“Help. We can’t find an appraiser to come to the property. Everyone is saying NO. What do you suggest?” I’ve been getting this question multiple times every week, so here are some thoughts.
Market update: By the way, in case you needed some background noise, here’s an hour-long market update I gave for SAFE Credit Union this week.
The problem: Appraisers have been dealing with record refinance volume and strong purchase volume – even in the midst of more appraisal waivers happening. Seriously, there has been an avalanche of work and not enough hours in the day to finish it. Unfortunately finding an appraiser to do a job quickly is about as easy as finding a contractor.
Four considerations:
1) Expectations: Everyone wants speed, but the appraisal is one of the slower parts. Sure, some appraisers could be more efficient, but keep in mind there is an incredible volume of work right now AND the system has also helped create this problem. Appraisers are being asked to write longer reports than ever and the scrutiny after the appraisal is delivered is unreal. In short, it’s important to have reasonable expectations about appraisers being busy and that today’s reports simply take longer. I’d recommend ordering the appraisal sooner too rather than waiting until the last minute.
2) Is the appraiser getting the full fee? A buyer might be paying good money for an appraisal, but how much of the fee is the appraiser getting? If you didn’t know, Appraisal Management Companies (AMCs) skim part of the appraisal fee and then advertise a lower fee to an appraiser. Sometimes the skimmed fee can be a huge chunk of what the buyer paid too. No wonder why an AMC can shop a fee for weeks and not get anyone to say YES. Here’s the question to ask the lender: How much of the buyer’s fee is the appraiser actually getting? This is hands-down the starting place if you can’t find an appraiser.
3) Rush fee = silver bullet: Money talks and if you aren’t having success, pay a rush fee. If you want to go to the front of any vendor’s line, a higher fee can often help make that happen. I don’t say this to pad my pockets as I only do private appraisals these days (so I don’t benefit from this advice). I’m just saying if you are struggling to find an appraiser for a loan, paying a rush fee can matter. How much? I have ideas, but this really comes down to your market. Feel things out and find the sweet spot until an appraiser says YES. Two weeks ago I gave this advice to a Realtor friend and the AMC said they were not allowed to charge a rush fee. I told my friend to press the issue because that didn’t sound right. Well, it turns out when a rush fee was offered and pressure was felt they found an appraiser. Also, I would ask how much of the rush fee the appraiser is getting in case the AMC is skimming that too.
4) Cherry-picking easy stuff: I do hear of appraisers passing up difficult assignments because there are too many easier ones out there. I mean, why would an appraiser endure huge scrutiny on a complex property for the same pay? If the lender you use cannot seem to attract competent appraisers willing to say YES, then either they’re going to have to solve that problem by adding more appraisers to their panel or you’re going to have to go elsewhere.
5) Other: What has worked for you? What did I miss? Any advice to give the real estate community. I welcome tips from agents, loan officers, and appraisers.
Closing thoughts: Ultimately there isn’t a one-size-fits-all formula for finding an appraiser, but hopefully some of my basic advice is helpful.
Thanks for being here.
Questions: What do you think of the points above? Anything else to add? Any stories to share?
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I’m glad you have this post because I’ve had that same call several times this week as well. One was an extremely complex luxury estate with over six times the list price of a median home (just told for perspective to the reader because the fee of the appraisal is based on complexity and not the price) and the fee that had been collected from the borrower by the lender or AMC to appraise the property was about what you would expect for a typical home. Often the lender will say it’s complex and offer $100 extra for an assignment that will take two or three times as long, five or ten times the experience, and has five or ten times more liability. The extra $100 is an insult.
Golden example Gary. Thank you so much. I was hesitant to list an exact fee for a rush, but I completely concur with your sentiment here. I wouldn’t offer a contractor $100 extra and think that would move the needle. A very modest uptick from normal for an appraiser doesn’t account for the time, expertise, potential increased scrutiny, and liability for such a lofty assignment. It would be like going to a Ferrari mechanic and saying, “Hey man, can you just do this for $100 extra than I normally pay my Pinto mechannic.” Okay, that word picture may or may not work… 🙂
Everyone wants a rush appraisal. And every deal is challenging the outer limits of value. The big issue is that quality takes time. And most people involved have no clue how long it takes to do one report…nor do they care. Am not willing to cut corners and jeopardize my license for their impatience.
Thank you Helen. It’s not easy seeing the market these days. Totally agree.
I am with you Helen. It takes time to research and analyze the market and even more time to write the “thesis” to explain why the value is not supported by that “hail mary” list price.
