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Appraiser News
Illinois releases C&R fee results
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Appraiser News
Monday, July 23, 2018
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Findings from Illinois’ Customary and Reasonable Fee Survey now are available, according to the Illinois Department of Financial and Professional Regulation (IDFPR). The voluntary survey of Illinois licensed real estate appraisers began in January with assistance from the Office of Real Estate Research at the University of Illinois at Urbana-Champaign.
The objective of the report is to determine recent fees paid for comparable appraisal services in each market area in Illinois. The report excludes appraisals ordered by appraisal management companies to establish evidence for a specific baseline of customary and reasonable fees, the survey said.
“IDFPR values quantitative data and appreciates the academic report’s findings. This data will not be used to establish price ceilings or floors for real estate appraisal services in Illinois,” Division of Real Estate Director Kreg Allison said in the survey by IDFPR.
“The regulation directs us to determine estimates of ‘customary and reasonable’ fees relying on recent amounts paid to ‘a representative sample’ of appraisers in each ‘geographic market’ in Illinois, explicitly excluding appraisals ordered by Appraisal Management Companies,” the survey said. “Additionally, the new rule highlights that customary and reasonable fees vary and depend on the specific geographic market in which the subject property is located. As the Board explains in the notes to the rule, the marketplace should be the primary determiner of the value of appraisal services, and hence the customary and reasonable rate of compensation for fee appraisers”.
There are nearly 4,000 licensed real estate appraisal professionals in Illinois.
Typical fees pertaining to each form in the state’s designated regions for 2017 showed the following:
- Cook County (1004, $350, 1004 FHA, $ 400, 1025, $525, 1073, $350 & 2055, $275)
- DuPage County (1004, $350, 1004 FHA, $400, 1025, $525, 1073, $350 & 2055, $275)
- Will County (1004, $360, 1004 FHA, $425, 1025, $535, 1073, $372.5 & 2055, $275)
- Lake County (1004, $375, 1004 FHA, $425, 1025, $525, 1073, $375 & 2055, $300)
- Northeast Collar (1004, $375, 1004 FHA, $425, 1025, $550, 1073, $375 & 2055, $300)
- Northern Stateline (1004, $375, 1004 FHA, $425, 1025, $550, 1073, $375 & 2055, $325)
- Northwest (1004, $375, 1004 FHA, $425, 1025, $525, 1073, $375 & 2055, $325)
- North Central (1004, $375, 1004 FHA, $425, 1025, $500, 1073, $375 & 2055, $300)
- East Central (1004, $375, 1004 FHA, $450, 1025, $550, 1073, $400 & 2055, $325)
- Central (1004, $400, 1004 FHA, $450, 1025, $550, 1073, $450 & 2055, $350)
- West Central (1004, $400, 1004 FHA, $500, 1025, $550, 1073, $ 450 & 2055, $350)
- Southeast (1004, $400, 1004 FHA, $450, 1025, $500, 1073, $ 425 & 2055, $350)
- Southern (1004, $400, 1004 FHA, $450, 1025, $500, 1073, $450 & 2055, $350)
- Southwest (1004, $400, 1004 FHA, $425, 1025, $500, 1073, $425 & 2055, $300)
“Overall, there was a small but significant range in fees of about $50-$100 across regions for each appraisal form,” the report concluded. “Fees tended to cluster based both on fees paid in adjacent regions as well as how urban or rural each region was. Thus Cook, DuPage, Lake, and Will County had very similar fees, a little higher in Lake and Will County. Similar clusters are seen in the northern regions, the central regions, and the southern regions. Overall, the pattern of fees stays consistent across regions for each different form suggesting the fee estimates are reasonably reliable.”
For this study, geographic markets were delineated using the regions defined by the Illinois Department of Commerce and Economic Development. They define their regions as “counties that are close in geographical proximity and share common economic traits such as commuting zones, labor market areas, or other economically integrated regions”, which is the best proxy for the geographic markets called for in the statute, the survey revealed.
“After consultation with IDFPR, the regions were slightly altered to better reflect actual appraisal practice. The main difference is that the core counties for the Northeast Region have been named as individual regions for each core county: Cook, DuPage, Lake and Will. The remaining counties in the Northeast Region are in a region called Northeast Collar Counties,” the survey said. “Within each geographic market, the rule requires fee schedules, studies and surveys rely on ‘recent rates paid to a representative sample of providers’.
“This suggests the representative sample is not of the state as a whole, but rather a representative sample within each geographic market,” the survey went on to say. “The objective of this study was to obtain at least 30 estimates from each region, reflecting a minimum threshold for a representative sample from all markets in Illinois.”
IDFPR provided a list of 3,795 currently licensed Certified General Appraiser and Certified Residential Appraisers for the survey, which included phone numbers and email addresses. At the request of the IDFPR, appraisal trainees were not included in the survey.
The survey instrument was divided into three sections.
The first section consisted of specific background questions intended to ensure those responding represent a broad mix of appraisers from throughout the state. Additionally, background questions about current license status, number of residential appraisals performed, and percent of appraisals ordered through AMCS were used as filter questions to determine whether participants were eligible to complete the survey.
The second section included questions about non-standard fees to both identify additional fees commonly paid for residential assignments and distinguish these from the typical fees asked about in the survey’s third section, according to the survey.
In the third section, appraisers were asked to estimate typical fees for five residential appraisal types for each Illinois county in which they did business in 2017, specifically excluding those assignments in which the appraisal was ordered by an AMC. The five residential appraisal types include:
- Form 1004 single-family (full appraisal)
- Form 1004 FHA (full single-family appraisal for FHA)
- Form 1025 ([2 – 4 unit] residential income property appraisal)
- Form 1073 (individual condominium unit appraisal)
- Form 2055 (exterior-only inspection appraisal)
“When it closed on March 7, 2018, there were 629 partially or fully completed survey responses to the Appraiser Survey, representing an overall response rate of 22.3 percent,” the survey added. “Of these, 118 respondents indicated in the background section that they either did not hold an active appraisal license in Illinois, performed no relevant residential appraisal work, or only did work through AMCs, making them ineligible to complete the survey.”
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