Our particular line of business processes loans for high net worth clients, therefore, these homes are typically multi-million dollar homes. Since TRID is moving to "no tolerance" for appraisal fee estimates on the Loan Estimate, we are looking at averaging appraisal fees based on market location and loan type/product.

Some of our clients may obtain a loan for a vacation home located out of our servicing market (e.g. Hawaii), which we have very little volume for. Does anyone have any idea how to obtain an exact appraisal fee estimate on high end homes located in places like this? We've contacted appraisers, and they won't be able to provide estimates within the 3 day requirement for delivering the Loan Estimate.

To tie in to another related question to this... In general, how are others providing exact appraisal estimates for higher priced homes, spread accross different regions?

We are considering moving to an averaging method for appraisal fees. However, if we separate by geographical property location and then by type of loan, our volumes are very limited in order to establish a good sample size for averaging.

Wondering if anyone has any thoughts on this subject...

We don't use average charges, so maybe that's just par for the course on that, but it seems odd (unfair?) to me that a borrower would pay more for an appraisal, not because their property required a more expensive appraisal, but because some other, unrelated borrower trying to buy a house in an unrelated locale has to pay more for their appraisal, and your bank wants to split the difference between all your borrowers. Again, just my thoughts.

I agree that when averaging, it could appear unfair to borrowers how would have a lower cost appraisal. Raitchjay, so beginning 8/1, since appraisal fee estimates move to zero tolerance, how will your bank provide exact appraisal costs?

I just re-read your post...i may have misinterpreted. Sorry.

We are trying to have good lines of communications with our appraisers, getting up-front quotes about what types of properties will require more expensive appraisals, etc. It's then up to the bank to know from the outset what type of property they are dealing with so as to give the proper quote, etc. I agree it's going to be much more challenging than what we have currently, and appraisers that don't cooperate and spring "surprises" on us will fall off our approved list. Service providers have to work with banks on this, or they won't be service providers anymore...that's how i'm looking at it.

Estimate high when out of market or home is out of the norm, just as you would now.

Conversely, if the appraiser tells us upfront that certain circumstances will cause an uptick in the appraisal cost and the person ordering the appraisal isn't properly doing their job and quotes the lower fee because they haven't done their due diligence, that's on the bank (and that employee), not the appraiser.

We too are using the communication approach. The average charge rules are so difficult to satisfy that the cost of ongoing analysis feels like it may outweigh the benefit.

Like Jay, I think you can continue to do what you've been doing for the last five years. You should have a feel for what an appraisal costs in your various market areas.
TRID isn't telling you that the cost can't come in lower.
It's just taking away the 10% wiggle room for raising the cost.

As far as costs coming in lower, i worry (more than now, for some reason) about 'padding' costs (guessing high) on the appraisal, as it could be seen as not being in 'good faith'. I don't mean as far as using the number you KNOW from the appraiser who has the highest fee on your list, but more so just having a phantom $50 or $100 that you couldn't defend as to WHY that's your quote. Just throwing it out there.

And I think that's a reasonable concern. "Good faith" requires using the best information reasonably available at the time of the disclosure. It assumes you endeavor to be accurate, rather than using safety padding.

Thankfully our appraisal costs aren't based on square footage.

Just a thought for those who do deal at price per foot. Could you put together some kind of spread sheet that could track costs on various size houses from the appraisers you use? Then you could show an examiner that, without knowing which appraiser would be chosen and based on the information you have, this is why you put the cost as $x on the LE.

I'm wondering if anyone has had discussions with their Appraisal Management Companies to see if anything can be done to better control changes in pricing, particularly in areas where demand is high and available appraisers are low. We find that estimates are difficult in these markets. I hear talk of these companies setting pricing and worry whether their approach to "setting pricing" could trigger any of the average cost rules or if those relate only to our own average charge pricing. Can the AVM establish some sort of average pricing to determine how much to charge the bank? Honestly, I haven't spent much time trying to understand the average price approach since the amount of work associated with it seems to make it impractical, however, I wonder whether I need to worry about the pricing approach of our vendors. Thoughts anyone?

TRID is telling us that the appraisal fee moved to the Zero Tolerance category which tells me that the fee cannot change. We ran a mortgage and indicated on the CD a lower dollar amount for the appraisal and our loan software told us that we had a violation and had to ajust via lender credits.

Not sure how to handle this whole appraisal issue.

zero tolerance means if the price goes up, the lender eats the increase, not that the charge can't go down. I'd talk to me LOS vendor about that violation error.

You have a software issue.