Jay Vorhees at JVM Lending wrote a blog recently about high appraisal fees and I wanted to share a specific portion of that with you:
Appraisal fees have risen from as low as $250 in the early 1990s to over $1,200 now – for a standard appraisal. Lenders everywhere are raising their fees in order to get the increasingly more limited supply of appraisers to accept their appraisal orders. There is simply no choice if we want to attract skilled appraisers with fast enough turn-times to allow us to close on time.
We are warning borrowers up front, of course, but I am encouraging agents who read this blog to also warn their clients, as we are seeing some serious “sticker shock” right now when we disclose what we now have to pay to appraisers.
So, why are appraisal fees so high? Inflation is obviously a major reason, as $1 in 1990 is worth the same as $2.08 today, per this really cool inflation calculator. Appraisers also have higher fees for licensing, insurance, E&O coverage, vehicle costs, software, MLS access, continuing education, and more.
The main reason the fees are so high is that there is a shortage of appraisers. One of our best appraisers is in his 80s, and he just works because he likes to; he certainly does not have to. And that is the case for a large number of our other appraisers. They can command all the fees they want, and they have no reason to tolerate mistreatment.
Kristin’s perspective: In my recent experience, most transactions are closing late because of a delay in getting appraisers to the property. Even if the buyer removed all their contingencies and they have a loan, you still need the appraisal to close. The shortage of appraisers – and the rising costs because of that shortage – are very, very real. Don’t be surprised when your lender or agent mentions those costs!