Appraisal Fee - Markup or Kickback? - Part 1

By
Real Estate Appraiser with Brian J. Davis & Associates

Kickback_1 Appraiser Question: "I received an order from an Appraisal Management Company (AMC) that requested I bill the client $75 more than my standard fee and return $75 to them. I've never heard of this before, but I haven't worked with many management companies. Is this common?" "Do I need to make a statement in the appraisal report that I have paid $75 to the AMC?" "Are there any other USPAP or legal concerns that I should consider to cover myself?"

Appraiser Question:I got a call today from a mortgage broker in Chicago.  She asked, "What's your fee for an appraisal in Danvers, IL?"  I told her.  Then she asked, "How you you feel about charging an extra $100 so that I could make a little something-something on the deal?"  

Here are some appraiser responses to the first question:

  • Appraiser: "I have a company that I do work for and they charge $50 per appraisal. I have no problem with this, I charge the customer my fee, provide an invoice for the entire fee and pay the company for each appraisal that they assign to me. Am I doing something that is illegal? Would this be considered a kickback?"
  • Appraiser:"At least two of the AMCs I work with inflate the quoted fees to the borrower and take their piece back when collected. It happens to be $50 in each case. I have no objection as long as I collect the fee before I pay them their end. "
  • Appraiser:"In my opinion the $50 is for a service performed by the entity acting as the AMC and is not violating RESPA. They have to do some administrative work at the least and make a panel selection to the referred appraiser."

That was just a few of the responses to a debate on how to handle additional fee requests from lenders,  brokers, and appraisal management companies.

I'd welcome YOUR thoughts on this topic before I blog MY opinions later today.   

Our_appraisal_logo_sm_blog_2 Author: Brian J. Davis, RAA - Brian Davis & Associates - Brian has over 23 years of appraisal experience in Central, IL and hosts the Appraisal Scoop blog and the WinTOTAL Users Group an email forum for appraisers.

 

 

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Tags:
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Rainer
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Nick M.
Realtor-Appraiser in West Palm-South Florida Real Estate Appraiser
Certified Residential Appraiser- West Palm Beach Real Estate

Hello Brian. ok, I'll take a stab at it, at the risk of being wrong.
Although i have never done work for an AMC, as I understand it, its not a violation of RESPA, but it must be disclosed in the certification and the transmittal letter. That's just from reading about it in USPAP, but i'm not exactly sure how to denote it in the report. I would also put something in the addendum. 
looking forward to see exactly how its done.. (if this is correct)..  like i said, never done work for an appraisal management company.

EDIT: forgot the link. Under ETHICS rule / management

August 28, 2007 03:55 PM
Rainer
11,510
Brian Davis
Brian J. Davis & Associates

Hey Realtor/Appraiser!

I'd say you did pretty darn good! 

Check out Part 2 and Part 3 of this series for MY take on the issue. 

The second question above just  happened TODAY!   It was so blatant that I was thinking to myself . . .Is this some sort of "Sting" operation??

Our_appraisal_logo_sm_blog_2 Author: Brian J. Davis, RAA - Brian Davis & Associates - Brian has over 23 years of appraisal experience in Central, IL and hosts the Appraisal Scoop blog and the WinTOTAL Users Group an email forum for appraisers.

 

August 28, 2007 04:09 PM
Rainer
62,269
Nick M.
Realtor-Appraiser in West Palm-South Florida Real Estate Appraiser
Certified Residential Appraiser- West Palm Beach Real Estate

Hi Brian,  sorry, i forgot to sign my name..

sure i can read USPAP, and i do.. love my digital version, but I dont know exactly how to put it in the report..so, i'm off to learn a thing or two :)

-nick

ps. i really think of myself as Apprasier / REALTOR(R), so maybe i should reverse the two.. just want people to know that i sell also.. ok i'm drifting. :)  

August 28, 2007 04:33 PM
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Rainer
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