Hey Ryan, I’ve been getting these calls from agents and buyers too. The source of the problem is the rapid changes that happen in the appraisal lending market vs. how long it takes to develop a competent appraiser. It makes no sense for me to staff up and train appraisers if the work disappears in six months. Why would someone competent devote the time to become an appraiser if the work can disappear at the next rate increase or when every entity in the industry is trying to reduce the use of appraisals?
For buyers and agents, don’t try to rush everything. A 17 day close in this market is asking for trouble.
Thank you Joe. I’m so glad you mentioned that. We have some real issues in the profession. Totally agree about having reasonable expectations.
How to find an appraiser during an insane real estate market. AMC’s-shake the cushions of your gold lined couches and share a larger slice of the pie with your appraisers. They are overworked, underpaid and abused daily. Good appraisers tired of taking half fees and getting beat up by clients have left the AMC arena and are doing private work or working with direct lenders. Lenders that use AMCs-you may not be getting the most competent appraiser available, you are likely getting the one fresh off the appraisal school turnip truck with the lowest fee and fastest turn. If I had a nickel for every “Please provide a RUSH fee quote and turn time”, Id make another dollar every day. Calgon, take me away. To a place that existed before AMCs. Gotta go…time to update my clients that I took five minutes out to respond to a blog post.
I hope people are listening to the comments. Part of me felt like my big point in my post was about the fee, but that IS a huge part of this mess. I took myself out of the AMC game because I felt like such a pawn.
Ryan if you have an articles on how to get more private work, I am interested in reading. I am taking classes that focus on non-lender work but any additional advice you can share would be greatly appreciated. Thanks
Thanks Laryssa. I don’t know that I have any posts on that, but I do have a talk I give. It’s just been a while since an organization has hired me to do that. For instance, I don’t think I’ve done this talk at all since the pandemic began. I don’t have much time to hash out ideas at the moment, but I wanted to say joining a local Realtor association and becoming a resource in your local market is huge. Build relationships. This is a relational business and the AMC model is NOT about relationships at all. So my advice would be to go after building good relationships within the real estate community and if you feel so inclined start putting out content to help tell the story of your market. I did both of these things about 12 years ago and it’s made all the difference. I have so much to say on this and so many ideas. Sorry to not let more out here for now.
Thanks Ryan!
You’ve hit a hot topic here my friend! Nice post! For me, fees are not an issue. No complaints. I just cannot take on the volume of lender work coming my way right now. About 40% of my work these days is non-lender work, which I’m grateful. Especially in light of this crazy housing market, with off the charts bidding wars. Last week, I turned down a week or more worth of lender work a day. I hate to, but I can only take on so much work a week. I am not going to sacrifice time with my family to work day and night. It’s been a crazy year, and the pace seems to be getting more hectic every day. But all of that said, it’s good to be busy! Many people are still unemployed, so I can’t complain about being busy.
Thanks Jamie. Yeah, outsiders might not understand the volume issue here. It’s been record-breaking volume going through lender pipelines. I find even private work is just scorching hot. You are correct about complaining. Though I think when people get really busy there is also a very real dynamnic of feeling overwhelmed or discontent. I know this feeling doesn’t make sense on paper and it might even sound insensitive in light of other people not havingg work, but it is still a real dynamic I wanted to acknowledge. Glad for your positive attitude my friend.
I agree with you! It is very easy to feel stressed and overwhelmed as an appraiser right now. I’m glad you have mentioned this. Appraiser’s feelings are totally legit! Frankly, I also have to fight these feelings. When I feel like I am getting overwhelmed I do my best to take a deep breath and attempt to step back and look at the bigger picture. But that’s not easy to do at times. My best to you and all of my fellow appraisers across the country! Hang in there! And thanks Ryan for being a great guy, who also happens to be a great appraiser.?
Good words. Thanks for the kind words too. Appreciate it.
Just wondering if groups of appraisers can set up “co-op” type AMC’s where they retain a larger percentage of fees?
I don’t know if that would be possible, but imagine the details of running something like that, hounding appraisers for status updates, etc… Not my cup of tea. But I’m all for systems that help the talent rather than the middle man get the fee…
Great question! I really don’t know about that. I know that some appraisers own AMC’s. However, they do not perform appraisals for their company. I’m not sure if it would work as a co-op.
I am interested in becoming an appraiser (have taken classes at the local community college in Marin) but it is so hard to get the training to become an appraiser and the work seems undervalued. I just had my home appraised for a refi and the poor man seemed so overwhelmed and even mentioned how little he was being paid these days. I would love to hear your take on becoming an appraiser today.
Love your blog!
Hi Hannah, thanks so much for the kind words and the question. That’s a big question. I don’t have time at this very moment to answer, but I’ll do my best to get to that. I’m actually asked this question fairly frequently so I think I need to just make a video to help share my thoughts. 🙂
Bravo Ryan. Your points are excellent and ones I point out to agents all the time when speaking on clubhouse or other platforms.
