Do mortgage packagers and lenders pay too much for their valuations? In most areas of business, panel managers do just that – manage panels of experts to ensure the best service is delivered to their clients at the best price.But this is not always the case in the valuation industry. Most valuation panel managers fall into one of two categories – those who employ their own valuers and those who use external valuers. Both groups work hard to achieve high levels of service to enable cases to be turned around quickly, accurately and promptly. But neither has any real incentive to minimise the costs for their mortgage packager and lender clients. Those with their own workforce tend to direct as many valuations as possible to their own valuers to maximise their own profits. Those who use the services of outside valuers tend to take a significant slice off the valuation fee before passing the instructions on to their panel, so the larger the valuation fee, the larger the amount of money made by the panel manager. Obviously panel managers must be paid for their services, but do their clients realise that this can be as much as 50% of the valuation fee? Can panel managers really justify making margins like these, managing instructions for their own benefit rather than for the benefit of their clients? In many cases proper assessment of the value of panel management is clouded by reciprocal agreements. At a time when everyone in the financial world is under pressure to provide better services more cost effectively, an innovative and more professional approach is now required to ensure valuations are managed for the benefit of lenders and packagers – and to ensure the real values of reciprocal agreements are assessed properly and openly. A revamped system should use the market to get best value on fees instead of imposing fees on valuers, and the manager should invite companies to submit fee scales at which they are prepared to accept instructions. These should be flexible so valuers can have different fee scales for different offices, and change their fees at any time depending on issues such as how busy they are. By making it clear to valuers that they are in open tender they will ensure their fees are competitive, while remaining at levels they are happy to accept. This differential pricing will ensure value with the best fee agreed for each job as valuers know they are in an open and competitive environment. It will also ensure motivation and speed among valuers. They will prioritise their work and be happy with the prices they have submitted rather than having low fees imposed on them. And it will mean flexibility for clients and valuers as jobs can be managed to match the urgency and pricing. Valuer selection should be automated by using technology to appoint the best valuer for each job depending on post code, service record, capacity and then price. IT must integrate fully with Quest and xit2 to enable smooth running. This technology will mean capacity can be managed to ensure no valuers are overloaded and cases go directly to those who can provide a fast turnaround. And quality service standards can be monitored, audited and maintained throughout the whole process. Technology will also ensure accuracy as each instruction goes to the right valuer in the right area who can undertake the instruction satisfactorily in the correct time and at the most competitive fee. Panel managers should have open systems and declare the margins they achieve so all parties know what is happening and at what cost. This transparency will ensure cost efficiency, easy identification of areas for improvement, good communications and understanding on all sides, proper analysis of the true costs, service levels and value of any reciprocal business. Most importantly, a revamped panel management system should share the money saved with the client. This will ensure that the panel manager is motivated to save money for the client and that the client is always getting the best value. This might all sound too good to be true, but just such a system of panel management is now handling thousands of valuations per month and achieving savings of between 25 and 75 per case against clients’ original valuation fee scales. A number of leading national mortgage packagers and lenders are using this system to recoup substantial amounts of money on their valuations. If you are not one of them, it’s time you re-evaluated your panel management. Who get what out of panel valuationLenders
- Resource saving – Staff can be removed from instructing and chasing valuations and put into more profitable areas.
- Improved service – The panel manager has the expertise, network of professionals, dedicated systems and administration to manage, monitor and progress each case quickly and efficiently and can chase overdue cases.
- Reciprocation – Lenders can award panel management contracts to companies that can introduce mortgage business through estate agents and financial advisers if they choose.
- Efficiency – The valuation for a particular lender to go to a valuer on that lender’s panel.
- Flexibility – Cases can be diverted from one lender to another if necessary, without wasteful second inspections.
- Independent – Not tied to an employed workforce of surveyors or a corporation that may be in competition with clients.
- Committed – Committed to returning maximum benefits in terms of cost and service.
- Equipped – They have the technology, systems and expertise to ensure fast and efficient communications, instructions and valuations.
- Motivated – They will reduce rather than increase, valuation fees.
- Economies of scale – They can aggregate business and drive down costs for all rather than feather their own nests.
- Transparent – They are open and honest in all their transactions. Who gets what out of panel valuation
Panel managers working under new system