On 12/27/18, I was assigned an appraisal order from an Appraisal Management Company (AMC) I am not registered with. This order was for an FHA foreclosure assignment with “as is” value and repair estimate requirements. First, this is not an area I cover, second, the fee was about $75 below what is reasonable and customary for an FHA appraisal in this market, let alone one with required repair estimates on a foreclosed property. Third, I don’t do FHA work because I am vertically challenged (cannot reach the attic even on a ladder). The due date was 1/4/19, therefore one week after assignment, during the holidays where many are not working. I declined the assignment as it is out of my area of coverage and the fee was inadequate.
On 1/4/19 I was assigned the same appraisal order but they increased the fee by $25. It was still $50 under typical for the area, and I still don’t handle that area. The due date had been extended to 1/14/19.
Why do I write about this? I do because this is an example of an AMC that is not paying attention to the comments from the declination. If an appraiser declines due to coverage area, then it should not be reassigned. But also, if appraisers decline because the fee is inadequate, is upping it a paltry $25 going to cut it? In the time between the initial order and the subsequent, ten days passed. Had the AMC picked up the phone and started calling appraisers, they may have had much better success at finding someone who first of all covers the area, and second of all, would tell them how much it would take for them to take on the assignment.
I write this as well as I am trying to figure out how they are benefitting their client, the lender, with this method of locating an appraiser?
If we are to believe there is a shortage of appraisers in a market, consider this as well: I used to work for a small mortgage lender. We needed a field review completed in a rural market and had two AMCs that were trying to find appraisers to handle it. After two weeks of trying, both turned it back and said there were no appraisers available. Frustrated with their lack of progress, I got on the Appraisal Institute “Find an Appraiser” page, located four appraisers within 20-miles of the property, and had agreement from two of them that they could handle the assignment. We ordered and received the field review within a week. So how was I successful in finding an appraiser and obtaining the order? Simply by being respectful of the appraisers I contacted, and asking them what they would need to complete the assignment. Instead of blindly sending an email with an order to someone who doesn’t cover the area and dictating their fee, I called, listened, and was able to get the review in an area which was not as sparsely covered as stated by the AMCs. In my mind, what happened was simply they did not get bites on their offers, and used the excuse that there were insufficient appraisers to handle the work.
So, next time you hear that narrative of a shortage of appraisers in certain markets, think instead that the shortage is only that of those willing to work for substandard fees. A little bit of communication goes a long way, and respect in dealing with others goes even further.
Thank you Rachel, you hit it on the head
Thank you. And a further thought is simply this is not how we hire professionals, be it plumbers, electricians, doctors or lawyers (or others). How many people email electricians saying “I will pay X and need it by Y”? Hint, doesn’t work.
WE HAVE A WINNER!! Well said Rachel and absolutely 100% correct.
Well said!
It seems there is a disconnect with reality with many AMC’s. Their definition of shortage is much different than the majority of reasonable people. Thanks for bringing attention to this all to common narrative that is being fed to the public about the perceived appraiser short.
Thank you Tom, yes – I think sometimes the thought is that if appraisers won’t take their offers, there are no appraisers. A simple phone call to appraisers who show up in the area, either through web searches like the AI site, or even the ASC, would show the truth. Call the appraisers, ask what they need, and then move forward. Stop saying what you will pay and how quickly you want it. Do we email lawyers and say “I need this and will pay that, and it has to be done by x date”? No we don’t.
Respect is the key and all very great points. Thankfully I do not get many of these types of requests often but seriously what “value” are these AMCs adding to the lender or the process.
They can be valuable to the lender. They make it less expensive for the lender in terms of not needing a large robust appraisal staff, and make it easier to deal with accounting issues. That said, lenders are ultimately responsible for the quality of the work they accept, so they have to have some review staff in place, even if just underwriters. I am not anti-AMC at all, just think that there needs to be a much greater level of respect shown by all, to all.
For sure they can add value and not all are bad. My comments relate to “these” specific AMCs on this assignment that attempted to engage to wasting everyone’s time.
Very well said. Thank you. Everyone needs to start understanding what is going on in this industry-and stop blaming appraisers for everything under the sun, when clearly it is NOT always the appraiser’s fault. AMCs and Lenders need to start taking responsibility for their short comings to improve their process and quality.
Excellent article and so true.
