Appraisers Ask: What Now?

By Daniel A. Bradley, SRA, CDEI

The hype and excitement for April 1, 2011 is now a memory. For appraisers who thought this date would bring about higher appraisal fees from AMCs and other clients, bitter disappointment has undoubtedly begun to set in. Appraisal-related blogs, message boards, and websites are trumpeting the news – it is just business as usual. The promise of higher appraisal fees turned out to be an April Fools’ joke on an entire profession.

So for residential appraisers, what now?

There are several options; not one of them is perfect. There is not one course of action that is right for every single appraiser’s situation.

Option 1: Leave the profession. This will undoubtedly be the choice for some; in fact, the exodus has been going on for some time. According to the ASC, there are approximately 10% fewer active appraiser credentials today than there were in 2008. It saddens me to think that others would give up on a profession when times get tough, but that is a decision that every appraiser has to make for himself or herself.

Option 2: Knuckle under and accept whatever fees are being paid. This is a very unattractive option. It helps perpetuate a “race to the bottom” in which the least qualified and experienced appraisers are doing the lion’s share of the work for clients who do not care about quality. It simply results in an appraiser working harder for less money. As a temporary measure, it may keep an appraiser from having to exercise Option 1 (or Chapter 11), but it is likely not a long-term solution.

Option 3: Complain. This will undoubtedly be the option chosen by many appraisers. The effectiveness of such a strategy depends on the party to whom the appraiser is complaining. Lodging complaints with federal agencies like the FRB, FDIC, and FTC is certainly more effective than complaining to one’s peers, family members, or online communities. In states that have AMC regulations already in place, appraisers have a ready-made repository for their factual complaints. The long-term effectiveness of this option remains to be seen.

Option 4: Specialize and/or improve one’s skills. This one takes the most planning, effort, and work, and may necessitate an appraiser getting outside his or her “comfort zone”. An appraiser may choose to upgrade his or her certification level; commercial appraisal clients typically do not use AMCs, and are typically more interested in quality than fee. Even without upgrading, an appraiser who wants to expand his or her horizons will find that there are many other types of appraisal assignments out there. Some are relatively simple, such as estates, assessment appeals, and divorce work. Others require additional knowledge and specialized skills, such as eminent domain or conservation easement appraisals. Specialization may require an appraiser to come up with an entire new marketing plan, which may involve marketing services to attorneys, government agencies, and/or individual property owners. By replacing, say, 30% of his or her mortgage lending appraisal business with other types of appraisals, an appraiser can retain his or her top-paying mortgage clients, and at the same time selectively dismiss their lowest-paying clients.

If you are thinking of replying to this article by telling me to wake up and smell reality, don’t bother. For me, this is personal. Appraising has been the only real job I have had during my entire adult life, and my wife is also an appraiser. I understand – better than most – the daily, weekly, monthly, and yearly trials and tribulations of an appraiser. Even though I spend most of my time these days writing and teaching appraisal courses, I still depend solely on the appraisal profession for my family’s livelihood.

The decision for every appraiser is individual and highly personal. What works for one may not work for another. I get that. I’m hoping, though, that most appraisers will select Option 4 above. The future of the profession is better served with more highly-skilled valuation professionals who are capable of providing a variety of different appraisal services, and fewer appraisers whose skill sets consist merely of inspecting houses, selecting comparables based on client-specified parameters, and filling out forms.

The best advice I can think of at a time like this is to spend your time thinking about what you can do, not about what you cannot do.

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32 Responses to “Appraisers Ask: What Now?”

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12
Trainee? Says:
April 19th, 2011 at 3:56 pm
Are you a trainee? If so then it’s called paying your dues.

Like or Dislike: 3 4
11
Jeff Says:
April 19th, 2011 at 3:27 pm
hello everyone. I got my license 6 months ago after spending thousands of dollars and taking many classes and Exams. (The final exam is extremely difficult now). I have not had one Appraisal assignment. I’ve spent thousands of $ to become an independent Appraiser. The cost of software, insurance is more than I expected. I signed up to over 60 different AMC’s without a response til after my 3 mos. of E & O insurance had expired. The majority, around 65-70% of these AMC’s required a Certified Appraisal license. I can’t get certified until I have been consistently doing appraisals for two years. Now, to keep my license current I need 56 more hours of continuing education. Oh, and another $385 on top of that. Don’t want to sound like a whiner but this is not fair to say the least. Any advice from anyone?

