Category Archives: Appraisal Fees

HUD Releases Updated FAQ for Appraisal Fees on FHA Loans

Posted on April 17, 2010 by bcoester| 3 Comments
HUD Update

HUD Update

Recently HUD released an updated FAQ about “reasonable appraisal fee’s” for FHA loans, turnaround expectation as well as if the lender is required to report the appraisers fee as separate or as one fee. The FAQ seemed to really validate practices already being done throughout the industry. Most AMC’s do pay reasonable fees to the appraisers and there cut isn’t nearly as much as the industry claims. Overall I think HUD clarified its position which is turning out to be somewhat neutral as long as the appraisal is accurate and reflective of the property.

Update FHA Appraisal Guidelines

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Appraisal Management Survey Sheds Light on Industry Propaganda

Posted on March 6, 2010 by bcoester| 13 Comments

Coester Appraisal Group, a nationwide appraisal management company releases its
annual appraisal industry survey. Over 1,559 licensed and certified appraisers
completed the survey with the results shedding some insight into the appraisal
industry and what is really happening in the appraisal industry. The data was collected
directly from appraisers via SurveyMonkey, various websites, press releases and e‐mail.
After further analysis of the data from the Annual Coester Appraisal Group Vendor
Survey, it seems like many of the implications made regarding the state of the mortgage
industry as a whole have been debunked.
FINDINGS
A total of 1,569 appraisers completed the survey, with a majority of appraisers licensed
in one state and some as many as seven. Appraisers in all 50 states are represented in
the survey.
Distance – One‐third of respondents traveled an average of 15‐20 miles from the
appraiser’s place of business to an assignment with an additional 31.4% traveling 10‐15
miles. This is consistent with the TAVMA survey that indicated the average travel
distance for an appraiser is 13 miles ( TAVMA Survey can be found on their
website)
Response Time – As shown in Exhibit 1 and 1A, the average turnaround time of 2‐3 days
from assignment for a Conventional 1004/1073 and 4‐5 days from receipt of the order. This was consistent regardless of it was completed by an apraisal management company or directly to an appraiser.

Exhibit 1

Appraisal Management Survey

Exhibit 1A

Appraiser Fee's

Fees ‐ Contrary to mainstream data reports, 64.65% of appraisers charge the same
amount whether contacted through an AMC or directly by the lender. Fees on
Conventional and FHA 1004/1073 appraisals ranged $350‐$450. One of the more
popular misconceptions in the industry is that AMC’s earn a huge margin by paying
appraisers $150‐$200 while charging the borrower $450‐$500. Our data proves this
wrong, showing that although appraisers quote lenders $350‐$450 for appraisals, they
net $250‐$300 for a Conventional appraisal and $300‐$350 for an FHA report. This
translates into appraisers receiving over 70% – 80% of their original quoted fee and the AMC
retaining the other 30% or 30 cents on the dollar.

Though many may not agree with the changes that the Home Valuation Code of
Conduct (“HVCC”) has brought to the industry including the proliferation of AMC’s,
71.1% of appraisers work for one or more appraisal management companies. This
appears to be a necessary “evil” in order to continue their career and livelihood. The
top AMC’s noted in the survey results are LSI (22.8%), Landsafe (19%), RELS Valuation
(27.59%), Quantrix (16.1%), Solidifi (6.9%), Appraisal Port (11.5%) and Coester Appraisal
Group (5.2%).
Overall, appraisers rate their AMC experience as simply “average.” The demand of
quick turn times coupled with reduced fees were prominently cited for the average
rating. Another reason was the abundance of report stips. The currently lending
environment can, of course, be the counter argument to the last point.

Payment ‐ A considerable number of comments regarding slow pay from AMC’s and
lenders alike were a revealed where 36.9% of appraisers would like to be compensated
on a net 15 payment schedule and 35.4% of appraisers preferring a direct deposit
method of payment. As a result of this survey, while Coester Appraisal Group currently
pays on a net 30 basis, we are currently making improvements to offer direct deposit to our vendors.

