My Perspective on Customary and Reasonable Fees

Posted by TSI Appraisal

By:  David Majewski VP Operations/Business Development

Traveling across the country over the last two years interviewing appraisers for both fee and staff appraiser positions, I have heard many issues and theories on the challenges within the appraisal industry.   The most common issues being: low fees paid to the appraiser, extended coverage areas, changing assignment conditions, an attriting appraiser population and continued general AMC strong-arming.  With oversight to a medium-large AMC, I find it puzzling that appraisers, along with the industries professional organizations and governing bodies, don’t try to establish a more formidable voice to create an environment and subsequent platform for change.  After having conversation upon conversation on the matter, I am left with the following observation – there is a complacency and resignation similar to someone “throwing their hands up in the air” and saying “that’s just the way it is!” 
There are a handful of appraisers I speak to that seem to challenge the status quo, stating they are not going to accept an AMCs questionable behaviors; instead, they continue to seek clients whom they align with, more from a philosophical and practical standpoint.  These appraisers are definitely in the minority, although I can appreciate the position (i.e. accepting work at a rate of compensation that is obviously below market, rather than having no work at all).
By no means do I contend that the responsibility for these changes is solely in the hands of the appraiser community.   I believe there needs to be continued questioning and challenging between the AMC and the Lender Clients on the merit (or lack thereof) for some of these current behaviors and business practices.  Numerous times TSI Appraisal leadership and I have had very candid, spirited conversations with Lender Client prospects and current clients as to the true necessity for further compressed turn times, fee reductions to the field appraiser, assignment condition scope creep and geo competency.  These are not easy discussions to have when there seems to be widely varied perspectives.   Additionally, we all hope there is more clarity brought quickly by the Consumer Financial Protection Bureau on the definition of what is a “customary and reasonable” fee, so that all parties better approximate and agree on which data can be used, resulting in a more narrow range and fairness of fees.
In the final analysis, these issues are similar to trying to “turn a tanker in a bathtub,” with many hurdles to overcome.   All parties need to come to the table with an open mind and identify collaborative solutions.   The unintended consequence is the further erosion of the appraiser workforce as they become more disgruntled with the industry, a poorer overall quality of valuation and continued contention between all groups.