Appraisal Fees

Ask Henry

Tax Appeal Appraisal Fees

Dear Henry,
At one time, courses suggested appraising a property for the purpose of proving it was being assessed — and thus taxed — too high. If the result was a lowering of taxes, the agreed fee was often one year's tax saving. Can this still be done or have advocacy rules stopped this practice.


Dear Donald,
The Ethics Section (Management) of USPAP specifically prohibits an appraiser's fee being based on the outcome of the appraisal. Assessment appeals would be a great source of income to appraisers if they were allowed to do them with their fee based on the outcome of the appeal. Unfortunately, the USPAP is very clear that it is prohibited. Ironically, lawyers are permitted to be paid this way, and most often are.


Sound Off!

Customary and Reasonable Fees? I Think NOT!

Dear H2 and REV:

Why are we not hearing about any law suits over the Customary and Reasonable Fee fiasco? It would seem that the very low fees that are currently being paid are both forcing appraisers out of the profession and helping to create a barrier for new trainees/apprentices from entering the profession. Combined with appraisers either retiring or dying off, the current available appraiser pool is dwindling and will continue to do so in the foreseeable future.

If there are going to be less and less residential appraisers in the coming years, why are those with a stake in having more appraisers being silent?

Won’t E & O Insurance companies feel the pain with fewer and fewer insureds?

Won’t software companies lose huge amounts of new sales and maintenance contracts with less and less appraisers buying their products?

Aren’t the continuing education and new licensee schools going to have to go out of business with no new pupils?

Wouldn’t the large appraisal organizations feel the pinch with not having robust membership?

The lack of anyone with deep pockets and a large stake in the game — maybe even a very large appraisal firm? — challenging the Customary and Reasonable Fees that did not change as they were supposed to on April 1st is mind-boggling. Those entities that depend on sheer numbers of working appraisers to stay in business should at least test the waters with a class action lawsuit. The specter of a $10,000 fine per occurrence and the potential liability for a fine
per appraisal should sharpen the mind and cause some lenders or AMC execs to rethink the flawed fee model.

Just a thought!

Fred Hankins

Sound Off!

Rebuttal to Complaint about Appraiser Honesty

Dear H2,

I would be glad to respond to the person who complained about over and under appraisals, and seemed to imply that all appraisers are dishonest. Performing residential appraisals daily with anguish and anxiety, trying to find the best comparables to fit the appraisal assignment in a market where more often than not, sales are infrequent or dated at best — I strive to provide the best possible product in a world of increasing competition for less than reasonable fees. My reports incorporate the latest statistical analysis (something we never did back in the old days) and I strive to stay educated and up to date on the latest analytical tools which have made my reports more credible than ever.

In an age, where good appraisers are dying off (like me!) and good new appraisers are becoming harder to find....I can only surmise that the writer, Austin Meredith, has not had the good fortune to run into any of the many good appraisers that still do exist, who do not blow their own horns, but go quietly about their days, still taking pride in their work and striving to produce the best possible product at all times. Happy appraising — honest and professional appraising — in not cookie cutter or boilerplate work!


Donna Gutierrez
Appraisals All Islands

Dear Donna,

I can understand your frustration with the current state of affairs in the appraisal profession. There are a lot of under-trained appraisers who turn out poor work, and some dishonest ones too, giving our profession a bad name. A big problem is the marketplace has many buyers of appraisals who are not interested in quality and integrity. I think things are slowly getting better. Time will tell.


New UAD Ad for BLOG

Ask Henry

Customary & Reasonable Fees in Certification

Dear H2:

This is a portion of a six page contract that I have to sign and send back in order to receive additional work with NREIS, address below. They are well known to pay low fees, and to take 90 or more days to pay the appraiser. Here's what the contract states about fees:

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

National Real Estate Information Services, a Pennsylvania limited partnership, having an address at 100 Beecham Drive, Pittsburgh, PA 15205 (the “Company”). The following certification should appear in the additional comments section of page 3 of the appraisal form:

“I have agreed to the terms of payment from Company and consider the fee to be customary and reasonable for my specific market for this specific property and report type.” (Emphasis added.)

"No employee, director, officer, or agent of the lender, or any other third party acting as a joint venture partner, independent contractor, appraisal management company, or partner on behalf of the lender has influenced or attempted to influence the development, reporting, result, or review of this assignment through coercion, extortion, collusion, compensation, instruction, inducement, intimidation, bribery or in any other manner.”

“I have not been contacted by anyone other than the intended user (lender/client as identified on the first page of the report), borrower, or designated contact to make an appointment to enter the property.”

“I have agreed to immediately report any unauthorized contacts either personally by phone or electronically to Company."

“I understand that according to the current regulations, that it is mandatory for the client or intended user of this report to inform the proper regulatory agency if this report does not comply with USPAP Standards.”

The above certification is to be included within the actual appraisal on every report you complete for COMPANY.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

I hope that we can fight this current interpretation of “customary and reasonable” fees, as several other AMCs are using the same rationale. If we sign such a contract, we basically agree with their concept of what we should be paid! How is that "independent fee appraising"?

Bob Godwin
Appraisal Services of the Gulf Coast
Pensacola, FL

Dear Bob,
I have some doubts in my mind as to whether this is an appropriate thing to be part of an appraisal report, especially where they want you to put it on page three. However, I am not aware of any regulation that prevents you from doing so as long as what it say is correct. I think you have to make a business decision as to how badly you want their work.


Sound Off

Appraisal Fees: A Reasonable Solution

Dear Henry:

Us 80 year old kids need to share our experience.

I recently received an FHA appraisal assignment on a single family house, from an appraisal management company and when I arrived on the scene I realized that I appraised, also on an FHA refinance, the house directly across the street in 2001. The value of the houses almost doubled in the 10 years in between.

My work to complete the appraisal, with 3 Comp sales (with current non-MLS pictures), 3 listings, interior pictures, market condition forms, etc, also almost doubled. When I pulled up the 2001 file, I found that I had received a fee of $400 for the old 2001 job. My fee for the 2011 appraisal was (drum roll): $400. WOW!

I found that the appraisal fee charged to the home owner was $750. (she offered the information) and asked why my fee which she assumed was the full $750 was so high? I could not find a reasonable answer except: "I'm sorry, I can't discuss it with you..ask your bank."

Reasonable fee solution: Since AMCs are here to stay, even though some states are now (or soon will be) requiring a license, the Feds and/or federal institutions should require the AMCs to pay the Appraiser 75% of whatever fee they charge the homeowner for the appraisal, and be required to show both parties and their fees, on the HUD1. The banks should NOT be allowed to own AMCs. This will stop the AMCs from shopping for the lowest fee and least experienced appraiser to do the job.

Don Betz
Maryland Certified General since 1962