Like or Dislike: 0 2
10
Joseph V. Passbet III Says:
April 19th, 2011 at 2:39 pm
Robert I concur,

As a CG in Ohio, and one who is asked to go out on about 60 sheriff foreclosure appraisals annually, I see where the mortgage balance is greatly higher than the property’s value, EVEN AT THE TIME OF PURCHASE. It sickens me to think that when this property transferred, someone in my profession rubber stamped a flip, or a fraudulent refi, etc. The solution greatly lies in getting the incompetents out of our industry. Yes, I know there are divorces, job displacements, but a great percentage of loans are way more than the actual MV. And we taxpayers gave the banks the funding to continue and AMC’s are allowed to rule. Imagine if you wanted to file a suit of any type and your filing needed to be thrown into the hopper for the next available attorney you would need to agree to work with? Attorneys would never have allowed the creation of such a travesty.

Like or Dislike: 7 2
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Christie Says:
April 19th, 2011 at 1:50 pm
While sometimes easier said than done, appraisers all need to stick to their guns and refuse to do work for horrible fees. The reason they get away with it is because they only need one to accept the fee. I guarantee if no one could find an appraiser that would accept their fee, they would reconsider them. It’s the simple law of supply and demand and all the education in the world won’t matter a bit when you have AMC’s shopping for the lowest bidder.

Like or Dislike: 14 0
8
Anita Says:
April 19th, 2011 at 10:58 am
I agree with most of the article and the replies. However, it seems that the author, who states that his main source of income is appraiser education, is a little self-promoting. I have had the best results standing up for my fees. As a Certified General appraiser, I should be performing the more difficult appraisals and being compensated accordingly. Unfortunately, most fees offered are the same as they were 15 years ago or less, while the forms, work, E & O insurance, and educational requirements have increased. The result is reduced dollar per hour received. What other professions have had their wages decreased to this extent? No wonder appraisers are leaving the profession.

Well-liked! Like or Dislike: 26 0
7
Ben Davidson Says:
April 19th, 2011 at 10:02 am
Stick to your guns! I have read the above mentioned replies and we have done the same thing in KY. They call with a fee, we turn it down, we give them a fee, and they say no. I then respond with “Call me back in a week when you can’t find someone and I will not go up on the fee I quoted you this week”. It usually takes about 6 days or so and I get the return phone call. The low guys can’t hang on forever. If they really figured out the time per hour they are making, it would be more profitable to be a greeter at Wal-Mart. Less Risk Too!! I have been at this profession for 15 years. If you put out a quality product, those wanting that product will find you. Be sure to continually get educated. Do not look at CE as a chore but a way to expand and make you better. Market yourself. There is not a bigger cheerleader for yourself than yourself!!

Like or Dislike: 17 2
6
ROBERT HURLEY . Says:
April 19th, 2011 at 10:02 am
WE HAVE TO LEARN FROM THE BANKS.. GO TO WASHINGTON AND PAY OFF
THE POLITICIANS TO PROTECT OUR INDUSTRY. THE S & L DISASTER ONLY BROUGHT US LICENSING [INCREASE COST OF DOING BUSINESS]. HAS ‘USPAP’ IMPROVED AN HONEST APPRAISER’S ETHTICS? I DON’T THINK SO.

UNFORTUNATELY, THIS BUSINESS HAS ALWAYS HAD SOME LOW LIFE WHO WILL TURN OUT A DOCUMENT FOR CHEEP. IT HAS ALWAYS BEEN THAT WAY. WE HAVE TO TAKE A PAGE FROM THE DENTIST. PRICES ARE SET. THERE IS NO SHOPPING AROUND FOR LOWER PRICE DENTAL WORK.