General Feedback ‐ The most prevalent feedback on AMC’s pertained to reduced or set
fees. Other concerns that ranked very high on the list are as follows:

1) Turnaround time expectations and pressure‐ Numerous appraisers state that this
is one of their main concerns (besides fees) when it comes to working with
AMC’s. They say that despite the enforcement of the HVCC, they still get
pressured from unknowledgeable staff to get the appraisal submitted
immediately. Appraisers feel as if AMC’s do not have staff members that are not
trained or licensed appraisers, therefore they are not aware of all the factors and
research that go into composing an appraisal report, especially in a rural area.
2) Too much follow‐up‐Appraisers feel that the time they spend answering phone
calls from AMC’s regarding status updates could be used doing more productive
things such as composing reports, doing inspections, etc. Although there are
some companies that may be a little excessive with checking on the status of a
report, but this topic is a double edged sword because there are plenty of
appraisers that do not take any initiative to call the AMC with an update before
they get the chance to call them. To be honest, the calls will stop when
appraisers start being proactive rather than reactive when it comes to the status
of a report. When AMC’s do not know what is going on with their files and the
lender is questioning their competency and reliability, it appears very
unprofessional, so phone calls must be made to the appraiser until an answer is
provided. Period.
3) Better communication‐ Respondents state that when it comes to getting
answers to questions from AMC’s, it definitely needs improvement. They are
disturbed about the fact that these companies expect them to answer questions
immediately, however when it comes to getting an inquiry response that is
imperative to the appraisal process, it is impossible to reach a staff member or
they reach someone who cannot speak proper English.
4) Lack of appraisal expertise/uneducated personnel‐As previously mentioned,
appraisers feel as if a majority of the staff is not competent when it comes to the
appraisal process, especially those that are in the review department. They feel
as if their appraisal reports are solely rated on a “checkbox” scale that AMC staff
is trained to use and that is the extent of their expertise.
5) Unfair/Non‐existence of rotation of assignments‐Appraisers are concerned with
the fact that they can never seem to get into the rotation to receive work from
AMC’s. They feel as if they are just another “fish in the sea” and no matter what
they do, appraisal management companies already have a selected pool of
appraisers that they give repeat business to.
6) Time it takes AMC’s to pay the appraisers‐Coester Appraisal Group is currently
paying appraisers on a Net 30 pay cycle. According to the data results above,
their preferred method of payment is on a Net 15 basis and some appraisers
report payment delivery times of six months after being quoted otherwise.
7) Broadcasting of Appraisal Orders‐Respondents also seem to be disappointed
with some of the methods used to assign appraisal orders, a main concern being
an appraisal “broadcast.” This is when a mass e‐mail is sent out to every
appraiser that services the subject area and the first one to respond to it gets to
complete the order. Appraisers feel as if this is the most impersonal way to do
business because you are not getting to know your vendors at all and some
appraisers even refuse to work with companies that choose to broadcast their
orders.
Global Disclaimer
Coester Appraisal Group specifically prohibits the redistribution of this material in whole or in part
without the written permission of Coester Appraisal Group and Coester Appraisal Group accepts no
liability whatsoever for the actions of third parties in this respect.

DOWNLOAD VENDOR SURVEY

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Coester Appraisal Group announces “New World for Appraisers”: Offering 5 Tips for Appraisers to adjust

Posted on December 25, 2009 by bcoester| 1 Comment

Over the 40 years my family has been in the appraisal business to say we have seen a lot of changes would be an understatement. In the 70’s and early 80’s appraisals were just a one page piece of paper with the appraisers signature and company letter head.  In the 80’s and 90’s they introduced the forms, then photos and licensing. Currently it seems as though you have to swear your children on the appraisal and go through an extensive background check before they will accept a single appraisal. The changes which have occurred over the years are generally a good thing, and even through all of the changes appraisals have fundamentally remained the same. The appraiser looks at the subject finds the most recent comparable sales and concludes with a value.

The changes that have taken place this year and that are taking place right now in the appraisal world have not only changed appraisal reporting but have reinvented the industry.  I remember the days when your local appraiser would know all the lenders, banks and brokers in their service area on a first name basis. Only up until a few months ago an appraiser could spend time with the loan officer’s; it was essentially your friends sending you business. Now, mainly due to the HVCC regulations times have seriously changed for appraisers. Not to say the HVCC is good or bad but if you want to stay in business, you must adjust with it.

