KREAB 2014 Residential Appraiser Fee Study
If you are a residential appraiser, or know a residential appraiser, or have had your home appraised in the last 100 years by a residential appraiser, you should have heard by now that we (as appraisers) are 100% absolutely, positively to blame for the entire mortgage crisis that we now fondly look back on as the ‘recession’ or ‘mortgage meltdown’ after the massive real estate bubble in the early 2000’s that we fondly look back on as the ‘good ole days’ to be an appraiser. It had nothing to do with foreign money, CMBS’s, no-doc loans, loans to illegals, indexing mortgage rates, or flipping scandals, of course.
As an appraiser, and a professional, obviously that is all said in sarcasm. However, what did eventually come to light, unfortunately years too late for most appraisers that were just hanging on anyway, was the the residential appraiser was, and still is, underpaid. It also came to light that appraisal management companies (AMC’s) were taking their chunk of our already low fees but not telling the borrower/homeowner.
Sure, I’ve heard the speeches, read the articles, wallowed in the gospel of ‘just don’t accept those low fees if you don’t want to do the work for offensively low rates’. That comes mostly from people that are on salary somewhere, are involved in other businesses or have other sources of income, or are heir to some bourbon fortune that secures their future. But for those of us that are fee appraisers, or more correctly ‘small business owners’, you do what you can for your business and your family. I can stand on principle all day in the welfare line with no appraisal work. But, I still get to pay for my license, E&O insurance, continuing education, appraisal software, gas, cell phone, Internet, tech and data subscriptions, even if I don’t have any appraisal work. Appraisers need to appraise. Business is business. Without a systematic change to the perception of what a residential appraisal is, then the pay will never get up to where it should be for the level of analysis required, secondary only to the amount of personal financial exposure we have as appraisers. Imagine being liable for every email you write at work at your typical office job, and you’ll get some sense of why appraisers are just a little jittery and paranoid. Imagine talking with your buddies about baseball statistics, but being legally bound to have data on every meaningless stat you quote, like RBI’s, rebounds, or icing calls.
I applaud the KREAB, the Kentucky Real Estate Appraisers Board, for commissioning the 2014 study on residential appraisal fees. Basically, the study is supposed to give our industry a benchmark, since we aren’t allowed to collude on pricing with each other, for appropriate residential fees that should be paid by banks, AMC’s, homeowners, etc…. Now, generally I am never in favor of any government involvement in pricing minimums. I don’t like the government in the free market. Typically, like with commodities, it always goes badly and farmers end up getting paid tax dollars to not grow crops, or something equally ridiculous. But, with this professional service, which really only got organized in 1990, we just weren’t able to organize against the massive banks.
The study is good, and seems reasonable. I know that the fees are very close to what I remember my responses were for my appraisal pricing in the Louisville area. This is a great start. So, appraisers, this is the new battle cry, “Mr. Customer, I need to refer you to the 2014 study that shows the appropriate pricing for what you are asking for me to do.” Now, let’s have some backbone, put the blame on something else (the American way) besides your own greediness, and get those fees up to where they should be. Stop cutting your own throat. Take the chance and stand behind these fees and see where it gets you. If you can only get cut rate fees, chances are, you are a cut rate appraiser that is probably out of business already and just don’t know it.