CJR's Ryan Chittum posts this great video of CNBC anchor-droids just straight up losing their minds the moment Janet Tavakoli, president of Tavakoli Structured Finance, dares to suggest that predatory lending ever existed on the Planet Earth.

Re-Blogged from the Appraisal Institute's Appraiser News Online Headlines:

New Mexico Gov. Bill Richardson signed Senate Bill 138 into law March 1. S.B. 138 will require that appraisal management companies post a surety bond or equivalent means of security with the Regulation and Licensing Department in order to operate in the state. The legislation will also require AMC employees who review appraisals be geographically competent to complete the review. See references to this bill on Appraisal Scoop - click here.

S.B. 138 also adopts fee disclosure requirements that are very similar to those adopted by the Federal Housing Administration in late 2009. Furthermore, it prohibits AMCs from including “hold harmless” provisions in their contracts with appraisers, or from requiring appraisers to indemnify the AMC against liability.

Minda McGonagle, lobbyist for the Rio Grande Chapter in Santa Fe, said, “This is a big step forward in requiring that AMCs are more responsible to consumers for the product they play a huge role in producing. Hopefully, the AMCs and the lenders that use them will be answering tougher questions from consumers. We could not have been successful if not for the support of New Mexico’s real estate sales professionals, mortgage bankers, credit unions and community banks.”

The provisions of the new law will become effective on July 1. A final version is not yet available, but previous versions of the legislation can be viewed at http://legis.state.nm.us/LCS/_session.aspx?chamber=S&legtype=B&legno=%20138&year=10 .

Re-Blogged from the Appraisal Institute's Appraiser News Online Headlines

Guest Post by Tony Pistilli, Certified Residential Appraiser and Vice-Chair, Minnesota Department of Commerce, Real Estate Appraiser Advisory Board, Minneapolis, Minnesota

Since the inception of the Home Valuation Code of Conduct (HVCC) in May 2009, there has been much discussion, and misinformation, about the benefits and harm caused by the controversial agreement with the New York Attorney Generals office and the Federal Housing Finance Agency.  This agreement, originally made with the Office of Federal Housing Enterprise Oversight, requires Fannie Mae and Freddie Mac to only accept appraisals ordered from parties independent to the loan production process.  Essentially, this means, anyone that may get paid by a successful closing of the loan cannot order the appraisal.
 
In the past 6 months while the Realtors© and Mortgage Brokers associations point fingers at appraisal management companies for their use of incompetent appraisers who don’t understand the local markets, appraisers are complaining that banks are abdicating their regulatory requirements to obtain credible appraisals by forcing them to go through appraisal management companies at half of their normal fee. 
 
Banking regulations allow banks to utilize the services of third party providers like appraisal management companies, but ultimately hold the bank accountable for the quality of the appraisal.  Unfortunately, the banking regulators have yet to express a concern that there is a problem with the current situation.
 

I need to state that appraisal management companies can provide a valuable service to the lending industry by ordering appraisals, managing a panel of appraisers, performing quality reviews of the appraisals, etc.  However, banks have been enticed by appraisal management companies to turn over their responsibility for ordering appraisals with arrangements that ultimately do not cost them anything. 

The arrangement works like this, the bank collects a fee for the appraisal from the borrower; orders an appraisal from the appraisal management company who in turn assigns the appraisal to be done by an independent appraiser or appraisal company.  During this process the appraisal fee paid by the borrower gets paid to the appraisal management company who retains approximately 40% to 50% and pays the appraiser the remainder.  So for the $400 appraisal fee being charged to the borrower, the appraiser is actually being paid $160-$200 for the appraisal.  Absent an appraisal management company the reasonable and customary fee for the appraisers service would be $400, not the $160 to $200 currently being paid to appraisers.

 
Rules within the Real Estate Settlement Procedures Act (RESPA) have allowed this situation to occur, despite prohibitions against receiving unearned fees, kickbacks and the marking up of third party services, like appraisals.  RESPA clearly states, “Payments in excess of the reasonable value of goods provided or services rendered are considered kickbacks”.  
 
Banks are allowed to collect a loan origination fee.  This fee is intended to cover the costs of the bank related to underwriting and approving a loan.  Ordering and reviewing an appraisal is certainly a part of that process.  Understanding that banks ultimately have the regulatory requirement to obtain the appraisal for their lending functions, why is it that borrowers and appraisers are paying for these services that are outsourced to appraisal management companies?  Does the borrower benefit from a bank hiring an appraisal management company?  Does an appraiser benefit from a bank hiring an appraisal management company?  The answer to those two questions is a very resounding, no!  Clearly the only one in the equation that benefits is the bank, so why shouldn’t the banks be required to pay for the outsourcing of the appraisal ordering and review process? 
 
