Dodd-Frank requires lenders to pay appraisers a Customary & Reasonable (C&R) Fee. The most common thread in appraiser comments on C&R is that it doesn't matter because there is no enforcement. So the natural progression is that one must first determine C&R before one can enforce it. For most states, determining C&R has been a challenge, but we have identified some states that have completed C&R surveys and published their results. Naturally, appraisal fees vary greatly depending on the market and type of appraisal product. With C&R established, does that mean enforcement is on the way?
Recently, some states conducted surveys and published their results. Texas was the first. The Real Estate Center at Texas A&M University, with the help of The Hobby Center for Public Policy at the University of Houston and the National Opinion Research Center at the University of Chicago, released their findings in October of 2012. Since that time, other states and universities have gotten on board. (See Texas results)
In May of 2013, The Business Research Center at Southeastern Louisiana University published their results in conjunction with the Louisiana real estate appraisal board. (See Louisiana results)
The Utah Association of Appraisers and the Utah Division of Real Estate joined forces with Brigham Young University to publish their results in August of 2014. (See Utah results)
Most recently, the Virginia Coalition of Appraisal Professionals reached out to the Virginia Center for Housing Research and the Virginia Tech Program in Real Estate for their assistance and published their results this past September. (See Virginia results)
When it comes to data, everyone knows the more data, the better. With more information out there it will be easier for appraisers to prove they are asking for a customary and reasonable fee. So what should appraisers do who live in states where there hasn't been a fee survey established? There are several things appraisers can do.
Call your state board and appraiser coalition. Reach out to your state regulators and find out if a survey study has begun. If your state has begun a survey, find out if you are eligible to participate. If they haven't, point them to the other state studies included in this article and encourage them to begin their own.
Set your fees and stick by them. We know this can be tough because it could mean the difference between having work or not. But when you accept lower fees it reduces the average fee for everyone in the area not just yourself. If you don't know what the average fee is in your area, there are other data systems logging C&R. For example, when you create a free Clearbox profile, you input your fees and can then see the average for the territories you cover. You can also ask some other appraisers in your market area.
Hopefully we will see more and more state appraisal boards and coalitions come together to commission fee surveys for their states. Once the data is there, enforcement can't be far behind. We are going to follow this issue closely so let us know if we missed any state fee surveys that have been released lately and if your state has one in the works by emailing email@example.com.
Jim Morrison is a graduate of the Franklin Perdue School of Business at Salisbury University and the Director of Marketing for the Appraisal Buzz. Be sure to follow us on Twitter and like us on Facebook for the latest stories and updates.