Why We Pay Rush Fees To Appraisers for Slow Closes Too; Appraisers Are Underpaid
We received a tremendous amount of positive feedback in response to yesterday’s blog about ordering appraisals immediately; we will definitely continue the practice.
Some agents said that our appraisals come back before other lenders even get around to ordering them (a huge frustration to say the least).
Others asked if and why we pay rush fees to appraisers for ALL transactions, even when speed is not necessary.
We do this for two reasons: (1) as I mentioned yesterday, we have discovered that our appraisal quality is much higher when we pay rush fees; and (2) appraisers are often underpaid.
Why We Pay Appraisers More
We pay a rush fee of $150 for every appraisal, which is $50 more than most other lenders pay. In addition, we make sure that the entire appraisal fee is passed on to the appraiser.
This is in sharp contrast to how many big Appraisal Management Companies operate, as they retain a large percentage of every appraisal and rush fee (sometimes as much as 50% of the total fee).
Here is a great article about how the big Appraisal Management Companies sometimes mislead borrowers and take advantage of appraisers.
As a side note, many large commercial and mortgage banks require loan officers to only order appraisals through national Appraisal Management Companies that randomly choose appraisers from their vast pools.
We too randomly pick appraisers for compliance reasons, but our entire pool is hand-selected to ensure they are local and very skilled.
In any case, our policy of paying appraisers more (and often much more) than other lenders and Appraisal Management Companies attracts more talented appraisers who are delighted to do their best work for us.
Mortgage Banks Have Internal Appraisal Panels
One of the biggest advantages is our ability to set up our own appraisal panel, entirely comprised of very skilled appraisers of our own choosing.
The benefits of having our own appraisal panel cannot be overstated, particularly in hot markets where values are difficult to support.
Our appraisers love working with us too because we pay well and because our Appraisal Manager is so skilled, reasonable and professional herself. As a result, our skilled appraisers tend to be extra-accountable because they want to stay in our good graces and on our panel.
We Never Want Appraisers To Push Values
While the appraisers on our panel go way out of their way to support values for us, we never want them to push values outside of the range supported by comparable sales data.
Whenever an appraiser does so, underwriters, with all of their own access to data and algorithms, immediately get suspicious and then order reviews which often results in significant cuts in value.
Making matters worse, such appraisers also get “black marks” on their records which results in excess scrutiny in the future, or get put on an actual blacklist exclusion at a particular lender.
Founder/Broker | JVM Lending
(925) 855-4491 | DRE# 1197176, NMLS# 310167