It is here where I believe the solution for the appraisal industry exists.  Since banks are the obvious benefactor from the appraisal management company services, the regulators should require that the banks, not the borrowers or appraisers, pay for the services received.  This one small change in the current business model would allow appraisers to receive a reasonable fee for their services and in turn they should be held more accountable for the quality and credibility of the appraisals they perform.  Appraisal fees would be competitive among appraisers in their local markets, much like the professional fees charged by accountants, attorneys, dentists and doctors.  Appraisal management companies would suddenly be thrust into a more competitive situation where their services can be itemized and their quality and price be compared to those of competing providers.  This will ultimately lead to lower fees and improved quality of services to the banks.  The banks will then have a very quantifiable choice, do they continue to outsource their obligations to an appraisal management company and pay for those services or do they create an internal structure to manage the appraisal ordering and review process?  Either way, the banking regulators need to hold the banks more accountable at the end of the process. 
 
When all of the previously discussed elements are present, I believe the appraisal industry will be functioning the way it was intended.  Appraisal independence will be enhanced and borrowers will be rewarded with greater quality and reliability in the appraisal process.  This is exactly the change that is needed, in addition to the HVCC, to stop the current finger pointing and address the poor quality and non-independent appraisals that have been and are still rampant in the industry.   
 
Tony Pistilli
Certified Residential Appraiser
Vice-Chair, Minnesota Department of Commerce,
Real Estate Appraiser Advisory Board

Minneapolis, Minnesota

The Real Estate Appraiser Advisory Board makes recommendations to the Commissioner of Commerce on the experience, examination, and education requirements for real estate appraisers, and on the periodic review of the standards for the development and communication of real estate appraisals. The Board does not have enforcement, licensing, or rulemaking authority, but it advises the Department on these areas from an informed perspective. It has fifteen members appointed by the Commissioner: three public members, four consumers of appraisal services, and eight real estate appraisers.

National Mortgage Professional Magazine recently had an opportunity to chat with David H. Stevens, Assistant Secretary for Housing at the U.S. Department of Housing & Urban Development (HUD), and 27th Commissioner of the Federal Housing Administration (FHA). A graduate of the University of Colorado, Boulder, Stevens has a strong background in housing, including experience in finance, construction, sales, mortgage acquisition and investment, and regulatory oversight.

Stevens is quoted in National Mortgage Professional Magazine: "I worked for Golden West from 1983 until about 1998. It was a very different program back then because when it started, the loan required a substantial downpayment and there was no secondary financing on those loans. The borrower typically came in with a 25 percent downpayment on those loans. You were dealing with a different sort of clientele. At the institution I worked at, Golden West, all the loans were held in portfolio, so the entire credit risk and interest rate spectrum was held on balance sheets."

"The scrutiny on qualification and scrutiny on property value was infamous at World Savings, where we personally appraised every single property."

"As a manager at World Savings, we rented caravans and loaded them with underwriters and originators, and drove to the properties that had been appraised over the previous month with loan files in hand, to evaluate the quality of loans we were doing. That focus on credit quality that Herb and Marion Sandler instilled in that company over the years is why Golden West was such a darling of Wall Street for decades."

Erick C. Peck of the National Mortgage Professional Magazine asked of Stevens: "Concerning the new appraisal rules coming out of HUD, would you consider permitting a “blind ordering” so that any originator, no matter what channel of origination, can order the appraisal in an effort to accommodate the portability of an appraisal from lender to lender and save the consumer additional expenses?"

Stevens replied: "I do think the blind ordering of appraisals is the one thing that was the strongest piece of the Home Valuation Code of Conduct (HVCC) that everyone universally understands and agrees with … taking away the influence factor in the appraisal ordering is critical. We also believe that portability is important, so controlling the appraisal channel and having it directed is a concern to me because should that loan be turned down and the borrower wants to go somewhere else, do they need that appraisal at the next firm or do they need to pay a new appraisal fee?"

"It continues to be an expensive way to complete the transaction. However we get there, I think the idea you presented is the kind of concept that we continue to talk about … how to make the appraisal stay and take away that influence factor, keep it arms-length, but also not make this another setback to the consumer who needs that appraisal and may need an appraisal for a different institution."

Click here to read the complete article.

