Earlier this month, the Standard & Poor’s Ratings Services (S&P) stated that it will take longer than predicted for the U.S. housing market to absorb distressed and foreclosed properties. This means that prices may continue to be low over the next several years. Although foreclosures are slowing, borrowers are continuing to default on their mortgages. The excess of defaults has created a surplus of homes for sale which many are calling the “shadow inventory.” S&P is predicting that it will be another 44 months until this inventory is cleared. Nevada, Arizona, Florida, and California are some of the states hit the hardest by the U.S. housing bust.
This new prediction for the fragile U.S. housing market couldn’t come at a worse time for struggling real estate appraisers. The long expected rebound of the market and the new Dodd-Frank Act requiring the registration of Appraisal Management Companies (AMCs) means appraisers will begin to see less and less work. The Dodd-Frank Act calls for high AMC registration fees which will eventually force AMCs to contract fewer appraisers. The combination of these two factors equals bad news for appraisers. It may not be economically feasible for many appraisers to remain in the real estate business.
This decrease in demand for appraisal services will not only reflect in the number of appraisers leaving the business, but in the number of individuals joining the profession. A decrease in the number of professional appraisers could actually benefit the appraisers who are able to weather the storm. If appraisers can band together and set slightly higher fee precedence, they would be able to take control of setting the standards of fees that are customary and reasonable for their industry. Slightly higher fees for appraisers could help them sustain in this market. It appears that the rebound of the housing market is somewhere over the horizon. The year 2011 will be a telling year for appraisers.
Author
Amelia R. Hyden
President & CEO
Appraisal Management Company of Southern Nevada
Direct Phone (702) 824-1614
Phone (888) 867-9763
www.amcofsouthernnevada.com
We are not the FHA, VA, USDA, HUD or any other government organization. The content on this blog is intended for information purposes only.
Ouch, the possibility for even higher appraisal costs? The average residential appraisal cost here in Minnesota is $400. Honestly, how much time does it take an appraiser to perform an analysis on one property? Your economic reasons for increasing appraisal costs may make sense, but at what point should a line be drawn?
Congratulations man…you live in the only location in the country where appraisers are being paid a fair fee. Most appraisers thoughout the U.S. went from being paid $300 to $150 overnight with the other half going to AMCs.
With regards to the article, I have a better idea. The few appraisers who remain in the business (the new guys) should seriously consider implementing a boycott against ALL AMC ordered appraisers. They’ve endured a 20 month rape so far giving away around 50% of their fees to AMCs. Why not try giving up ALL OF YOUR INCOME if necessary to shut down AMC completely and (or) force them to pay fair fees ($400).
Its time for every appraiser to join their state coalition. If it doesnt exsist, form one. Its the best way to potentually implement a bocott and demand we be paid $400.00 appraisal. With “scope creep’, its only reasonable ! Amc’s are esentually preforming a function that banks and morgage company’s use to preform. The banks and mortgage company’s no longer have the expence of panel management, order/processing, review, etc.. Guess who now pays for it ? We do, in reduced fees ! Banks win again !
What if your state is too backward to recognize the problem, much less form a coalition?
Our state appraisal board denies to this day that HVCC created a problem for appraisers.
I may get back into the business 10 years from now when they finally realize that appraisers were screwed by HVCC, banks, & Dodd Frank.
re: Mahtomedi Homes for Sale
You may pay $400 for an appraisal but I guarantee you that the appraiser is not getting $400. $400 fees are the AMC rates that enable them to pay average average appraisal fees of $175-$225
Ok, to all appraisers, banks and realtors or services groups- aside from the fees and who’s making nothing or who’s making pennies- gives us a break! It’s proven appraisles are simply “opinions” that you all justify by looking at markets near by, houses sold, square foot etc. We, us, the homeowners have 50% chance of getting the reasonable appraised value of our home and “losing”!!!!!! Our money. Yeah, we lay out the cash, you make your money no matter what so don’t send these stupid responses about how things are not fair. In my opinion, we don’t need appraisers, I would actually like to work directly with banks and completely eliminate your industry and trade.
As long as the banks sell the note to investors and the American people have to bail out the banks for their mistakes… we need appraisers. Can you imagine what kind of reckless loans would be done without appraisers while the banks immediately sell their loans to wallstreet? Appraisers get paid whether the deal gets done or not so that there is not an incentive to close the deal based on a predetermined value. I do not think I am doing the lords work by being an appraiser but appraisers play an important role. Its not black and white. Sometimes there are instances were an appraisal is not needed but do to federal law one has to be completed.
Note that while appraisal costs are rising, it is not the appraiser who is realizing the entire fee. His fee has been cut in half or less in the past four years. The AMC is the revenue
collector for the bank who owns the AMC.
Moderation? Your fee demands are awaiting moderation.
If you are an appraiser check out http://www.BankRape.com (the only group I am aware of that is fighting for appraisers)..
Re: Comment From Wlc007 aka JackS
Obviously you were one of the countless mortgage brokers (previously known as a used car salesman) that was forced out of business by HVCC.
My sympathy to your parents for having to take in such a miserable excuse for a human being AGAIN.