As reported by Valuation Review, Georgia’s legislature has officially proposed an amendment to its state appraiser rules regarding “customary and reasonable” appraisal fees in order to bring them in line with federal requirements. If passed, Georgia would become only the second state to address one of the more controversial topics within the appraisal industry, which has led to years of animosity between appraisers and Appraisal Management Companies (AMCs).
The Georgia Real Estate Appraisers Board (GREAB) recently collected data from 2014 on the average fees paid to non-AMC appraisers for conducting residential appraisals. The GREAB collected data from both appraisers and lenders in regards to the typical appraisal fees that were paid for several different types of appraisals: urban, suburban, and rural. In doing so, Georgia became only the sixth state to conduct this type of fee study – joining Kentucky, Louisiana, Texas, Utah, and Virginia.
Appraisers who participated in the study reported typical appraisal fees ranging from $350 to $550, depending on the type of appraisal and the geographical area. Approximately 93% of the participants said they charge additional fees for appraisals of complex, unique, or very expensive properties. Of that 93%, roughly 68% said they usually increase the fee more than $100.
Lender participants also said their typical appraisal fees ranged from $350 to around $500, depending again on the type of appraisal and the geographical area. Approximately 72% of the respondents said they typically pay an additional fee for appraisals of complex, unique, or very expensive properties. Of that 72%, roughly 71% said that the fee increase is usually more than $100.
When comparing the two groups, the GREAB concluded that appraisers reported fees that were an average of $39 (or about 10%) higher than those reported by lenders.
It’s interesting to note that the GREAB’s study didn’t include fees paid to appraisers for appraisals ordered by AMCs. Nevertheless, the board will likely consider the above figures to be the norm for “customary and reasonable” appraisal fees and will expect AMCs operating within the state to abide by these amounts.
The main focus of the GREAB’s proposal is to reword and amend several sections of its existing appraiser rules to require AMCs to comply with Dodd-Frank’s “customary and reasonable” fee standards. Under the proposal, an AMC would be deemed compliant if it meets one of the two presumptions listed below:
- The AMC has reviewed several factors, including the type of property, the scope of work, the time in which appraisal services were required to be performed, appraiser qualifications and experience, and work quality, and has made the proper adjustments to the recent rates paid in the relevant geographical market to ensure that the amount of compensation is reasonable.
- The AMC has based its current appraisal fees on “objective, third-party information, including fee schedules, studies, and surveys prepared by independent third-parties – such as government agencies, academic institutions, and private research firms” to at least match the typical rates being paid to other appraisers for similar assignments.
The GREAB’s proposed amendments also seek the authority to discipline AMCs for failing to comply with the new requirements, and these disciplinary actions have the potential to be stiff – current Dodd-Frank penalties could cost violators up to $10,000 for every day they’re not in compliance.
For more information, please visit the GREAB’s website.