This article by Guest Blogger, Executive Director, Jeff Schurman of The TAVAMA Blog

Warning: What you are about to read could be career-ending. For me that is. But only if those who intend to drive a stake in to the heart of the AMC (Appraisal Management Company) industry win the day.

It’s worth it though, if it brings some people around to the genuine threat facing the mortgage lending ecosystem that state AMC registration laws pose. I remain convinced that federal AMC oversight is the safest, most effective, and least costly alternative, and is far better than the state-by-state approach underway. In fact, I wouldn't even be too worked up if there was a single, federal overseer, with states taking on the enforcement role. It's the 50 states crafting their own legislation that's worrisome. What some state legislatures propose to rein in AMCs will put them out of business.

But before it goes that far a few points are worth noting. I’ll use New Mexico’s proposed AMC act as just one example of what can happen when states attempts to regulate entities that they don’t understand on the advice and counsel of populist outrage.

Lenders have two (2) choices when it comes to managing appraisal panels.

They can do it themselves or have someone else do it. Each choice has advantages and disadvantages; and each involves tradeoffs. By outsourcing to an AMC, the lender avoids appraisal coordination costs that it would otherwise incur.

Appraisal coordination includes the cost of hiring, equipping, training, and supervising people to find and qualify appraisers, place and track orders, perform underwriting reviews of finished products, among other duties. By outsourcing, lenders avoid certain technology investments, labor burden, order volume fluctuations, and keep the appraiser and originator at arms-length.

Significantly, AMCs enable lenders to convert the numerous fixed costs associated with fee panel management into variable costs. Lenders managing fee panels themselves must invest in all the requisite resources to perform these functions on a mostly fixed-cost basis. And it adds yet another cost center managing non-core functions.

Hence we arrive at critical point number 1: Appraisal reports don’t just show up; someone must invest in IT, facilities and carbon-based resources to acquire them; the lender… or AMC.

Production cost + coordination cost = the total cost of any good or service.

Few would dispute that it costs something to coordinate appraisal transactions. We can debate the amount of the cost. But surely we’d agree that there is some coordination cost. Someone has to find the appraiser, perform a background check, negotiate fees, turnaround times, and delivery methods; handle customer complaints, status updates, and underwriting reviews; pay the appraiser and bill the customer.

Charlie Elliott, who operates one of the nation’s largest appraisal firms, put this cost at $100 per appraisal. My own pro formas support his estimate. And it’s important to consider that that’s the cost to an AMC; the cost to a lender self-managing a panel will be even greater. Why? Because, while an AMC approaches supplier management as a core-competency, a lender necessarily does not. AMCs spend tons of time and resources organizing their value chains to maximize productivity and innovation, and reducing overall operating costs. Cost saving is another advantage for lenders that use AMCs.

Thus we come to critical point number 2: There’s upwards of $100 in transaction coordination cost to an AMC above and beyond the cost of the appraisal; even more to a lender self-managing suppliers.

New Mexico proposes to cap AMC fees at 10 percent of the appraisal cost.

That’s the poison pill at the center of Senate Bill 138, which was introduced this month by Senator Mark Boitano. If it carries, an AMC that pays an appraiser say $250 would earn $25, just one-forth of its internal coordination cost; at $400 it would earn $40, a not much better two-fifths of its cost.

[Author's Note: My understanding is that the NM legislature has dropped the 10% fee cap subsequent to the post being published. ]

Therefore, a 10% fee cap would mean one of two things. The AMC would either need to pay the appraiser $1,000 per appraisal, to cover the $100 cost to coordinate the transaction, or leave. This would mean NM consumers would pay more than twice what they pay today, which won’t sit well. Or AMCs will bail on the state.

So here are critical point(s) 3 and 3.1: Arbitrary fee caps will put AMCs out of business, harming the mortgage lending ecosystem, and raising administrative costs. 3.1: Such clauses demonstrate a stunning lack of understanding of the economics of the business model being regulated.

All this is stacked atop a $1,000 AMC registration fee.

Last year, New Mexico passed an AMC registration act requiring AMCs to pay a $1,000 registration fee the first year (and $550 annually thereafter). Of course, this won’t much matter because few AMCs will make it past the one-year mark. But regardless, coupling the $1,000 registration fee with the 10% fee cap means an AMC that earns $25 (in fee-cap imposed earnings) needs to do 40 appraisals that year; at $40 they’d need 25 orders in year-one, or 2.1 per month. Not huge order numbers relatively speaking. But given that the fee cap guarantees a loss on each order it’s understandable why the better option is to bail.

