Thursday, September 09, 2010

Coester Appraisal Group releases survey results

New legislation often has unintended consequences. In some cases, it can causes conflict as opponents clash with those in favor of the changes. Sometimes, it can fan the flames of ongoing conflict into an outright war. That's what we've been seeing between professional fee appraisers and the Appraisal Management Companies (AMCs) that some lenders are using to remain in compliance with Home Valuation Code of Conduct (HVCC) and regulatory guidelines.

I've watched the Title/Appraisal Vendor Management Association (TAVMA) try to maintain bridges between these groups for over a year, but some appraisers in the space continue to throw burning garbage on them in the hope of driving AMCs from the business entirely. I've heard it claimed more than once by an appraiser that the only appraiser that would work for an AMC was one with no experience. A new survey by Maryland-based appraisal management company Coester Appraisal Group refutes that claim.

The survey revealed that only 3% of appraiser respondents have less than 5 years of experience, and more than half have been in the business for 15 years or more. Additionally, almost two thirds of appraisers earn $250 to $350 per appraisals assigned through an appraisal management company–fees that are well above the rumored $180 to $220 fees that appraisal management companies are believed to pay appraisers, according to Brian Coester, CEO of Coester Appraisal Group. When working on their own as independent appraisers, almost 40% earn $250-$350 per appraisal.

The survey, which was completed in August 2010, tracks the responses of 5,384 licensed appraisers throughout the U.S. The study revealed that over half (52.4%) of respondents feel that an ideal fee of $350 to $400 would allow for the highest quality of work on a conventional appraisal, and 45.3% said that $400 to $450 would allow for high quality FHA appraisals. Nearly 78% of respondents stated that the typical fees they were receiving were enough for them to do their highest quality of work, over 82% feel that appraisal management companies should keep a percentage of 15% or less, and almost 17% felt that appraisal management companies were entitled to 15-30%.

I like seeing companies reaching out into the industry for this type of information, unfortunately, I expect many appraisers to take exception to the data given the fact that Coester is an AMC. To make matters worse for the firm, Coester issued a statement in a release at the time the survey results were released.

“Quite a few negative misconceptions about AMCs have been getting a lot of media coverage, which is fueling undue distress among lenders and appraisers,” says Coester. “As an AMC, we knew those claims were unfounded, but just to be absolutely sure appraisers felt the same way, we set up a survey to get their feedback first-hand.”

It's difficult to be taken as an objective expert if you admit to knowing the results before you poll the community. Scientists know that research tends to support our preconceived ideas, which is why all scientific discoveries must be independently verified.

I suspect that Coester is exactly right. After all, they vet every valuation professional that they hire and they know exactly how much experience they have. Still, I'm looking forward to some independent verification.

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