Pretty much every agent group or individual I have spoken to has no idea how the AMC model works. They have no idea that their purchase appraisal is most likely being shopped around for days if not weeks. I have turned down the same order 3 times in 2 weeks and the crazy part is that their due date was this past Monday as stated on the order. They refuse to come up in fee to pay someone to get it done. I too have stopped doing a large amount of lender work as I have transitioned into more private work and get paid much more than a typical AMC fee. Why would I want to take those jobs when the private side is much more fulfilling.
Amcs, fees, and this crazy market have really alienated many appraisers from doing these appraisal assignments.
Now add to this the limitations placed on the abilities of trainees… if they allowed trainees to be able to inspect homes and be more involved after a period of time with a supervisor alone, this would in my opinion open the doors to many appraisers taking on trainees to increase their business and there workloads. But they just want to keep creating fairy tales and put band aids on everything.
It’s tough out there, and the more we educate maybe the more people will not only understand but also get on our side of things.
Thanks Mark. I really appreciate the kind words and props on Clubhouse too. Very cool. I’m so glad you mentioned this. I hear this same thing from colleagues all the time. They’ll quote a fee, the lender rejects it, and then the order comes back 2-3 weeks later with the fee the appraiser quoted. Nobody hears about this though, but it’s a huge problem behind the scenes.
As a loan originator who confronts this challenge daily, here’s how I deal with it. Essentially, I explain the reality of the situation. From now on, I can provide them with the link to Ryan’s blog post. (Thank you, Ryan, for saving me time.) I explain to the refinancing borrower that the Dodd-Frank Act threw many wrenches into the mortgage industry; this is just another one. When an appraisal is required, I lock the rate (if the borrower wants to lock) for 45 days and explain to the borrower that we might need an extension.
If it’s a purchase, I explain to all parties that we can’t close in 30 days without an appraisal waiver. If they insist, I decline the transaction. Life’s too short to deal with tone-deaf real estate agents who close so few sales that they don’t get it.
P.S. I have never in my career said to an appraiser, “Here’s the number we need.” As my mother often said, “A clean conscience is the softest pillow.”
Appreciate you Catherine. Thank you so much. I think being realistic is so critical right now, but it’s not always something that happens in the real estate space. Thanks for not asking appraisers to “hit the number”. 🙂
Be respectful and professional. More with honey than vinegar.
Exactly.
There’s much to discuss about this topic! But all I say is this. Increase your fees… I work rural counties in the Midwest, mostly for AMC’s nowadays. Why, because all they want is “fee and turn time”. So when a job comes across my desk for the second (or 3rd) time I know everyone’s turning it down and not even bidding it… That’s when I explain the requirement demands, the complexity, the extra time, and often a 2nd trip for comp pics. Then make a bit, and tell them you don’t want to leave them with “no options”. I completed a job for $1,000. and one $1,200. the last couple weeks. (It was obviously their best option…) Yes, it was work, and time, but at least I’m paid for driving 120 mile round trip for a photo of a “private drive”.
Thanks Roger. Rural markets are not easy these days especially, so you’re in a prime spot to receive business. I just referred a rural colleague today in an outlying county in my area where there are very few appraisers. I can’t imagine how busy they are (and you too). Thanks again.
Hi Ryan! Everything you wrote about is exactly correct. I just had an escrow in Alta, CA and it took 3 weeks to get an appraiser to accept. As a last resort, the lender ended up offering a ridiculous amount in hopes someone would bite, and thankfully they did. The several appraisers we spoke with gave us the responses you mentioned. They had a ton of local, easy jobs, so why would they go to Alta for a slightly more complicated property?
Thanks Jennifer. Yeah, it’s no joke in more “rural” areas so to speak. There are fewer appraiser who even serve those markets. Money tends to talk. I’m guessing the original advertised fee was just way too low to begin with. I’m so glad it worked though.
Yes! I believe the original offered price was $425 and my lender ended up offering $2,000. Crazy right? We do what we need to in order to get it done. 🙂
Thanks Ryan for the knowledge you bring!!
Thank you.
Being shopped for a $250 fee for a 4 day turn time for a 2 bedroom log home on 10 acres with large shop in county with 1 person per square mile is a waste of my time to respond.
And I don’t know how many of those are in my trash folder on a daily basis.
Or better yet-taking my quote and then immediately putting it on hold while you shop it around for an appraiser who wants to work for free or doesn’t have a family
Offer me a reasonable fee and I will give you my 4 week turn time. A reasonable fee in town in a subdivision is $525
Out of town goes up by distance and complexity
Offer me a 2x fee and you will get it 2x faster.
