Planet Of The Cheapskates

Where to start with this? Do I have to refer you back to my past articles like “What’s Not in Your Wallet or Appraisers Outraged?” Where do we even begin….

We begin here. Another story of an Appraisal Management Company going out of business owing tons of money to appraisers for services they provided. Coester VMS that was once one of the biggest players in the game closed its doors recently. They closed them leaving appraisers with thousands of unpaid invoices for services that who knows if they will ever be paid for. As stated in previous blog posts, these amcs are acting as agents of the lenders that choose to use them. The lenders sign contracts with the AMCS to provide a service to them in order to help keep Appraiser Independence as stated in Dodd Frank legislation. So who is really responsible for payments to appraisers. The Lenders? The now out of business AMCS? Who? Who do appraisers turn to when the AMC goes out of business owing them money? Many states but not all require a surety bond in order for an AMC to do business in that state however as was the case in NC, the bond amount was only $25,000.00 and appraiser claims exceeded the amount in 4 days leaving most appraisers to be paid on a pro rated basis. So who else is responsible? Maybe you the Borrower? Do we really know? The laws are so vague it’s actually quite disturbing.

So lets start with a good story. A story of a lender named Sierra Pacific out of CA that has been bombarded with requests from appraisers to pay fees owed due to the now defunct Coester VMS appraisal management company. Sierra Pacific was the lender using Coester VMS as their AMC. When Coester decided to close its doors and leave appraisers unpaid, Sierra Pacific stood tall and has since been doing the right thing. They are paying appraisers for work done for them even though Coester VMS took the money from borrowers and ran. They have stepped up to pay appraisers for fees owed to them for prior appraisals. So bravo to you Sierra Pacific. We thank you for doing the right thing. See the letter below and know that Sierra Pacific is a quality Company.

Now we get to Planet Home Lending.

This was another company that had entered into a contractual agreement with Coester VMS. They are the Lender that hired Coester to be their agent and provide a service to them. Appraisers have contacted Planet Home Lending demanding payment for appraisals done for them. Unlike Sierra Pacific, Planet Home Lending decided to take a different route as seen below:

So what does this all mean??? You have one lender paying appraisers due to their admission they used a deadbeat AMC to represent them and want to do what is right. Yet another flat out states they don’t care nor will they pay due to not having an agreement with the Appraiser directly.

Here is the ultimate question? Who is responsible? The lender doing the loan or the AMC representing the Lender? Does it matter If the lender collects the fee for the appraisal from the borrower and passes it along to their agent to pay the appraiser or if the agent or AMC charges the borrower the fee directly? Good question. Why? Because this is the only profession and industry where there is a third party making contracts, taking payments on behalf of others, and making decisions with your bank or lender, while the actual entity that performs the service is left out. So another question? Why are AMCS taking payments directly from the borrower? What about Escrow accounts like Realtors have to use or how about the borrower pays the appraiser directly. We are in a day and age where borrowers can pay the appraiser directly via numerous avenues due to technology, Apps on devices, PayPal, credit cards or yes even cash or check. Why for the nth time do we have to have appraisers go unpaid for services due to an AMC failure? WHO MADE THESE TERRIBLE AND RIDICULOUS LAWS? You guessed it. Our government, who is indifferent to small businesses, the backbone of the economy but they sure will support the banks and lenders.

Enough is enough and as consumers you should be outraged as well. You could one day wake up with a lien on your home. Maybe a lien on an investment property? Maybe you just get calls from the appraiser who wants his payment. Are you ready for all of that?

Your money is not going where it should but instead enriching the lives of others at the expense of real estate appraisers and small business owners due to these poor laws, legislations and the blind eyes not paying attention.

It’s time for a change. It’s time to have lenders pay AMCS separately from the appraiser . Its time for TRANSPARENCY and ACCOUNTABILITY! It’s time for appraisers to be paid fairly, rightfully and on time. It’s time to change the poor laws.

Appraisers Outraged! End The Appraiser Payment Issue!

” I am owed $20,000.00″. “I am owed $2000.00”. “I am owed $500.00”. “I am owed $1500.00”. These are just some of the quotes pulled from various groups, message boards and forums from appraisers all over the country that are owed money for the appraisal services they provided. Services they provided for a Lender, Mortgage Company or Bank through an Appraisal Management Company or AMC as they are known.