Like or Dislike: 19 0
5
Jim Scrivens Says:
April 19th, 2011 at 9:52 am
I concur with Scott. I’m one state south of you in NH and the same principle of supply and demand is at work here. There are only a few appraisers working for low AMC fees left operating, the rest have left the industry or gone bankrupt. Those of us left standing are the ones that refused to accept less than full fee, now AMCs are forced to pay us as deserved or lose the order. I used to have the phone monkeys from the AMCs telling me that they had other appraisers in the area willing to do orders for X, now they don’t even try that anymore, they typically just agree to my fee. April 1 did not make a bit of difference to my business, we charged full fee before and continue to do so now. I set my rates, not the AMCs, i didn’t expect a third party to stand up for me and make the big bad AMCs toe the line.. I would have hoped that by now the low ball appraisers would have realized that their business model was flawed and started to demand reasonable compensation, but there are still a few out there pumping out low quality appraisals on the quick.

Like or Dislike: 25 7
4
Ruth Says:
April 19th, 2011 at 9:43 am
I agree pretty much with Scott, above. My area of the world gets a bunch of appraisers who cannot make it in their market. They come visit my area of the world because we have an excess of work. New comers make a mess and the experienced local appraisers get to clean it up with re-appraisal and review work weeks and years later.

The original ridiculous $85 to $125 AMC appraisal work bids I turn down regularly, no matter how many times those AMCs tell me, they have a bunch of appraisers who accept those fees. If they truly do have “a bunch” of qualified appraisers who accept work at that price, why do they consistently call me? I am now getting work from those same AMCs at reasonable pricing. The 60 to 120 day payment terms I haven’t yet been able to fix. 120 is my limit, then they get turned into the state. If enough appraisers do that, those AMCs will either pay timely or the state will fine and/or take their license to operate.

It’s a frustrating business, but one that has supported my family well over the decades. I had hoped to partially retire at age 60 and fully retire by age 65. I ‘m still working 60 hour weeks and expect to keep it up until my health stops me or I reach age 70 (7.5 more years). The only good thing about that is that I have a chance to replace some of my lost retirement funds. Then I only have to live long enough to enjoy a retirement.

Like or Dislike: 16 3
3
Scott Jones Says:
April 19th, 2011 at 9:13 am
Hang in there people, In our State so many people have left the profession we our naming our fee and getting it. If they need a Certified Appraiser they are in trouble. Every week I hear from AMC’s complaining how they can’t find an appraiser here in Maine. I see orders broadcast at $250 with the message saying it been published to other appraisers. The following week it comes through at $350. If they don’t go higher the following week you see the same property with a different AMC. Sometimes this goes on for over a couple months. Finally the borrower will go to a local lender or one of the AMC’S will realize they have to pay $450 or lose the job. I’ve even had them go as high as $650 because they can’t find anyone. Three times last week I had an AMC go off on me because its not right that they have such a hard time finding someone to do the appraisal. They feel we have a monopoly up here and its not fair. I was told all three times the lenders will get fed up with it and stop lending in Maine to which I always respond GREAT! I prefer working with the local lenders anyways. Over the last year we have turned down more work than we accepted. We turn down between 7 and 15 jobs a week because of the low fee. Almost everyone of those jobs come back to me with a higher fee eventually. They have done this to themselves. We have lost a ton of appraisers and because of the fee’s and scope creep nobody new is getting into the business. I have a feeling this same situation is going to start happening all over the country. The average age of the appraiser in this country is in their 60′s and we have very few new appraisers coming in. Its real simple (supply and demand) as the supply of appraisers continues to dwindle the demand will go up and so will everyones fees. The best thing the AMC’S could do for themselves is start paying a fair fee. I don’t want to hear that the lenders or AMC’S won’t pay it because they are up here. Every appraiser in my area has been told by some of these companies that they would never pay our fee and yet everyone of them still doing business here is paying it now. They stopped sending us all work for a couple of weeks thinking we would give in and now they all pay the fee or do business elsewhere.

Well-liked! Like or Dislike: 44 0