Most everyone has experienced a slowdown recently. Some of us over the last few months, some longer. Volume in the marketplace being where it is, the basic economic theory of supply and demand comes to mind. In the summer of 2013 we were all very busy. Appraisers had the ability to dictate fees, to a certain extent, and often commanded much higher fees. Now that volume has dropped, AMCs and lenders are leveraging what work there is so that appraisers are willing to take a much lower fee for their services.
This week I spent some time speaking with contacts at several AMCs we have done work with for many years. I was informed if I wanted to see work I would have to lower my standard 1004 rate to two-hundred dollars or less. I agree that every business will follow supply and demand but there has to be a cut off line at some point.
Appraisers that work for my company do not get their fees lowered when volume slows down. At the same time, their fees are not raised when volume picks up. We have a good relationship with our appraisers. We keep them busy with a fairly steady pace of work. When the market is busy they dig in and help get the job done. Despite the technological take over and the super-regulation that has become today's marketplace, more companies need to realize this is still a business of relationships. If you are forcing orders to the market for $200 now, what will happen when the market is busy again? Maybe the appraiser charges $450 or more next time.
This will all likely play out in the not so distant future. The AMCs that treat others evenly and fairly will stay in business for the longer term and the solid appraisers who are able to do the same will continue to get work. Appraisers also have to realize that the AMC business model is just that, a business, and as such needs to make a profit and keep its clients happy. That being said, as appraisers we must be even and fair accepting fees and submitting our reports back to the AMCs on time to keep the AMC's clients happy too.
The summer months are nearly upon us, with volume increasing who will you choose to work for?
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