What’s an Appraisal Management Company you ask? Well for those that do not know, AMCS have been around a long time. Appraisal management companies (AMC) are business entities that administer networks of independent appraisers to fulfill real estate appraisal assignments as Agents of the lenders. However it wasn’t until the financial crash of 2008 that they became a permanent fixture in the Real Estate Process due to the HVCC (Home Valuation Code of Conduct now known as DODD FRANK). They were installed as the “Middle Man” between appraisers and lenders to help insure Appraiser independence and manage the appraisal ordering process. Overnight many of these Amcs were formed and began entering into contracts with the lenders to perform the duties of managing the appraisal process as Agents of the Lenders. Notice how Agents is in Bold? I’ll explain shortly.

So now that we have that out of the way lets get into the real issue here. Appraisers are being left unpaid by Appraisal Management Companies and it’s an outrageous, painful and terrible result of poor legislation and regulation. I will compare this to the recent Government shutdown. The outrage of federal workers not getting paid. The outrage of them not being able to pay bills. The outrage of how could this happen. It’s nice to see all the outrage over this but where is the outrage over appraisers being owed money and not being able to pay bills? Exactly. There is none because no one knows about it. Let me give you some insight and maybe you too will have some outrage.

First lets go back in time.

2011 an AMC named Appraisal loft closed its doors unannounced owing appraisers Millions. The scramble began by appraisers to get their monies owed. Some appraisers were successful but most were not. In this case Lenders were collecting the fees from the borrower and passing them along to Appraisal Loft to pay the appraiser. But over time that didn’t happen and the doors closed leaving appraisers not paid for their time and services.

2012 an AMC named JVI Solutions closed its doors owing appraisers Thousands of Dollars. Once again appraisers scrambled to get their monies owed however only some were able to do so. In this case as well Lenders were collecting the fees from the borrower and passing them along to Appraisal Loft to pay the appraiser. Some appraisers sued the lenders that used JVI and one in particular won his case (no update on if he actually received the monies owed). However others were left without payments ever being made.

2013 an AMC named Evaluation Solutions filed bankruptcy thus leaving appraisers without payments. JP Morgan Chase was the largest client of Evaluation solutions and through a courts decision in Florida the Amc and Bank were absolved of all payments and liabilities to appraisers. Once again borrowers paid for appraisals to the Lender and the AMC failed to make those payments to appraisers.

2018. An AMC named CoesterVMS goes silent and leaves appraisers unpaid. Per numerous articles, web searches & message boards appraisers are owed thousands of dollars and hoping to get paid. According to other various articles, blogs and web searches, Coester VMS stopped responding to appraisers, was paying them late, owed payments from over 6 months and more and now is apparently out of business. Once again appraisers are scrambling to get paid. Many have called the lenders that used CoesterVMS and some lenders have paid up however most have not. Many Lenders as in the other examples state they already paid the AMC for services and are not responsible for any further payments.

There are a couple other AMCs that have ceased business between 2011 to now as well. Some have tried to settle with pennies on the dollar and some have just disappeared. Hell there are some that just rename themselves and continue to not pay appraisers.

Now let me explain this. Most states have AMC laws and regulate them. Many require an AMC to carry a Surety Bond in order to do business in that state. Some don’t. So referring back, one AMC had a surety bond in NC that was for $25,000. When it was announced that the AMC had canceled the surety bond, appraisers flocked to file against that bond for payments. Within a day or so the bond was exceeded. Yes $25,000.00 was exceeded in 1 state. Imagine the filings in other states since the company operated in all 50 states plus Puerto Rico.

So a question comes to mind. If these AMCs are doing this much business and handling this much money then why are they only required to carry a $25,000.00 Bond? A million seems more reasonable.

This brings me back to the beginning and the word Agent. As an independent appraiser I work for myself. I am considered an independent contractor. According to the laws and regulations an AMC works as an Agent of the lender. If they are acting as an Agent (they have a signed agreement), how come the Lender is not ultimately responsible for making sure the appraiser that their Agent obtained is paid properly and on time? Think about this for a minute. The borrower paid the Lender and the lender passed that payment to the AMC to pay the appraiser however no payment was made. Who would you hold accountable?