This suggests critical point number 4: High registration fees only add to the twisted cost-benefit equation for doing business in a state; adding a fee cap is lethal poison.

The problem is clear. Someone must pay to coordinate the transaction. The coordination cost -- to AMC is upwards of $100 per order; to the lender potentially much more. Unable to pay premium appraisal fees to cover coordination costs under the cap, and having also to pay a $1,000 registration fee, and the specter of a large loss on each transaction, means that enacting NM SB 138 as-is will cause AMCs not to serve lenders that do business in New Mexico.

Four likely outcomes if I turn out to be right.

If I’m right there will be four (4) outcomes… beyond ridding the state of AMCs. 

The first is that other states will unwittingly adopt similar poison pills. Not understanding the unintended consequences of such a clause on not only AMCs but also mortgage lenders and mortgage availability to living, breathing, and voting taxpayers state legislators will view the fee cap poison pill as aspirin. It won’t be.

The second outcome will be that lenders who formerly used AMCs will suddenly have to manage appraisals themselves. This is significant given that 17 of the top 20 lenders use or own AMCs. Trouble is they won’t have the resources to tackle this new responsibility, at least for a while. And assuming they finally get their act together it is unlikely that lenders will replicate the productivity, innovation, cost controls and strategic advantage that the AMC industry – whose core competency after all is managing appraiser contracts and workflow – achieve currently.

The third outcome will be that lenders, faced with the prospect of building an AMC-light operation, will pass on the additional costs to consumers. These costs will prove significant. Beyond the coordination costs mentioned already, lenders would now need to reserve for risks they’re taking on. Some of these risks include HVCC compliance risk and reporting risk. Way more significant will be risk (and cost) associated with order volume volatility. Today, many lenders mitigate order volume volatility simply by placing more or fewer orders with AMCs. Absent that outsource safeguard, they’ll need to forever staff up and lay off workers in response to often wild swings in volume. Capacity will be constant anchor on profitability.

The forth outcome -- and there surely are more than just these -- is that we’ll quickly discover a disparity between the laws of various states with regard to bank-owned AMCs. Many states exempt banks from their AMC registration laws. I suspect this is to avoid going head to head with the existing federal bank exemption. Other states, including New Mexico, do not carve out banks from their AMC laws.

I’m not sure about how this bank-exemption thing will play out. However, in states that exempt banks, I suspect, bank-owned AMCs will claim the exemption. Should that strategy ultimately fail in a handful of states they’d simply bring the subsidiary AMC in-house as a department of the bank: the appraisal management department.

An opportunity for meaningful registration lost. 

Article Source: The TAVMA Blog

UPDATE: The webinar is complete.  The Power Point presentation and audio link to the full webinar are available below.

Here is the link to the webinar. http://www.fncinc.com/ClientAccess/WebConf_AMC.aspx

In addition to the recorded webinar, there is an accompanying conference Power Point.  There are also a couple of other reference articles you should read.

Web Conference Power Point Presentation (171kb)

Valuation Review - State Regulation of AMCs Causing Confusion (110kb)

AMC Briefing - New Laws Affecting Appraisal Management Companies (233kb)

New state and federal legislation could significantly change day-to-day operations for appraisal management companies, but FNC Inc.® – the recognized leader in mortgage collateral technology – will offer insight in a free webinar.

The webinar begins at 1 p.m. CST, Thursday, Feb. 18, and is open to the public through free registration at www.fncinc.com/ClientAccess/WebConf_AMC.aspx.

FNC Chief Legal Counsel Neil Olson and Director of Product Management Shawn Telford will lead the call. Joining FNC’s industry experts are AMC veterans Hank Pruett, senior vice president of operations at JVI, and Francois Madath, president of American Reporting Company.

The webinar is expected to address the impact of state and federal legislation on AMCs, including the requirement to pass a USPAP course to continue to do business. The webinar will also address new laws regarding how appraisal reports are altered, the duty to review appraisals, record keeping, license validation, compensation, and next steps for AMCs.

“Because some states have active regulations and others have pending legislation, there is a large amount of confusion,” Telford said. “Each state’s legislation is completely unique, meaning AMCs are struggling to learn how to comply. We can help with that.”

For more information about this critical webinar, contact FNC at (888) 963-3330.

