buck back to the appraisers for fraud, misconduct, and incompetent appraisals. The appraisers will bare the entire burden, despite being deliberately instructed by the AMC’s to hit a value or decline the order (and any further business). Naive appraisers trying to “get by” financially will no doubt wind up in court and inevitably lose everything gained by working for these crooks and worse- end up in prison. It’s a sad situation in our country today when fraud, greed, and corporate america have ruined the average american’s chance to achieve the american dream. The appraisal profession, like many other’s has been cheapened and will soon be discarded when the powers that be realize that cheap, bulk appraisals are worthless and provide less security than a “Zillow” value.
I think the appraisal industry has had one of the roughest times of all the housing professions over the past 3-4 years. The only other sector that might have been hurt worse would be the builders. There’s a big difference though, the main force that hurt the builders was that the market was going through a natural correction process in response to recession and mortgage meltdown. The main force that’s killing our industry is new government regulation. They added the HVCC to “cure” the valuation process when the reality is that the regulations have made the industry unprofitable and is forcing all the real talent out of the industry.
As an industry, appraisers do not have the kind of collective power as some of these larger lenders do that have sank their claws deep into the appraiser’s pocket book. The government needs to step back in and correct the mess that they created and mandate a fair wage or else this industry will soon be a joke.
In response to Jarrod’s comment “or else the industry will soon be a joke”.
The appraisal industry became a joke the day they allowed HVCC to take affect without forming a National Appraiser’s Boycott. Two years later it is without doubt the most laughable career choice for individuals today. The National Appraiser’s Boycott was organized in April of 2011 to help appraisers take back their profession from the bankers who hijacked it in 2009. For the most part appraisers appear to be far more willing to surrender 50% of their fees than support the boycott. Personally I believe apprasers deserve the bank rape that they’ve endured for two years because they are too stupid to put up a fight.
You can find the boycott site through google: Criminal Justice Petition National Appraisers Boycott
April Fools is on the appraiser. I have been an appraiser for 20 years. From 1996 – 2005 my customary and reasonable fee was $ 350 for a typical appraisal – $ 425 for an FHA appraisal and my customers had no problem with those fees. From about mid 2005 the AMC’s took control and if you wanted to pay your bills, you had to take a pay cut. I have lost $ 35,000 a year since that time due to the reduced fees. Since April 1, if I accept an appraisal from the AMC’s there is a statement in the request that says if I accept this assignment that I am agreeing to what is considered a customary and reasonable fee. Now the AMC’s have gone on a hiring binge for staff appraisers so they don’t have to pay customary and reasonable fees to independent appraisers. Staff appraisers make the equivalent of $ 90 – 120 an appraisal and if you don’t produce, you don’t stay employed. 85-90% of all appraisal business is controlled by AMC’s and until appraisers take a stand, you may as well work at McDonalds. States require that appraisers be licensed but yet the banks have the right to say they won’t accept a persons work even though that person complies with the state licensing regulations. Banks should be required to accept an appraisal from anyone that is state certified, wether the appraisal was ordered by the bank or a private individual. You would think that anti-trust laws would apply somewhere here. We are not even allowed to compete. Something is wrong with that. Appraisal work today is much more demanding than it ever has been and yet the fees are similar to those paid in the 70′s and early 80′s. I’m tired of being underpaid, WHAT ABOUT YOU?
- Retired Appraiser
“85-90% of all appraisal business is controlled by AMC’s and until appraisers take a stand, you may as well work at McDonalds.” You are so right with this statement, I wish with my whole heart you were wrong, but it’s the way it is now. Pushed me right out of the business.
Zachary -