Appraisers and mortgage brokers have an interesting dynamic between them. And the recently proposed HVCC (Home Valuation Code of Conduct) proposed by the New York Attorney General and Fannie Mae and Freddie Mac, does not really help any.
The vast majority of appraisers -- those that primarily do appraisals for mortgage transactions -- need the lenders/brokers/LO's in order to survive. It's that simple. Without the business my clients send me, I have no business. Yes, some appraisers make
a living doing divorce work, tax work, legal work, etc., but it is not nearly the percentage that work on mortgages.
Conversely, mortgage professionals have a variety of sources to get valuations from. AMC's (appraisal management companies) and AVM's (automated valuation models) have continued to make inroads and take away business from the "traditional" appraiser. Additionally,
if the mortgage pro is unhappy with my work for any reason, there are 100 other appraisers that would love to take my place. So the mortgage pro has only a minimal need for my services, and no specific need for me in particular.
So the relationship is not balanced, but it never will be. The only thing I can do to diffentiate myself is provide good quality reports, a wide service area, and fast service -- and let's face it, the fast service is the only thing that the mortgage pro wants.
Or at least the only thing I am willing to consistently provide. "Make value, and make it fast" as one LO told me when I asked how I could gain his business. Sorry, but I plan to be in this business for a while, so I can get it to you fast, and make it a
good quality report that gets through underwriting quickly, but it will be valued at what it's worth. I'm not going to lose my license over a $350 appraisal.
So the mortgage pro has a phone book full of appraisers that would be more than willing to do work for him tomorrow morning, if not sooner. And I would guess 30% would be willing to push values as well, which is "gold" for a lender. (Just my estimate from
doing reviews, nothing scientific.)
On the other side of the fence, I can cold call all week and maybe pick up a client that will send me 1 or 2 reports a month. So for me to lose a client, depending on what kind of volume they do, might cost me 40 hours in cold calling to replace, while the
lender is out 5 minutes on the phone.
However, I think it is very important to note that after quite a bit of turnover over the years, I now have a good roster of clients that (a) want to do what is best for their clients, and so want to see the true value, and (b) respect the quality of my
work and rely on me to get the job done and done right. I like working for them, and they like the work I do for them. A relationship that is beneficial to all involved parties, including the buyer.
With any profession, there are good and bad apples. Like the broker who told me to "make value, and make it fast", there are those people who I know are never going to be the clients I want. And I have no doubt that there are plenty of appraisers out
there who wouldn't think twice about doing work for them. I've heard the argument from some of these pushers - that "everyone is doing it". And judging by some of the appraisals I review, I know it happens regularly.
I don't think the HVCC will do anything to stop this kind of activity between appaisers and lenders. It's not an activity that is specific to one category of mortgage professional. I've been pressured by the guy working at the bank that will hold the note
just as much as the independent mortgage broker. So the HVCC's provision to disallow brokers to choose their own appraiser (which it essentially does) doesn't help with everyone else in the pipeline. And it does hurt some very good brokers that I do work