How Lenders Can Reduce Costs & Improve Borrower Experience with Appraisal Payments

At Reggora, our mission is to make fast, high-quality appraisals the norm for mortgage lenders. Along the way, we’re able to solve problems that lenders often don’t realize they can fix. In part three of our value series, we'll show how traditional appraisal billing costs lenders $35 per loan file and how Reggora eliminates those losses via automated appraisal payment processing capabilities.

Traditional billing and invoicing for appraisals is a significant operational burden that also  poses a financial risk for lenders. This manual process consumes valuable human resources across departments and inevitably leads to unforced errors that result in six-figure annual revenue leakage for lenders.

These issues can be rectified internally through automated payment management. The right tools can also enable lenders to operate as a more effective middleman for appraisal payments. In this article, we’ll examine the impact of and costs associated with traditional appraisal billing and invoicing, and how Reggora’s payment processing capabilities eliminate these issues for lenders while improving the experience for borrowers and appraisal partners.

The Real Costs of Manual Appraisal Billing

At Reggora, we’ve spoken with multiple lenders who have described their traditional appraisal billing process as “an operational nightmare” — one that would weigh down the accounting department with orders and at times consume valuable resources as high up as members of the executive team. 

When we talked to the vice president of operations at a private mortgage company, he described how the monthly backlog was always a chore that required hours of his time: “Often at the end of every month, we would have to reconcile. We would have to go back and say, ‘Hey, I didn’t get an invoice for these 100 appraisals,’ because it was a manual process, and ‘can you go find me 100 invoices?’ And that fell to me to do as the team lead of the group.”

Especially with a constant flow of billings and invoices each month, some are bound to slip through the cracks of a manually executed workflow. There are borrowers who neglect to pay their bill and sometimes fee escalations don’t get passed onto the borrower, requiring the lender to absorb the costs. 

Oftentimes, these unforced errors are viewed as an inevitability. Categorizing them as such likely makes it easier for lenders to accept the losses as the cost of doing business. But that cost is high for those that manage all appraisal payments in-house: $35 per loan file on average. This financial risk no longer needs to be assumed by the lender thanks to solutions like Reggora.

The Value of Automated Appraisal Payments

Lenders can eliminate the issues that come with manual billing and invoicing for appraisals through Reggora’s payment processing capabilities, which automatically collect payment from borrowers, pay vendors, and organize all payment details for accounting in one place. These capabilities can be integrated with a lender’s point of sale (POS) system and accessed there, if applicable, or used directly in Reggora’s platform if the lender doesn’t have a POS.

It starts with the borrower. They expect an experience that is as easy as any online transaction: just enter credit card information and click submit. And why shouldn't it be that simple? With Reggora, lenders are able to send borrowers a branded email containing a payment link. Borrowers just click the link and pay their appraisal fee with a debit or credit card. 

A lender-branded email increases borrower confidence in the source, rather than if they received a third-party link from an appraisal partner or software vendor. It also helps create a smooth, consistent experience for borrowers. Katherine Campbell, chief digital officer at Assurance Financial, stressed the importance of this: “Making it feel like a seamless experience for the borrower — no matter if they’re going through 11 technologies from us — they need to know they had a good experience with Assurance Financial, and it was easy with Reggora.”

Lenders set up their unique payment workflow in Reggora according to their needs. Meaning, they can either instantly send the email to borrowers at Intent to Proceed (ITP) or delay it until close. Appraisal vendors then get paid efficiently and in a timely manner.

In addition to payment collection and distribution, automated workflows can be created to notify borrowers of fee escalations. Without such a notification in place, lenders risk negatively impacting borrower sentiment. "If you don't have technology in place to redisclose for a change of circumstance, the borrower experience is going to suffer,” explained Mike Seminari, STRATMOR Group's director of customer experience in a recent webinar on appraisal fees. “We asked customers if they saw any unexpected fees in the process. When they said yes — and they did about 10-15% of the time — that takes their NPS from 81 to 21."

Reggora’s payment management capabilities reduce the time it takes to manage invoicing, payment collection, accounting tasks, and vendor remittance by 50% or more. And what does that mean in hard numbers? For the average lender, the fully-loaded hourly cost of personnel associated with billing is $69, assuming 75% of each hour is productive. With a 50% reduction in time spent on manual tasks related to appraisal billing, a lender's cost per loan is reduced by $35 per file.

Appraisal Billing Cost Before Reggora

• Average Billing Time: 1 hour per loan
• Labor Cost: $69 per hour
• Appraisal Billing Cost: $69 per loan

Appraisal Billing Cost With Reggora

• Average Billing Time: 0.50 hours per loan
• Labor Cost: $69 per hour
• Appraisal Billing Cost: $35 per loan‍
• Reduced Cost per Loan: $35
  

Want to calculate how much your organization could save? Contact our mortgage solutions team for a free cost per loan consultation. Our team will quantify your current costs related to billing and provide a detailed model of the costs you can eliminate.

The Value of Optimizing Your Appraisal Process

Modern tools like Reggora automate parts of both the appraisal billing and invoicing processes to remove the burdens associated with manual payment management. This additionally helps lenders avoid costly issues, like neglected borrower payments, that lead to sizable revenue leakage.

Labor-intensive work and unforced errors in appraisal payment collection aren't the only challenges that lenders face when it comes to appraisal management. In our white paper on the ROI of appraisal management technology you can learn more about costly challenges and impactful solutions for quality control, plus revenue leakage, appraisal management time, and visibility into the process, all of which we have either already outlined or will in future posts as a part of our value series.