How to Stop Paying Excessive Appraisal Fees

 

Do you recall the last time you booked an airline ticket? Let’s say that this particular time, you did your research. You knew the best time to buy was on a Tuesday. You knew exactly which airline had the lowest fare. You knew which seat on the plane was most likely to give you the best bang for your buck. You did everything under the sun to score an incredible deal…only to get to the part where you actually book and be slammed with additional fees. One for a checked bag. Another for snagging that emergency row leg space. And yet another for adding wi-fi. By the end of the process, your fees nearly outbid your ticket. Thankfully, unlike holiday air travel, additional fees for property appraisals and home appraisals can be avoided.

When it comes to keeping appraisal fees in check, it’s important to remember that fee reduction shouldn’t be your sole objective. Our chief appraiser, Rob McPherson, likes to quote the following axiom, “When ordering appraisal services it is appropriate to consider quality, speed, and price. The problem is you can only pick two of the three. If the lowest possible fee is the objective, then you will surely sacrifice either quality or speed.”

The key to having competitive fees is to make sure you understand what you are competing against. Since the commercial appraisal market tends to be hush-hush about fees, it can be difficult to know if your fees are competitive. This is where our Benchmark Report comes in handy and gives you insight into the market. Once you understand where your fees compare with the marketplace, you’ll be able to determine your competitiveness. Keeping fees competitive is about making sure you have a competitive bidding process along with a quality review process. In an environment where there is more volume than there are appraisers, it is important to make sure you have as many quality appraisers on your panel as possible. Keeping your appraisal fees competitive doesn’t mean sacrificing quality; there are ways to make sure you are getting the most competitive bids, and the highest quality, on your assignments:

Sacrifice speed

As mentioned above, you can always sacrifice speed to avoid higher fees. If you give an appraiser more time, even when dealing with a complex property, you are likely to get a more competitive bid. This requires planning in advance. Many “rush” transactions could be avoided if the appraisal was ordered sooner in the underwriting process.

Provide more information when obtaining bids

Make sure each appraiser has all the information necessary to provide an accurate bid. It is critical that all appraisers bidding have been provided consistent information. One of the worst things a bank can do is choose the lowest bidder, only to find the appraiser wasn’t aware of the assignment conditions. Giving the appraiser complete information at the bidding stage means they don’t have to guess about the complexity. Therefore, providing complete information can actually lead to lower fees.

Choose appraisers based on prior performance

Having data that supports appraisal report quality and timeliness is an integral part of feedback that banks and credit unions can use on front end ordering. As you bid appraisals or select winners for that matter, it’s crucial to make sure that you are selecting the right bidder not only based on experience and price, but also based on their prior performance. We’ve said it once, and we’ll say it again: there are many, if not most, times in which the lowest bid isn’t always the best one. Instead of relying on low offers, look at the bids as a whole, not in parts. For example, if you have one bidder at $1,500 and four others at $4,000, you’ve got a red flag. Consider why the outlier could possibly perform the work at such a lower price compared to the remaining bids. At MountainSeed, our experience is that the lowest bid is almost always the wrong choice.

The thoughts mentioned above should help you avoid paying excessive appraisal fees. Thankfully, with a little planning, there will be nothing but clear skies. Ready to discuss even more ways we can help smooth out your appraisal process? Let’s talk. While air traffic control isn’t our speciality, being your trusted, top appraisal management company certainly is.