To interview Shawn Telford, Neil Olson, or any of FNC’s mortgage industry experts, contact:

Bill Dabney, manager of public relations 
FNC, Inc. 
Phone 662/236.8304 
bdabney@fncinc.com
 

Press Release: February 17, 2010  Oklahoma City, OK —  

a la mode, inc., the dominant provider of appraisal-related technology and services to the mortgage industry, today released the first public edition of The Appraisal Fee Reference™.  The AFR™ is the authoritative national analysis of independent appraisal fees, and is just one of the monthly data sets published as part of a la mode's Appraisal Industry Analytics™ practice.  

Using the data from hundreds of thousands of verified and validated appraisals, the AFR reports the median appraisal fees for each of the 3,221 counties and districts in the fifty states, the District of Columbia, Puerto Rico, and Guam.  

The timing of the release is critical, since FHA's recently implemented guidelines require that participating lenders ensure that appraisers are paid "reasonable and customary" fees, independent of what may be added on by appraisal management companies, or AMCs.  Only by using the AFR can a lender or appraiser objectively determine what is a 'customary' fee, and decide whether the appraiser is being offered less than that by an AMC. Appraisers and the National Association of Realtors have complained loudly about the issue in recent months, which appears to have prompted the issuance of the new mortgagee rules by FHA.

For compliance with HUD's new 2010 RESPA rules and the revised Good Faith Estimate, the AFR gives a lender a defensible basis for estimating closing costs on a GFE for loans using independent fee appraisers.  Lenders utilizing the Mercury Network (http://www.mercuryvmp.com) also receive additional data sets for GFE compliance.

"Of course," noted Dave Biggers, a la mode's chairman, "Knowing what's customary or commonly expected is only the first step.  As in any business, only the person performing the actual work would be able to say what is reasonable or required for a specific request.  In real estate that's especially true since every property is different.  The key is that the AFR provides lenders and appraisers alike a logical, legally defensible starting point for that fee discussion and for GFE estimation."

As for the actual report, the February 2010 edition of the AFR reveals several interesting fee statistics.  For example, the most expensive counties to get an appraisal were not in the major cities.  Instead, the 50 most expensive locations were dominated by counties in Alaska, Hawaii, and Wyoming. 

Of the locations with the lowest fees, appraisers in Ohio were represented disproportionately, with 18 of the bottom 50 slots being taken by counties in the state.  Four nearby states -- Pennsylvania, Kentucky, Illinois, and Wisconsin -- also had three to four counties each in the bottom 50.

Perhaps not surprisingly then, the East North Central census division, comprising Illinois, Indiana, Michigan, Ohio, and Wisconsin, ranked at the very bottom of the nine divisions nationally, with a median fee of $300.  The Pacific division was most healthy overall for appraisers, with a median of $400.

When looking at the larger census regions, the West and South fared best for appraisers with median fees of $375 and $350, respectively.  The Midwest and Northeast did more poorly, with both showing medians of $325.  

Nationwide, the median observed appraisal fee was $350, with an average of $351.

For more information, visit www.mercuryvmp.com/analytics.

An analysis conducted by the Appraisal Institute of failed banks shows that nearly two-thirds had been previously cited by federal bank examiners or had ongoing appraisal administration problems, highlighting a significant weakness in many struggling financial institutions.

For a copy of the analysis, visit www.appraisalinstitute.org/newsadvocacy/downloads/key_documents/FDIC_MaterialLossReview_Appraisal.pdf.

Source: Appraisal Institute

Placing a Value on Your Services - a Guest Post by Michael W. Armetrout of AM Appraisals

As every appraisal firm manager knows, gauging the direction of the current business environment can be a difficult task. Some may see every new trend as a time to reinvent themselves while others may simply lay low through fluctuating periods. 

One thing is for sure, the constant wave of financial fiascos and regulatory changes have made it nearly impossible to figure out what is on the horizon for our industry. Whether you subscribe to a “glass half full” or a “half empty” approach to the appraisal profession, maybe we should first take stock of the basics. What do we really have to offer? We are in the business of placing value on real estate so why can’t we place an accurate value on our services?

I don’t want to get off course with promotional tag lines or sales pitches but rather want to examine the real reasons why our potential clients utilize our services.

I have narrowed down a list of six primary areas of what I believe encompass our worth and appeal in the marketplace.

Ability to Render Value

It doesn’t get any more basic than this. Our ability to produce a determination of value is the hallmark of what we do. Today’s appraiser’s offer credentials based on licensing, education and experience and have specializations that cover a wide array of disciplines.

The word “ability” can be a subjective term but is ultimately determined by our expertise. A client may or may not desire expertise but it obviously is something we should endeavor to improve constantly.

