Appraisers, represented by the Appraisal Institute, say sellers, buyers, agents, and others haven't been able to grasp that values have dropped in the last five years. They do agree, however, that the post-meltdown system is a disaster not of their making. As evidence, they name third-party appraisal-management companies, which regulators determined were an appropriate barrier to lender-appraisal "collusion." Lenders contact these companies for appraisers, and the firms find appraisers to assign to the work.
The Government Accountability Office says the Federal Financial Institutions Examination Council's Appraisal Subcommittee, which oversees the regulatory programs established by the states, needs to improve its monitoring procedures. That may not happen, however, since the subcommittee has a $2.8 million annual budget and 10 staffers, and the Dodd-Frank Act is expanding its regulatory work.
As I sat pondering the various arguments, I decided that I needed to find an insider, a fresh voice to articulate what appraisers are up against.
That's Gregg Gipp of Keller Williams Oceanside in Ocean City, a real estate broker and certified appraiser. He has been selling real estate since 1979. His appraisal firm, GTG Associates, does 600-plus each year in Philadelphia and South Jersey.
Appraisal-management companies, Gipp said, are in business to make money, "so the most they can make, the better for them."
The market rate for a residential appraisal is about $350, he said. The typical management company offers $200, although some come in as low as $175.
"The price of an appraisal has not increased since the mid-1980s," Gipp said, adding that the "true cost" to complete one, including insurance, software, transportation (car, gasoline), licensing-board and Multiple Listing Service fees, and Internet and office expenses, is about $190 in today's dollars.