Here are some tips that might help you as the times change so your business may continue to thrive:

  1. Work with appraisal management companies – AMC’s are here to stay and will be a part of the appraisal industry long-term. They provide a valuable service to the client and ensure compliance with all regulations. Keeping appraisals in house is extremely costly for a lender and current regulators frown upon having “in house” appraisal management companies.
  2. Keep your information up to date for all of your clients – If you renewed your license, expanded your coverage area, changed your fees or got an additional certification this is something that your clients will really want to know. Keeping this information up to date will ensure the possibility of receiving work as well as prevent the possibility of automatic removal from some panels (like FHA connection). A good way to keep track of this is by having a simple spread sheet of people you are signed up to do business with an keeping your login information ready . Once you change or update something you can spend a few hours updating all of your information and you are good to go.
  3. When you do get an order communicate every step of the way – Most clients will want a daily update on all outstanding appraisal files you have with them. Everyone is in the service business and when you fail to keep the appraisal management company abreast of any changes regarding your files, it reflects negatively on you as well as the AMC. When the client calls and asks’s for an update saying “we can’t get in contact with the appraiser” is not a status and it looks extremely unprofessional. If the problem is consistent good AMC’s will stop doing business with you as communication is a must.
  4. Turnaround time- It’s not like it used to be when the loan officer called and told you they needed the appraisal in a week and you could take your time. Right now the lender and the loan officer don’t know who you are, don’t have any idea what the value of the appraisal will be and the last think they want to do is wait a long time for an appraisal. Most lenders and appraisal management companies track the average turnaround times for their vendors and the details as to why a particular file took a long time is not always clearly communicated. They also look at total turnaround and not time from inspection. This is important to remember if deciding to accept work. If you know you can’t see a property for another week or two it might be better to just turn down the file rather than mess up your turnaround. For revision 24 – 36 hours is the maximum time it should take unless clearly communicated as to why this is not possible. To be on the safe side always under promise and over deliver. Most lenders and AMC’s will accept a 4-5 day total turnaround on appraisal anything more  your are putting yourself at risk at being beat out by another appraiser. This does vary from state –to state and county-to-county.
  5. Make your appraisals “crystal clear” – In the past, the underwriter knew who you where and you knew exactly what they expected from you. Currently your client based as just tripled as the one or two banks you were doing work for has gone up to 30 or 40 as most AMC’s work with more than one lender. Due to this making sure your appraisals are clearly presented and professional the first time is extremely important. Very often when we call an appraiser for a clarification on a report they go into this very professional  logical rationale on why they did what they did, our next logical questions is always “where does it say that in the report?”. Most appraisers know what they are doing the only thing is they do a poor job communicating this on the report. The vast majority of revisions as well as quality control problems could be avoided if the appraiser would just explain why they did what they did.

This is not a complete list however is a good stepping stone for you to be on track to getting the most out of the current appraisal regulations and changes. The most important thing to remember as an appraiser is that you have finally gained your independence and can focus on appraising and not all of the other things like in the past. Now is the time where the best appraisers will really do the best and not the ones just “hit the numbers”.

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HVCC Suspension – Not Gonna Happen

Posted on August 17, 2009 by bcoester| 4 Comments


Throughout the news the HVCC has been bad mouthed, talked bad about and i am personally waiting for someone to scream “bloody murder”. Most of the controversy has been centered around perceived lower values, increased turnaround, high fees and overall poorer quality of appraisals. You hear the stories of the appraiser driving 200 miles to a town he has never been to do an incompetent appraisal, or the appraiser who is trying to feed his family but only gets $200.00 per appraisal from the big bad management company and is forced to foreclosure on his house due to the HVCC.

This post is to set the record straight and to go into the truths about the HVCC. Whats really going on and also why the HVCC will not be suspended.

Whats really going on:

Road trip appraisals: It is 100% true that there are some appraisers who will very often drive 100, 200 or even 300 miles to do one appraisal. It might also be true that they have never been to this town, maybe never even heard of it nor can properly pronounce its name. However, due to the fact they are the only appraiser within 500 miles this is a very normal thing for him.

The truth is not all areas have an abundance of appraisers and unless the lender doesn’t require an appraisal, they have to get it from somewhere. Very often after 30 or 40 calls to appraisers in the area, after calling real estate agents and the state appraiser boards. If you get one guy who says yes you are so happy that you want to dance.

We do appraisals for HUD and we just recently had a case come across our desk in which the asset company was trying to find an appraiser to do an appraisal on a HUD owned property for over a year! that’s right over a year. The reason they said they haven’t been able to find anyone is because in this part of rural Nebraska know appraisers will complete a residential appraisal and the cheapest they could find someone to do a residential appraisal for was $2,500 (the estimated REO value was only 22k for the property).