Imagine how many people would have accepted this assignment initially if they had offered $75 above C&R instead of $75 below.
Excellent! Thank you Rachel!!
Sorry for the long post but this is my major pet peeve- this is the false narrative that they continue to push to benefit their bottom line; however, it is coming back to bite them as the lender clients have began to measure the worth of the AMC Model.
Many of the local lenders in my area have pulled the appraisal process back in house due to the unprofessional manner in which many of the AMCs that they were using were operating.
As the market begins to slow just a bit I suspect many of these AMCs that are so top-heavy will begin to merge with others and look for additional ways to generate income to their bottom line which is why they were peace Mealing the fee on your assignment. If they could’ve gotten you to except the assignment at the lower fee then they increased their bottle bl as the market begins to slow just a bit I suspect many of these AMCs that are so top-heavy will begin to merge with others and look for additional ways to generate income to their bottom line which is why they were peace mealing the fee on your assignment. If they could’ve gotten you to accept the assignment at the lower fee then they increased their botton line.
This is another reason why the AMC fee should be clearly broken out in the closing documents so that the market can react to the value of a firewall.
Keep turning in those AMCs that are not paying a reasonable and customary fee to your state boards or the FDIC as it is a federal law that they do
I think that was my biggest takeaway Joe. (Great article BTW Rachel). Her mortgage company ordered via an AMC to start out with and only after flakey inaction by the AMCs did they undertake to do what they could (should?) have done in the first place.
I get that big banks or mortgage companies dealing in thousands of appraisals a month still save money that would otherwise go for HR and admin costs by using AMCs. I understand that trend (or HVCC hangover) won’t be voluntarily reversed.
There is still a solution for lenders; (1) adopt cost-plus pricing. Fixed rate for the AMC based on service level required. (2) Pay the appraiser C&R fee based on real C&R fees for an area and property type/complexity. (3) Be willing to get a revised TRID signed when notified your appraisal fees are ridiculously low.(4) Require disclosure of the AMC fee and the appraisal fee in all reports. Its the only way to curtail underhanded AMCs gouging.
It has a lot to do with automation, too. I’m in the hole 2 REO appraisals where FNMA is the client. The first AMC went bankrupt; the report was sitting in the AppraisalPort portal. The second, the AMC threatened non payment; clearly a FIRREA violation.
My point is, the culture must change. If FNMA condones it, why wouldn’t banks? Very frustrating and why appraisers are specializing. No shortage, just business.
Good article Rachel. It really does shed light on a topic which is clearly starting to send this profession down a historical path once again, I.e, hybrid appraisals, loans with no appraisals, etc.
Great article! And a message to lenders, really know what your AMC’s are doing. And to agents, recommend that your clients use lenders who don’t use these bad AMC’s. Appraiser’s do give out referrals and we know what lenders treat appraisers like the professionals they are.
Well said Rachel. As appraiser, we see this on a regular basis!
I agree and this is an aspect that the lenders (the AMC clients) are not aware of. We need to do a better job of education the lenders about what their “vendors” are doing to the quality and service of the appraisal process are doing. I believe it is mostly a business decision to increase their profitability and now as the volume has significantly declined (in our Colorado area) they are “fishing” with the smallest bait. While I believe in free trade and let the market define the rates, it is sad for those of us that have 30+ yrs of experience, not only of producing reports but offering a great “service” to our clients and assuming greater liability and responsibility due to gov’t regulations are competing with our peers who are willing to accept pre 1980 fees. Self Respect is what we need more of! How can we train more appraisers when fees are minimal? How can we pay increased E & O fees, MLS fees, other office fees and association fees, when we accept reduced fees? I’m not tell you what to do, I’m just commenting on the reality of my business and I do exercise self respect for it.
Great article Rachel. Important for consumers to know.
As I detailed last week (appraiserblog), I had an AMC offer due in a week on a +/- 12 million dollar ocean front home (MTV house / San Diego) for $340. Many lenders and their hired puppet AMCs have NO respect for the appraiser, but rather look at the process (appraising) as a secondary income stream.
Seek the truth.
AMC – What do they really bring to the table?
The lender could have found an appraiser the same way you did. Why use an AMC?
