| Featured news - posted July 20, 2006
More AMC reliance, fee pressure part of a normalizing market Last week Washington Mutual announced it was cutting some 900 jobs, including hundreds in its in-house appraisal department, in favor of outsourcing appraisal management to two Appraisal Management Companies, LSI and a First American unit. The transition is underway and will proceed "throughout the remainder of 2006." At the same time, other national AMCs affiliated with top five mortgage lenders have contacted some appraisers on their fee panels to announce planned fee cuts. Some appraisers have received written take-it-or-leave-it "offers" to stay on the panels in exchange for agreeing to drop fees. What's driving all this? A slowing residential mortgage market, surely. The market slows and speeds all the time. So many people involved in the mortgage business, from production to processing to vendors, are relatively new to it after a historic housing (and hiring) boom. So they've never seen a hot market cool to normal. But we certainly have, as have many of you. It's the peg many of these lenders and AMCs are hanging these decisions on that's interesting. There is increased regulatory scrutiny to ensure production staff aren't involved in choosing appraisers or ordering or managing the appraisal. WaMu and other companies are pointing to this new thrust toward ensuring appraiser independence as a reason for relying on AMCs more. But reducing fees has nothing to do with assuring appraiser independence. That part of it has to do with what you'd think it has to do with — trimming overhead and buffering the bottom line at a time when revenue is dipping. Home buyers and refinancers — so many of whom, these days, are rolling their costs into their loans anyway — are not clamoring to save money on appraisal fees. And remember, they're the ones that pay them. AMCs' business models rely on paying their vendors (you) $X and charging their customers (lenders) $X+Y. If lenders are more anxious to use AMCs' services — as many are with the regulatory environment what it is — competition among AMCs for that pool of $Ys increases. The larger AMCs, with more appraisers relying more heavily on their work, can promise and largely deliver a reduced $X, allowing them to reduce $Y but net the same difference. There is nothing wrong or surprising about businesses trying to rein in their costs when faced with a normalizing market for what they sell. But it's only tangentially related to new regulations or promised enforcement of appraiser independence from production staff. It's directly part of a market cycle, something veterans of this business have seen time and time again. And somehow, we always survive. Many of us even grow and prosper. The key is staying on an even keel, doing great work and not overreacting to every fit and start of a real estate cycle. You're hearing and reading ideas all over the place for diversifying your practice and attracting new business. If you're feeling a pinch the best place to start, 100 percent of the time, is with the business you already have and value. All the tricks of the marketing and client retention trade won't keep all your clients ordering at the same pace they did in 2003. But that's not a reason to take your eye off the ball, it's a reason to bear down and do everything you can to be sure your phone keeps ringing (or XSite keeps pumping out orders) while your colleagues' go silent. The old adage "if you love something, set it free" does not apply to client retention. You need to pay attention to the business you have. And then pay more. Your goal should be to turn existing clients into fans. You know how fans act if you follow sports or know someone who does. In business they become living, breathing testimonials for you. They recommend you to others and even pick up the phone to let you know of an opportunity to help your business grow. By following a couple key strategies you can help turn existing clients into satisfied, long-term fans. Try this:
You can spend equal amounts of time and effort rooting around for new business and feeding and watering the business you already have, and your work on existing clients will almost always reap the most, and most immediate, rewards. Give it a try. |
Briefly Speaking Taking the lead in document security Our SureDocs product for mortgage professionals is hot right now. We have thousands of people using it to create truly e-signable electronic mortgage documents. A large wholesale lender, MILA, announced it is accepting disclosures generated by SureDocs, and that's only the first (public) domino. And you care why? Because while mortgage was the first market to get SureDocs, its possibilities for your appraisal business are very exciting, and we're coming out with an appraisal version soon. SureDocs' secure e-sign capabilities benefit you by making it virtually impossible to steal or alter your signature. SureDocs is a PDF driver, plus a delivery system (no XSite needed), and an encryptor. It also takes our SureReceipts concept to the next level, with page-by-page receipts logged in the system — you can tell which pages were read, and when. ID tags will make alteration of your report if not impossible, then impossible to hide. Signature and document security are things you'll see us taking the lead on in multiple markets. Watch this space for more information on an appraisal version of SureDocs as the time nears. In the meantime, you can play with the free mortgage version by downloading it here. There's also an overview video available by clicking here. While it's clearly designed for mortgage loan documents, you can see how it will be modified for appraisers. MLSs said to be insecure By now we hope you've read our white paper (click here if not) on Gramm-Leach-Bliley financial privacy laws and how they apply to you. A recent syndicated column by real estate reporter Lew Sichelman reminded us that if you use an MLS, you have information in your hands you need to make sure you keep secure. MLS data available only to members — who pledge according to the service's terms of use not to misuse it — can include seller names, showing instructions, even times the home will be vacant. In the wrong hands this may or may not be a GLB issue, but it can certainly abet theft — the identity kind and the actual physical kind. Don't share your MLS password. Change it frequently. Don't "borrow" a login from someone else. That will keep you square with your MLS service's terms of use and will help keep private, sensitive information out of the wrong hands. Contact the newsletter Write the editor at mattb@alamode.com Information and materials on Gramm-Leach-Bliley, copyright, advocacy, AVMs and more are available at our new a la mode resources page. Click here to visit. |