Krystal Schware, PA CREA
The Truth About Appraisal Fees and Turntimes
Do you like paying hundreds of dollars in hidden fees when you buy, sell or refinance your home? Unfortunately, you probably already have. Or maybe you have had a loan take longer than planned because you were told, 'we are still waiting on the appraiser.' If so, there are a few things that may interest you.
That fee that you paid the appraiser? The one you are angry about the fee being so high? Chances are you've been lied to or intentionally mislead in the fee. Often it's not the appraiser you should be angry with about the fee. Additionally, you may hear, "we are still waiting on the appraisal", which may also be a myth. Allow me to explain.
Forgive me for first repeating what I say so often. The appraiser is not the enemy. We are your best ally in protecting your investment with honest, unbiased information and results. We are the only unbiased party in your home financing transaction who has no financial benefit to gain off of you buying, selling or refinancing your home at a 'higher value.' Our fee is not contingent on how high the opinion of value is of your home.
The introduction of AMC's, Appraisal Management Companies, as a staple for lender appraisal ordering, has added additional fees and additional time to the appraisal process. Back in better days, your lender would send the appraiser an order, the appraiser would do the appraisal and send it to the lender. Boom. Done. In today's reality, most things now go through a third party known as an AMC. AMC's are a business so, of course, they do not work for free. But guess who ultimately pays this hidden fee? You. The consumer. Please allow me to make note that as in all things, there is good and bad. There are a few AMCs out there that are good to work with and pay fair fees to the appraiser and provide good service. They are quite few in number but we are thankful for those who fall under that category.
The little tidbit that you might find interesting? This AMC fee is typically hidden from you. Even in the paperwork you will see at settlement, it is hidden and lumped in with the appraisal. You will see 'appraisal fee' listed but up to 80% of that fee is for the AMC, not the appraiser or for the appraisal. As you will see in the real, true portion of an appraisal order in the photo, this is what you are really paying for. The appraiser does all of the work and the AMC takes home the paycheck. Since AMCs forbid appraisers to discuss or disclose fees to the consumer as part of the appraisal engagement process, you would never know.
Did you know that some AMC's may hold on to your appraisal order for up to 3 weeks before ordering your appraisal? (And blame the delay on the appraiser) Most send out 'bid requests' to multiple appraisers. Many AMC's will 'shop' your appraisal around for weeks until they find an appraiser willing to take the assignment for the tiniest fee possible. Why? Because the AMC gets to keep the lion's share of the total fee. It is to their benefit to hold out for a bigger piece of the pie. If after a while they have been unable to find a taker for a bargain-basement fee, they then go back up the list, to the lowest available bid received, and see if that appraiser is still interested in accepting the assignment. You see, it is not the turn-time of the appraisal, it is the additional handling and processing time of the AMC.
The real estate appraisal industry as a whole works hard to maintain the public trust in our profession. There are many great people and appraiser organizations that are working hard to demand transparency of fees for you. Currently, many are actively attending various functions all over the United States to push for the truth to be disclosed to you. That there will be real 'truth in lending' which breaks down what appraisal fees are actually being paid versus AMC fees in a clear, honest, transparent manner.
Appraisers are demonized for many things in the real estate industry but I can say quite honestly, it is rare that I see us at the actual root of the issue at hand. In truth, we as appraisers will continue to protect you and your investment with an honest, unbiased valuation of your home.