If the lender takes payment from the borrower and then passes it along to the AMC for the appraisal then shouldn’t the lender who hired this Agent make sure they are doing things correctly? I would think so. I’d like to know if my agents were doing things correctly representing me.

Now what can be done here? I have a couple thoughts:

  • The laws need to be redone to make all parties (Lenders/AMCs)responsible for paying the appraiser and in the event the AMC goes under the Lender takes full responsibility.
  • As discussed earlier, A Larger Surety Bond of at least $1,000,000.00 should be required.
  • Lenders pay the Appraiser their fee for the report and pay the AMC they hire a separate fee. Separate checks or transactions.
  • Escrow Accounts. Money is collected by the lender and put into an escrow account OR if the AMCs do collect money they take their fee and put the rest in escrow.
  • Do not let AMCs handle the appraisal fees. They should have nothing to do with collecting or paying appraisal fees.
  • Go back to the days when the actual borrower paid the appraiser at the door for the appraisal service. With technology today the appraiser can be paid quickly via many different payment options without having a 3rd party commingle in the process.

Enough is Enough. It’s time to change the way appraisers are paid for their services. With all the talk of technology and changing the way appraisals are performed one would think with said technology appraisers can be paid properly. It’s time make changes and that time is NOW!

**** all info regarding AMCs was researched via web searches, blogs, and other public articles*****.

AGA Is On Your Side

We have all seen the the commercials for Nationwide Insurance and that they are on your side. As real estate appraisers do we know who is really on our side?

There are so many organizations that represent appraisers. Many claim to help appraisers, many do help appraisers, many are out there to fight for appraisers, many offer education and many just want us to join them in their own agenda journey made up of false narrative and false promises. I’m not here to force you to join anything. I support the state coalitions and I also support the organizations that are willing to help appraisers even if I’m not a member. But there is one organization that puts YOU, the appraiser, at the front of the line every time. That organization is the American Guild of Appraisers or the AGA.

First lets get this out of the way. The AGA as many think is a Union. Well that’s not true. The true Fact is that the AGA is a Guild with Union affiliations. These affiliations allow the AGA to offer benefits, tools and resources to help support the appraiser and as the Guild grows so do the benefits of those union affiliations. Many big organizations that represent appraisers have the funds to do things the AGA cannot at this point in time. However the AGA does one thing most other organizations don’t and that is work for their appraiser members on a one on one basis and help them with issues such as: blacklists, getting paid, & state board complaints. Yes. All of these. The AGA works hard for YOU, the Appraiser. They don’t stop there. They even work on national issues in support of or not in support of issues pertaining to the Real Estate Appraisal Profession with other organizations to make a change.

To clarify more I personally say the AGA is like car insurance. Kinda like your E&O insurance but better. You pay car insurance just in case something happens for the year. If nothing happens you are at a piece of mind knowing you had it. But what happens when you get into an accident? The insurance company is there to help cover you. Well the AGA is the same way. You pay a fee for the year and if you get in trouble with a complaint, a blacklist, not getting paid etc, you now have the AGA there to work hard for you to help resolve this. Don’t believe me? Here is one member that was kind enough to write a review on the AGA:

Being a real estate appraiser can be challenging.  We don’t advocate for our “clients” which could be a bank, a homeowner or a potential buyer.  We advocate for public trust.  Yeah, try explaining that to most people who engage you for your services.  There are often times when an appraiser performs his or her job correctly that one party may be negatively affected by the outcome.  Of course, this is no new story to any of us.   Every appraiser has that little voice in the back of their head saying, “it’s not if, it’s when.”  When will that certified letter show up for your state board?  That’s right, somebody filed a formal complaint on you as an appraiser.  Of course, this type of thing can happen for many reasons, some of which are warranted, some of which are not.  Good news, you don’t have to be alone.

In mid-2018 I had one of these certified letters show up for the first time in my career.  My immediate reaction was stomach sickness, literally.  After the initial shock and review of the complaint, I took a breath and started tapping my resources on the best way to handle the situation.  I reached out to a few of my peers for guidance and was reminded that I was an active American Guild of Appraisers member, the AGA.  Once I contacted Jan Bellas, she very professionally ran me through the motions of what the AGA was going to do for me and how WE were going to handle the complaint.  This initial phone conversation was probably the most reassuring thing I have EVER heard in my appraisal career.  

