Managers are inflating fees for home appraisals

Are you getting fleeced on appraisal charges when you buy a house or refinance?

Many appraisers say yes. And they’re eager to let consumers know that when the charge is $500, $800 or $1,000, they’re frequently being paid a fraction of that. The rest is going to an “appraisal management” company that oversees the process for the lender.

Controversy arises when management companies add 35 to 50 percent surcharges — or more — onto the appraiser’s fee. Appraisers say management companies often seek to hide it by prohibiting them from attaching invoices to the appraisal the consumer receives.

Ryan Lundquist, an appraiser in Sacramento, California, said he recently was asked to appraise a house with complicated features, which required a higher than typical fee — $800. The management company tacked on $345 — a 43 percent surcharge — billing the consumer for $1,145.

After the homeowner complained, Lundquist learned the management company said the $1,145 was solely Lundquist’s quote.

“I was shocked,” he said.

Lundquist described his experience in a blog post, which drew dozens of responses from around the country.

“I got chewed out by the owner of the house,” wrote one appraiser. “Yes, I charged $700. But he (the owner) paid $1,700” — a $1,000 add-on.

Jeff Eisenshtadt, CEO of Title Source, which includes a big management company, said his industry brings “a tremendous amount of value” to the table. But “we believe the consumer really should be focused on the bottom-line charge for the appraisal,” not how much the appraiser or manager gets.

Consumers don’t care about the individual costs of “the pickles and onions and lettuce” that go onto a hamburger, he said, nor should they when it comes to appraisals.