I sort of like the Uberization of the appraisal business. I decline way more orders than I take. I can have all I want for fees that would put my income on par with a bank teller. As soon as volume goes up I will not feel bad about clobbering the AMC’s. The more work you take the less per hour you make. I WOULD TAKE A LOT OF DISCOUNTED JOBS IF THEY CALLED AND ASKED AND I WASN’T BUSY BUT IF I HAVE TO BID, I BID THE MOON. I AM NOT GOING TO WORK OVER TIME FOR LESS MONEY.
This is an 8 year journey in dealing with this unprofessional AMC organization that has none of the credentials we have to enter this field.
It is time consuming to deal with AMC
The work in my area is $100 to $300 below non-AMC work.
I feel it is unfair that we have few options! This feels like black mail and corruption and approved by our government and Banks.
I don’t think appraisers are interested in hustling for a discounted fees that also comes with hassles and no relationship
The AMC is going to breed some trainees to do this hustle soon. This will be staff and they will pay them $25/hour. This is a prediction! I think they will increase their profits and the owners will be able to buy that 10th Lamborghini.
Title XI has forbidden banks from pressuring appraisers since it was passed into law. So to get around this, the banks used AMC’s; some even formed an AMC. The reason, of course, is that Title XI doesn’t say a word about AMC’s because they weren’t invented when it was passed. So while a bank can’t pressure an appraiser, an AMC sure can. And a bank is completely at liberty to pressure an AMC, since they don’t perform a valuation function.
But I got fed up with AMC’s that had the temerity to try to “assign” work to me; that wanted me to inspect on their schedule; that had a “dress code”; and who wanted to dictate a fee and turn time. And over all that, they wanted me to sign a twenty page (or longer) contract in order to be eligible for this “privilege.”
About eight years ago, I totally quit accepting “assignments” whose intended use is to assist in mortgage origination. About three years ago I retired from the field altogether.
Good luck, all. And great article, Rachel.
Dont just blame the AMC’s
it is a systemic problem.
I cover 9 counties-sounds like a lot but we are rural.
I routinely-(and I am talking this is the normal course of business)- I will get an AMC send me a fee/TAT request.
I supply a quote.
Within hours or sometimes minutes, I will get the a request for the EXACT same property from a DIFFERENT AMC. The most I have seen are 5 different AMC requests.
However, Once that second request comes through-my response to the second request is almost ALWAYS to up my fee by $100-150. Each following request gets a higher fee quote and sometimes longer TAT.
This goes on and on until either I get it or not.
And sometimes when I dont get it right away, it will come back to me in a phone call from maybe one of the AMC begging for a rush(rush fee) and basically asking what the fee is and I have been told explicitly-they will pay whatever fee I ask-anything.
How does this benefit the consumer who is CRYING at the door about the (exaggerated) $10,000 fee they had to pony up for their 5,000′ 1 bedroom 3 bath log cabin on 250 acres in a national forest off the grid with insane views next to RR tracks 5 miles from nearest neighbor and >15 miles from the nearest “Census designated place”(not enough people to be called a town)?
(only the fee is exaggerated)
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So-the lender is pushing the AMC for the cheapest fee and when the AMC returns to lender with my unacceptable fee, they go to the next AMC to find the lowest common denominator.
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Also-many thanks go out to those appraisers who take EXTREMELY hard work in EXTREMELY limited markets for 20-30% of my fee. Your low fees and the expected quality of work that accompanies those fees has increased my business in those areas as you slowly get pushed out of a field where you cant make money.
Appraisers need to start naming these AMC’s by name so all appraisers can decline all work from that AMC. Single Source still sends me appraisal request with a fee of $250.00 to $275.00 and they want the report within 4 days from accepting assignment. I dont do any work for them. I am a VA appraiser and wish all assignments were like how the VA works.
New Order Available for Acceptance – Valuation Partners
Date Ordered 2/2/2019
Date Due 2/6/2019
Vendor Fee Split $230.00
property is in a town of ~2500 people covered by 2 MLS systems=2x PITA data discovery with no market activity.
I wouldnt do this for this fee if it was next door to the office and a model match to the house that sold next door to it yesterday.
New Order Available for Acceptance – Valuation Partners
Date Ordered 2/2/2019
Date Due 2/6/2019
Vendor Fee Split $230.00
property is in a town of ~2500 people covered by 2 MLS systems=2x PITA data discovery with no market activity.
I wouldnt do this for this fee if it was next door to the office and a model match to the house that sold next door to it yesterday.