Once I accepted the help from the AGA I was instructed to send the same information to her (Jan) that the state was requesting.  Within a few days the head appraiser of the review committee, Mike Ford, responded with a VERY detailed peer review letter of my appraisal, work file, and complaint associated.  I think the best part of working with Mike on my complaint was his brutally honest and matter-of-fact approach.  Some of you may know Mike, and if you do, you know what I am talking about.  I’m very confident if I were to have been I the wrong, he would have told me.  However, he STILL would have been in my corner to help me through my predicament; even if it meant telling me things I didn’t want to hear.  The good news for me was that I wasn’t in the wrong.  After only 2 months of the pending complaint being opened, the state notified me that no action against me was going to take place.  Those of you that have been through this know what kind of relief comes over one’s body when receiving this letter.

Ladies and gentlemen, I am not here to sell you on anything.  This organization does that on its own.  I am merely here to tell my story and how much the AGA made a difference for me.  If you have ever been in this situation you may know how alone and stranded you feel.  The AGA is not only fighting for the appraiser, they CARE about the appraiser and the appraisal industry. The process of working through my complaint with the AGA was invaluable, educational and REAL.  If you are looking to be a part of an organization that has your back or, if you make honest human errors that will work to mitigate ‘damage’ I highly recommend talking to an AGA representative.

(from *.K., TX)

This is only one example of many that illustrates the impact of the AGA.

I also was turned into the state board for a complaint that was dismissed due to the help of the AGA and while I was panicking and worried, I felt very good knowing that the AGA and the Peer review committee were up for the task. They exceeded my expectations and I was even given some pointers on my work by Mike Ford to help me going forward.

I really hope this blog explains the AGA more and that you will consider looking into becoming a member not just for you but to also be a part of an organization that will continue to fight for the real estate appraiser profession. For the cost of 1 appraisal per year you can know that the AGA is really on your side and working hard for you.

Change is only made if YOU and others want to make it. The AGA wants to make that change. Do you?

Closed for business! Sorry Folk

It feels good to be back. Thanks for all for waiting. For those who aren’t familiar with what an AMC is, its short for Appraisal Management Company. After the 2008 crash they were installed to be the order manager for the lender and ensure appraiser independence. If you’ve already read “what’s not in your wallet or round and round” go get a little more familiar before reading this.

Amcs are to manage the orders. They find the appraisers to give the orders to and then through quality control are supposed to help facilitate the process so that the lender can make a lending decision. These AMCs are then the ones to pay the appraisers for work done.

Over the course of the past 10 years we have seen many AMCs collect the money you pay to them to which they are to pay the appraiser they hired. Now many AMCs do a good job at paying appraisers however there are many that do not or worse, they leave appraisers in pain and suffering wondering what the hell just happened.

See there were companies like Appraisal Loft, a big AMC who pocketed millions of dollars from consumers only to never pay the appraisers, close their doors and leave appraisers without compensation for their work. JVI AND ES. Companies like Newtown AMC, Maverick AMC, Nationwide AMC who did the same, made money, never paid appraisers and closed their doors but were all owned by the same guy who once again formed another AMC called Atlantic 1 who well you guessed it, isn’t paying appraisers. Valuation Concepts as well as COESTER VMS are the newest additions to this trend. Not answering calls or emails leaving appraisers without their hard earned money. Some AMCS are closing down and are trying to settle for pennies on the dollar with appraisers. This is a major concern. Hard working appraisers not getting paid for their work. I’m sure you would be upset if your company didn’t pay you. So here is theQuestion?? Where’s is your money, the money owed to appraisers going? Good question. I’m sure some of these current and former amc owners are living much better than all of us.

Under Dodd frank lenders are supposed to be responsible for the third party amc they have chosen to work with. However that’s not the case. Many lenders simply say sorry, or if they do do anything many will get you some sort of compensation. However that’s not good enough. You the consumer paid for a service. You paid for the product and the person who supplied this gets 0? I’m sure you wouldn’t be ok with this. Refer back to my blog post “what’s not in your wallet.” Revisit how it used to be. I’m sure your mechanic, plumber or your lawyer isn’t doing work for free or allowing anyone else to collect it for them before they release your product. So why do independent appraisers have to abide by different rules than anyone else? Why do we have to wait 30-60-90-120-600 days to get paid and risk another company going out of business never to see our hard earned money? Why do independent business owners have to have someone else collecting their money and determining when they get paid. Why does it take 30 days+ to get paid when it used to be at the door when we did the inspection? If you have paid for the appraisal up front before it’s ordered then why can’t the appraiser be paid the moment he submits the report? I know when I do work for the consumer directly they pay me before I leave the site. Independent appraisers are subcontractors NOT employees. This system is broken. It needs to be fixed.

