There’s an
old adage…you get what you pay for.
Generally
speaking, if one desires quality, one is willing to pay a bit more to assure
that the product or service meets the purchase criteria. And quality generally demands more time and expense
to be met.
Nearly every
product starts with a 3 sided equilateral triangle with the points being -
quality…time (speed)…cost. Pick any two
you want to dominate and the third point is compromised. The triangle is now lopsided. You say you want quality…then it takes time
and a decent income in about the same proportions. You say you want speed…then quality probably
will be sacrificed, and maybe the price.
You want it cheap…then time will be shortened and quality may be
substandard.
It seems in
recent years, the concept of quality in appraisal reports has eroded due to the
decline in fees paid to the appraiser.
This is borne out when report reviews are done by qualified and
experienced review appraisers, and the conditions demanded by the assignment
client is evaluated. Quick ‘n cheap has
resulted in reports that are not USPAP compliant. And appraisers are not really earning what
they should be worth.
So…pizza in relationships
to reports, and income? It’s puzzling at
first bite. But it makes sense. In today’s society, we are accustomed to
instant gratification. “Just give me the
report…quick.” That’s the mantra of
mortgage lending. Quality…the tastiest
ingredients…takes a back seat to cheaper products and details. Quality details in their entirety get dropped
out of reports in place of boiler plate generic comments that are not specific
to a particular property. Quality has
diminished, as had potential earnings.
We are so
accustomed to ‘making’ a pizza by going to the store and buying a product in a
box that we forget what it takes to actually produce that product. It all
starts with the ingredients carefully tended by farmers over many months. Then those ingredients are assembled by the
pizza maker into a tasty pie we all enjoy.
There are individual items that when combined properly bring us an
enjoyable meal. But we all know that
cheaper ingredients make for a lousy pizza.
And cheaper, less detailed reports leads to indigestion both for the
lender and the appraiser at some point in the future.
Appraisal reports are no different than a quality
pizza. But many clients and lenders
think that a quality report is similar to the pizza they ‘make’ with no effort. Go to the store (inspect), choose the boxed pizza
(research the data), stick it into the oven for 20 minutes (write the report),
and wa-la, it’s ready to eat (submit the report). What they conveniently forget is the
assembling of the report ingredients starts way
back on the ‘farm,’ and takes much time to nurture properly to insure quality.
So it comes down to ‘what kind of pizza maker are you?’ And ‘what quality of pizza do you want to produce?’
Click here to continue reading . . .
This is a major
change in the industry. This is an
earthquake in terms of appraisal history.
Every FHA report should reveal the amount paid to the appraiser,
especially if the assignment comes via an ‘agent’ of the lender who may siphon
off a portion of the cost a borrower pays to their Lender for an appraisal.
What do you
believe a customary and reasonable fee should be for an FHA assignment? Do you believe that fee is the siphoned off amount
offered by some ‘agents?’ Or do you
believe that fee should be more in line with what you would charge a local
attorney or private homeowner for estate or divorce assignments, which probably
is closer to what is considered customary and reasonable in your area?
If you
consider a fair fee to be higher than the ‘agent’ chooses to pay, then it is
proper to be sure a quality report is produced, with more details and specific
commentary relating to the specific property.
There will
come a time when you may have to tell the ‘agent’ “no, I’m a better pizza maker
than what you are willing to pay. My
ingredients are top quality.” A time should
come, soon, when you persuade your regional appraisers to have the courage to
properly charge for report ingredients.
And the time may also come when quality appraisers place our assignment
fee into every report we do, not just the ones for FHA. This is transparency borrowers should see,
not hidden by the pepperoni slices and cheese.
Remember – there’s a difference in what you charge verses what you are willing to accept. If you only accept low fees, that’s all you will earn, and what you are worth. Learn to be the quality pizza maker, i.e., a quality report producer, and charge appropriately for your product.
AUTHOR: Dave Towne, Certified Real Estate Appraiser - Towne Appraisals. 16422 Britt Rd., Mount Vernon, WA Phone: 360.708.1196 eMail: towneappraisals@clearwire.net Web: http://www.TowneAppraisals.com
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