Fighting for $200 to do an Appraisal

If you were buying a house, how would you feel if the appraisal was ordered as below? Or if you are a real estate agent or loan officer, and your deals are hinging on quality appraisals, how does this strike you?

I received an email with the text below just a few days ago. I don’t personally do business with these types of companies, but I guarantee someone did accept this assignment.

My name is XXXXXXX with XXXXXXXXXXX. I have a 1004 Conventional order in Auburn, CA. It has a fee of $200. Please let me know if you are interested.

What’s wrong with this message? Several things: 1) The fee is too low and not customary to typical market rates for a real estate appraisal, especially in Auburn; 2) This email was likely blasted to a high volume of appraisers, and orders like this typically go to whoever responds the fastest. Is that really a good methodology? Instead of picking the most qualified appraiser for the job, it selects whoever happens to be available to work for cheap; and 3) The management company ordering the appraisal likely charged the bank easily $400+ for the appraisal. That doesn’t seem very fair to the borrower or the appraiser.

Thankfully not all appraisal management companies (AMCs) operate like this, but unfortunately there are many that do. When I do appraisals for loans, I only work for good AMCs that respect my time, work and pay me decently. If you are in a position to order appraisals or you use an AMC, what is the process like for engaging appraisers for business? Is it like what I explained above? Different?

Please know that I’m not ranting or asking for pity for the real estate industry (like anyone would give some anyway). That’s not it at all. I just want to provide some insight and context into the happenings of the appraisal ordering process because over the long haul this is not going to be helpful to consumers or the real estate industry.

What do you think?

Questions: Any thoughts or stories to share? What is #11?

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Comments

  1. says

    Ryan, I spoke to a real estate agent the other day that said something like, “This lender NOW goes through an Appraisal Management Company.” As far as I know, this lender has used AMCs for at least 8 years. I feel like AMCs have been the real estate appraisal industry’s dirty little secret. Thankfully, blog posts like will help to educate everyone.

    • Sac Ryan says

      Thanks Bryan. You’re right that AMCs have been around for a long time. Just think of Countrywide’s use of Landsafe as an example. There are some decent ones out there, but like the one I mentioned above, it’s just no good on too many levels.

  2. says

    I think the idea of ordering appraisals like that is ridiculous. I own an AMC and would never even consider doing something like. ( I will note we do send our commerical bids I a mass email format as it’s too much work to send the one by one when your looking for a quote). But for a residential property they should have set reasonable fees for the area and really have a relationship with the appraisers. These kind of companies shouldn’t be allowed to do business. I would send that to the lender as they would be pissed.

    • says

      Brian, I appreciate your commment. I have heard of your company. I think you said it best that “these companies shouldn’t be allowed to do business”. I saw your tweet too. If that’s what you pay for appraisals, it’s pretty decent for an AMC when considering what many AMCs pay. I appreciate that. By the way, what’s the deal with the TBWS guys mentioning your AMC a few weeks back? A friend told me that was all bogus.

  3. says

    Yes that is ridiculous. There are a lot of AMCs out there like that. The problem is that they are greedy and work with the big banks therefore get tons of orders. Although I know smaller AMCs attempt to do the same thing. Another problem is that there are good number of appraisers willing to accept assignments for these pitiful fees. I worked for this company while i was an assistant and I would say the average fee per assignment was $175. He low balled everything but his quality was garbage, so I guess that makes sense. Needless to say, I didn’t work there long. I have never worked with Coester but there noticed there are some good AMC’s out there. I would love to find more of them so if you want to fill me in, I’m all ears!

    • says

      Good point, Matt. That’s the thing…. obviously someone is doing the work. People need to feed their families and there is nothing to complain about there. I respect that. It’s just that on the other side of the coin, working for so little cripples everyone. But that’s not unique to our industry right now. We see this phenomenon in so many trades. Matt, email me. Let’s talk more.

  4. says

    Hey Ryan! Great information. On Monday, we received the new protocol for a national AMC we work for. The new method goes like this…. Instead of an order blast, they begin calling appraisers that service that County. If you don’t answer, the automated call rolls to the next appraiser in your service area. If you do answer and do accept the order, the automated call automatically calls the homeowner to setup the appointment. What if you’re in the middle of measuring a home or talking with a homeowner and can’t be interrupted or know your schedule? Then, you miss the order. This is getting ridiculous!!! Keep It Up, Please! Bill

      • says

        Yeah! Except when I’m in the person’s home I’m appraising. I figure that if they’re paying me for my time and attention, the very last thing I want interrupting me or them in conversation is my cell phone. What kind of message would that send to them? I guess the Army taught me attention to detail and to focus on the matter at hand…

        • says

          I think you’re right. We must be courteous and professional. It’s too bad that a phone system like this could potentially interrupt that. Along similar lines, we probably shouldn’t be returning a text message or email on our phones when talking with a home owner. Most of my work right now involves vacant properties, so it wouldn’t be too much of an issue for me.

          I didn’t know you were in the Army. That’s great, Bill.

  5. says

    Geezzz, talk about undercutting! Two hundred bucks will barely fill up the gas tank these days, depending on how far your drive. The other piece that the public sometimes does not get is that, we as independent contractors, have to shoulder all our own expenses (health care, insurance, office, equipment, supplies, etc.). If anything, the fee may need to go up. You are worth every dollar.

    • says

      Thanks Keith. My family deducts usually between 7-10K in health insurance per year. And that’s just health insurance. It all adds up, especially in this economy.

      By the way, does anyone know why my Avatar is no longer showing? Ever since I picked out a universal Gravatar, my Avatar does not appear? Odd. Now that I see Keith’s freshly installed Avatar, I better figure this thing out. 🙂

  6. says

    Ryan,

    Great post! A similar situation occurred with me last week. I got a call Friday afternoon to do a “rush” job. They needed it back Monday morning. I decided to find out the address (since there was a chance I could have recently did a job in that area recently). After I called them back they then asked me “oh, can you do that for $250? I told them no considering it was “rush” job and I would have to charge at least $100 more. She told me she would call me back after she got the fee approved…she never did call back. As you said though, I am sure they got someone to do the job. It seems like they want superhuman service at bargain basement prices. It seems the only way we can survive is through diverisfication.

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