Anything can happen. Maybe one day you will have to fork over money you already paid.

PRESSURE: MY STORY

In just 16 years as an appraiser, I’ve seen and heard many things. Some, I just want to forget and some I wish I never heard.

Appraiser pressures aren’t normal everyday life pressures, they’re different.Typically, when business is good, it’s for reasons like doing a great job and providing a great service. Or, it could be because one aims to keep the client happy by hitting value, which is not exactly a good thing. If business is slow it could be because the market slowed, the quality of service is poor, not providing obscure requests for updates, or maybe they removed you from their list of approved appraisers. Hell, we all know it could also be because your fees are reasonable but considered unreasonable to the AMC and they continue to shop for the cheapest. Truly sad days in this respect.

We became appraisers to do the best jobs possible for our customers, abide by laws and regulations, and uphold the public trust.

Today, too many AMCs are controlled by lender demands and if they can’t make the lender or client happy they risk losing the account. To leverage themselves, they’ve negotiated my time, my expertise, and my contribution to the process on my behalf and unfortunately, they’ve done a very poor job negotiating and it’s starting to show.

In this example of client pressure, a subject property appraised for $180k; the contract was for $225k. Five comparables were provided on the subject street including one across the street. All five were renovated like the subject and the sale across the street was an almost perfect match to the subject; it sold for $180k a month prior. Three others on the same street sold between $175 and $180, within 3 months of the appraisal. They were the same style of home and similar size, too. The last one was around the corner and sold for $195k and a little larger in size.

When I submitted the appraisal, I was BOMBARDED with requests to consider other sales that were larger, sold several months back, and one had a basement. After I addressed as to why they weren’t used, I resubmitted the report. They sent it back again with two more sales to consider that were also less relevant than the comparables provided. In total, this happened three times. So basically, what they were saying is that all of research and verification of recent sales on the same street were insufficient compared to cherry picked sales from around the market area. This is what value pressure looks like. Pressure to change the value to meet everyone’s expectations to make the deal work, not what is right or correct to protect the public trust.

I did not succumb to the pressure and for that, my assignments went from several to zero.

In another example, a subject appraised for $370k, the contract was for $385k, the list price was $400k (this is important). I used sales in the immediate subdivision, three of which had finished basements, that ranged from $350k to $385k. Once the report was submitted, I was immediately contacted by the selling agent claiming I failed to do my job and failed to consider chandeliers and drapes and two Tupperware containers that were claimed to be rain collection systems (I’m not joking). I was then supplied with two new sales to use; both from other subdivisions down the road. I was also provided a prior appraisal that was completed three weeks earlier. Upon review, I see this is not an appraisal report at all, it was a desktop report and the appraiser picked the top 3 sales from other areas instead of using the comparables in the immediate neighborhood. The desktop value of $400k is the (same as the list price). An interior inspection was not completed and relevant adjustments for differences in basement area and finishes weren’t considered. I received three messages from the agent threatening to turn me into the state. The lender asked to reconsider value three times.

I did not fall for this pressure and continue to uphold the public trust to do what is right for everyone, not my wallet.

THIS IS WHAT PRESSURE is like for appraisers. Hit value, get paid. Don’t hit value, get fired or quit.

I work hard and do the best I can possibly do, yet some who have never understood appraising, have the education or credentials to appraise, are suddenly somehow now the experts.

Bill Black describes it perfectly as the Gresham’s Dynamic in valuation which simply means that bad ethics and practices push good ethics and practices out of business. No one cares until it’s too late and THEN want to cry wolf.

I am sounding the alarm for consumers, if you really want to know your net worth, hire an independent and trustworthy credentialed appraiser to serve YOUR best interest. This is about your home and the well-being of your family. I am the appraiser who does not fall for control fraud and neither should you.