We are not however, the only source for value determination. The increasing use of the AVM has offered potential clients a much lower cost alternative to our services and BPO’s have become a favorite product for asset management companies in foreclosure work. We may proclaim the shortcomings of these alternate valuation vehicles but their growing use indicates that end users view them as a viable option for some purposes.

Competitive Fees

What we charge for our services can vary widely based on locale, client type, volume and the scope of assignment but is still in effect set by customary fee ranges in a particular market. If the same client pool has access to a set number of appraisers, the market will obviously not lend itself to wide extremes for the same service without some attrition. Fees then become relatively competitive in that market.

Recently, fee trends have been one of the pivotal issues related to appraisal management companies in the wake of the implementation of HVCC. Many of the larger AMC’s allocate assignments to appraisers willing to work for as much as 40% less than pre-HVCC rates.

The balancing act for appraisers who work with AMC’s is now to attract new clients with attractive rates yet somehow streamline processes and implement new efficiencies to make up lost revenue. It is possible though; that shortcuts may lead to a reduction in overall report quality and further add to an already fledgling public sentiment toward appraisers.

Quality Products

If you were to ask a group of appraisers if they all produced quality products, I’m certain you would hear a resounding “absolutely” and without exception. We all want to believe that we are completing reports that are accurate and reliable but we must come to terms with the fact that not all reports are created equal.

Someone has said that an appraisal is only as good as the available data but while there is a grain of truth to that, a quality appraisal consists of many parts, not just raw data. Market expertise, academic and logical analysis, supportable conclusions, and clear presentation are just some of the components that make a quality appraisal. Making sure we are turning out the best possible quality is the key to our long term survival.

Communication

How we communicate with clients is what I believe to be one the most valuable traits of any appraisal organization. It is the bedrock of all business relationships and has historically been the factor that either keeps or loses clients.

In the past, mortgage lending relied heavily on the ability to communicate freely with appraisers. How ironic that this is also what was scrutinized by many in our profession and eventually was a contributing justification for HVCC. Regardless of the opinions on HVCC, the end result has clearly led to a decrease in communication as a growing “form-filler” role has been placed on many appraisers.

The large AMC model makes it difficult to cultivate business relationships on a national or even regional basis due to the scale and protocols of companies that order appraisals overwhelmingly from computer databases. This is where I contend that HVCC has caused the most damage to our ability to do business as appraisers.

Turn-Around Time

Besides death and taxes, we can always count on a client’s expectation for their requests to be completed as soon as possible. After all, if they have ordered it, then they are ready to receive it. It is funny how they are not always ready to pay for it.

A quick turn-time has been the norm since the advent of appraisals began and I’m sure will continue until its demise. For all of the changes HVCC has brought, it has had no effect on the expected delivery window for appraisal reports. All clients still want it yesterday.

Liability

I have saved this one for last because it is often overlooked but I believe it has become our single largest attraction to the lending market. Our financial, legal and professional liability is what sets us apart from the alternate valuation methods noted above and may very well be what keeps us in business in the years to come. It is also one of the prime motivators for maintaining quality in our services and products.

Don’t believe for a moment that many national investors and banks would not opt for a low priced AVM or BPO if they had recourse against them upon loan defaults. This is why the use of “no appraisal” programs was utilized in some lower risk loans during the buildup to the meltdown of the financial and housing markets.

I urge appraisers not to sell their services away for cut-throat rates. If they do not properly value your professional skills for what they are, then maybe they will value the liability you offer. It’s not free to us and it should not be free to them.

So how do we parse these points? Understanding prospective clients is the key to creating a business model that works and must always be guided by ethical conduct. For instance, if our primary draw is our ability to render value, a client may want predominantly high values therefore creating a dilemma that would lower quality and increase liability which in the end should not be a decision we accommodate.

Striking a balance of these issues can be difficult but is imperative for our success in the appraisal industry. As we continue on the roller coaster ride, we must continually be evaluating a client’s perception of the services we provide.

Other Posts By Michael Armentrout:

• Properly Define “Declining Markets” - A Call To Mortgage Lenders
• Appraisal Independence at Crossroads, Again!

AUTHOR: Micheal W. Armentrout, VP AM Appraisals, Inc. Mike has been involved in full time real estate valuation since early 1992 and has experience in numerous Central Ohio markets. He served as a staff appraiser at several local firms before forming AM Appraisals, Inc. with business partner J.M. Massey. e-mail: marmentrout@amappraisals.com web address: www.amappraisals.com