This might be a little extreme example however is still very real. We have over 22k appraisers in our system, that is 1/3rd of all the appraisers registered and we still don’t have 100% coverage in all possible areas of the US. At least weekly i will get an e-mail or a phone call from someone indicating they have spent over 50 calls to appraisers and no one will do an appraisal in this area. When we do finally find someone we don’t care what they charge we are just happy we found someone and can get it done.

Out of these long appraisals we do, the vast majority of appraisals are very well done and are very well put together. The very, very small percentage that are bad, are not caused by the HVCC as they are just bad appraisers which will be in the system no matter what you do.

Perceived Lower Values:What they are really arguing is the fact the appraiser didn’t use the highest sales in the neighborhood. The majority of these complaints are from loan officers trying to get refinances done, if it is a purchase it is typically known by everyone that the buyer is paying too much and it is no surprise to anyone the value didn’t come in.

We do 1,000′s of appraisals per month and out of the purchases we do maybe 1 out of 100 the value will be lower than the contract. The reason is because typically the contract price is reflective of the most probable sale price of the subject and not the highest value.

What the nation is screaming about is when there are 2 or 3 higher comparable that sold in which the appraiser didn’t use for whatever reason and the value could have been 10 – 15k higher which would have made the deal work. The reality of the situation is those 3 highest sales aren’t probably the best reflection of the subject’s “market value” and please remember that the appraisal is going for market value and not anything more or less.

The appraisals job is to have 100% non-bias opinion of the property and the market value. His job is not to be too high nor too low but rather reflective of the properties marketability and overall market value.

Increased turnaround:I will admit this has been a big drawback of the HVCC, however what else would you expect to happen when the entire industry changes the way it does business?

The first few months were hell, however turnaround times are no much more so improving and shortly will be back in line with the acceptable turnaround times.

Increased Costs: Most appraisals management companies charge about what the typical appraiser charges however not much more. The thing that has increased the cost of the appraisal is the 1004MC form which has increased the work from an appraiser by about 1 hour.

Also underwriting guidelines have tightened and an appraisals now require 5 – 6 comparable as well as a whole bunch of other information that wasn’t required only a few years ago.

a few years ago it was 3 comparable, maybe 4 and that’s it. I have seen underwriters request as many as 4 additional comparable on appraisals with no mercy, as an appraiser your essentially asking for a new appraisal in which they have full right to charge for it instead of charging the client a new appraisal fee they just raised there fees and called it a day.

Poorer quality appraisals: With all of the extensive underwriting requirements to say the appraisal quality is down they have unrealistic expectations. Appraisers are killing themselves to try and get these appraisals done in a professional manner. The real problem is the lenders requirements are too strict and the underwriter is just checking off a list and not actually being a professional. Lenders having requirements for appraisal’s that are unrealistic is a much bigger problem. Like Providents requirements that three comparable must be within 90 days or a desk review is required. As an appraiser having one comparable within 90 days you might do a dance let alone three. There are some areas in the us where there are no sales in a county within 3 months let alone within a mile or even 30 miles.

Poor Dan the appraisal man who only gets $200: only if that was true, amcs would be making billions. The truth is vast majority of appraisers wont do an appraisal for less than $300 which means at most the AMC is making a 25% gross profit from a $400 appraisal.

Now don’t get me wrong we do have appraisers who only gets $200 per appraisal what is not typically mentioned in the article (how convenient) is that the appraiser might get 50 – 60 appraisals a month from us and he only does appraisal for us. What we do and what most amc’s do is approve a panel of appraisers that are good and reliable and bring them on board as the go to appraiser. That’s it…calling an appraiser on a spot deal to do 1 appraisal for $200 you will get hung up on.. after 20 – 30 a month you can have some serious pull and be 100% justified as its a good business decision for both and makes sense for both the appraiser and the management company.

Why the HVCC will not be suspended:

Its simple, the world doesn’t have faith in US real estate. Without the feds buying mortgage bonds the entire real estate market would freeze. The HVCC wouldn’t be an issue at all because there would be no appraisals being done or loans being made.

What the HVCC will slowly do is start rebuilding trust in the US and the integrity of the mortgage bonds.

This above all will be something that will help turnaround the US economy. Without this we would have no MBS markets, brokers and mortgage bankers would be gone and all loans would be done by your local FSB or credit union like it was back in the 70′s.

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Posted in Appraisal Fees, HVCC Compliance, HVCC Suspension, Homes Values

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