HELP WANTED

Real Estate Appraisers

REQUIREMENTS

Active appraiser license, preferably certified, a computer, appraisal software, MLS, E&O insurance, dependable vehicle, camera, smart phone, a background check (by us) because the one your state requires every year is just not good enough and good communication skills (see smart phone requirement).

JOB DESCRIPTION

You will be responsible to perform valuations subject to 30 pages of requirements set forth in the engagement letter. We will require availability always to answer our redundant calls and emails.

Special note: if you live in ND and have a license in GA, TX, and NJ you qualify for our special desktop hybrids and never have to visit a property site again.

Using your smartphone, assignments will be broadcast at fees WE determine acceptable for the area. The fee is non-negotiable as we have included our special fee in addition to your fee and cannot go back to the lender/client for more money. All jobs will be bid out to our panel of appraisers and those who accept the assignment first will get the order (so make sure you are quick and have that smart phone or tablet with you at all times to accept the orders).

On occasion, we will ask for a fee and turn time to build an AMC C&R survey. Jobs are assigned to the lowest fee and fastest turn time submitted to us. You don’t have to be located near the subject property but reports are required within 48 hours. Nearby proximity to a subject property and expertise are not important factors.

Upon completion, please be available at all times to answer superfluous stipulations to meet UAD or address all value reconsiderations or sales sent to us by the lender, realtor or any party that believes your opinion of value is not high enough.

COMPENSATION

DO NOT INCLUDE INVOICE WITH APPRAISAL REPORTS. We do not accept invoices this way by our team members. Upon completion, we will send you your payment in 30-days or more, depending on your state AMC regulations and rules.

COMPANY MISSION AND VISION

Our mission is to maintain infinite client satisfaction.

If you feel that you can meet the job description, send your resume, three sample appraisals, your driver’s license, bank account info, credit check and health history.

AMC

Unintended Consequences, USA

Weird Science

Remember the movie Weird Science where the two guys develop technology to make a doll real? If you’re my age, I’m sure you do. If not get to googling Kelly LeBrock.  

She did some amazing things. She looked great, was sexy and had odd powers that turned the older brother into a pile of emoji poop. Weird huh? Everything about her was amazing on the outside, but something was weird. That’s how I feel about new technologies that AMCS, Zillow and others have offered the public. On the outside, it looks great but what’s really happening on the inside?

I’ve seen examples of this technology when it comes to appraisals. They claim to be faster, cheaper and accurate but even Zillow’s owner’s home price was way off base. Let me explain to you just how inaccurate this is.

Many of these companies rely on dirty data i.e. tax records and other public data that isn’t always accurate or vetted. What happens when you put an addition on your house, but the tax office missed that after the sale? Or that you’ve completely renovated your home? Maybe the neighbor hasn’t renovated in twenty years and the interior is falling apart. How can unverified data be superior to trained experts who are on site? Dependency on technology sites that produce and profit from bad information is dangerous.

Here’s another example how bad data works, because lets face it even you aren’t being fully honest.  Say I said my car was in good condition on Kelley Blue Book when it’s only fair condition. What I see as good is not necessarily what a neutral professionally trained individual would see. If I use the wrong data when I go sell, that car will result in disappointment. The same applies to big data in real estate. On the upside, it goes the other way, too. Home sellers don’t want to leave money on the table.  

Lenders and AMCS developed this technology, using unvetted data, to stream line your appraisal process making it cheaper and faster. That sounds good on the surface and some data is correct but as an appraiser, I often find mistakes in the data, big mistakes and lots of them. This is not an isolated extreme; it’s happening everywhere, and consumers need to be wise and sharp when it comes to cheap and fast.

Ask yourself these questions: did anyone come see your fabulous remodel? Did anyone accurately measure your home and new addition? Do these sites know the area or the surrounding amenities that help drive markets? If the answer to any of these is NO, then how confident are you knowing your net worth is being valued properly by these new technologies? 

While technology is great in many ways and helped many areas of the appraisal profession, trying to determine your value based on sites like Zillow or an AMC hybrid is a risk in and of itself.

As a home buyer, seller, or if refinancing, it’s worth your attention to verify the sources and validity of your value estimates. The best way to truly know your net worth is to hire an appraiser who is independent of banks and AMCs and can give you that neutral, unbiased, on site and verified service.