Three choices;
Fast
Right
Cheap
Pick 2 and if I am the one doing it your only two choices are fast or cheap.
Thank you Mark. Bingo. I hope people are reading the comments to get perspective. Thanks for your thoughts.
I am finding that a lot of appraisers in my area must be just taking on the easy ones. I, on the other hand, am only taking on the challenging ones and I am finding that borrowers and buyers are mostly quite willing to pay good fees since no one else wants to take on the complex assignments. I make sure to charge for the extra time and conditions I will likely get from the lender and then the direct lenders and AMCs know they can call me with a hard one. I have myself set as “on vacation” for almost all AMCs I previously worked for but the assignors at the AMCs who try to find a home for jobs that no one takes now know who I am, so I actually feel like I have a bit of a personal relationship with them. Just one way to approach the current glut of work.
Love it Alanya. Thanks for sharing. I think you becoming the go-to appraiser for the hard stuff is such a good move.
I’m in Texas…we, real estate agents, can’t order an appraisal for our clients. Only the lender can order it and then the appriaser is assigned to the case (there’s no “choosing” an appraiser).
Unless, it’s a cash deal…but most cash buyers in this tight market wouldn’t pay for an appraisal.
Thanks Pat. Yeah, I find it’s hit and miss with cash buyers. Some want an appraisal and some don’t. I only get called on the ones who do, so it’s hard to say how many actually do (I’m guessing most don’t). There are situations though. I also get called sometimes from buyers who have accepted an appraisal waiver. There are so many factors to consider these days. Thanks for chiming in.
And by the way, if you ever see anything interesting in terms of migration between CA and TX, I’m open ears. I watch the stats closely and I’m always open to hearing boots and the grounds stories or commentary.
Spot on, Ryan. Especially, “ordering the appraisal sooner.” There really should be no such thing as an emergency appraisal.
Emergencies happen, but let’s try to plan to not have them be the norm. Thanks George.
Ryan
Thank you for your post, very timely. I recently completed an extremely complex assignment with no recent comparable sales. This was a rush purchase assignment directly to the lender. I personally do very little AMC work for the same reasons so many have mentioned. The purchase price was under $2M, but it occurred to me there was a significant amount of risk and subsequent liability associated with this particular assignment. I am reassessing my pricing to not only consider the time a complex assignment involves but also the increased risk and liability appraising in this current market with values increasing at essentially unsustainable rates. I quoted $1,000 and completed the assignment for the lender. I ended up taking three days to complete and I lost money on the assignment. One week later the exact same assignment came to me from a new lender through one of the AMC’s I have completed complex assignments for in the past. I quoted the same fee, the fee accepted, and I spent another day re-photographing the property and re-analyzing the market with a few minor tweaks. I ended up not losing any money on the two assignments but I do not believe I am being adequately compensated for the risk and liability and will be reassessing my fees moving forward.
Thanks so much for sharing Joseph. Wow, that’s great the assignment came back to you. Man I’ve been there so many times with charging too little.
Great topic, Ryan, and lots of great replies. The appraisal profession is going through a lot of issues right now. It’s sad that one of the quick fixes they are using to do a quick close is the appraisal waiver. They are using this to bypass the appraisal (of course the borrower has to qualify) but I believe this has the potential to bite them in the long run. While the percentage of waivers is lower for purchases I can see this increasing in the future and the potential for problems increasing as well. We have become such a speed and convenience drive society but I think we all need to just slow down a little.
Thanks Tom. I totally agree about waivers. And the speed we all crave isn’t always ideal for us. I know this as a California driver. When I visited family in Idaho last year it was painfully obvious I am in a hurry. Nothing wrong with slowing down….
Hi Ryan. I am a home-owner going through a re-fi. I own a townhome in Folsom. Last year (May ’21), I tried to re-fi and it took several weeks to get an appraiser to come out. I’m trying to re-fi again (I pulled my May ’21 contract because it came in too low) because home prices have sky rocketed over the last 8 months. My lender is going through an AMC. If I want to avoid another delay, can I ask my lender to offer more for it? Would I expect to have to pay the difference? Would I be better off letting the lender make a new, higher offer without my involvement? I’m assuming they would pay the difference, right? Thanks
Hi Darcy. I would open up conversation with the lender. Ask them what their procedure is for ordering appraisals and what they are seeing with current turn-times too. Ask them about their success rate with turn-times and what tends to get things done more quickly too. I think once you understand the process and what they are saying works, then make your decision. Before offering money I would want to understand how things work. But if more money is offered, I would 100% make sure the appraiser is actually getting the money. It’s no good if you offer more and the Appraisal Management Company overseeing appraiser selection skims that money for some reason.
Thanks, Ryan. Very good advice.