"I paid $650 to the bank for an appraisal and the guy from the XYZ* appraisals was here for 11 minutes and reported to the bank that the house is 2400sqft with 2.5 bathrooms when its 3800sqft and has 3.5 baths?" - Frustrated Homeowner.
We get these kinds of phone calls every couple of weeks from frustrated homeowners that say the other appraiser ran through their home, snapped a couple of pictures and missed important details.
Why does this happen in an industry which claims to have stringent professional standards?
Following the money.
It's all a questions of following the money. Several banks use third party appraisal management companies (AMC) to order appraisals. These AMCs assign the work and it is either accepted or rejected on a base fee by appraisal firms with subsequent quotes for specific items such as mileage, executive, multi-family, market rents, rural acreage, ferry expenses etc. submitted. It then falls to the AMC's and/or lender to decide if they are willing to pay for the services by either accepting or rejecting quotes submitted by these firms.
The convenience of centralizing, automating and making appraisal firms compete for work definitely streamlines the process for the lenders. Based on the principle of substitution, self interest, "the invisible hand" competition is usually a great thing for any industry as it spurs innovations and usually makes products and services better.
The issue with the appraisal industry, and why some appraisers are running through properties at a breakneck speed is that the competition AMCs create appears to be largely based on the price point with little regard for the level of services or expertise the homeowner receives.
It appears that some AMCs send the work to those that are willing to do it as cheaply and as quickly as possible. Some appraisal firms will accept assignments for $100-$125 all the while homeowners may be invoiced $500-$600 for the service. The appraiser completing the appraisal may only be getting 40%-50% of the $125 ($62.50). The end result for the industry is clear; Appraisers working under these kinds of conditions are running all over town trying to view as many homes as possible in a day in order to just make a living wage and feed their families.
This is not what we do.
Promise of quality service and expertise
I can remember a conversation with someone at one particular AMC when attempting to raise our rates in an inflationary cycle to keep our appraisers on a living wage; They made us a promise to never again send any work if the rates were raised and this promise has been kept.
So be it.
Our mission will always remain the same; to work towards excellence in ever single appraisal assignment and strive to give clients the absolute best appraisal service in the industry. Appraisers from Abacus Appraisals do thorough viewings of each home, attempt to answer all questions and are at the property for the time it takes to cross every t and dot every i.
If you find us appraising your home for one of the banks that uses the services of an AMC, it is either because we have been requested by name, our expertise is needed for a second opinion, or our quote has been accepted. Over the years we have found that the RBC, TD, Scotia Bank, Sagen, and most Credit Unions, along with some of the AMC's they use, tend to value our expertise and the level of service we have striven for.
We are more than happy to work for any individual or company that will value our expertise and time as much as we value theirs and hope to have the opportunity to be of service to you soon.
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