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Are AMCs the Real Problem?

By Michelle Tucci

Real Estate Appraiser with LIRA Corp NY45000046048

August 14, 2008 09:06 AM

I think that most appraisers see all AMCs in such a bad light, but I have to add that I dont feel they are the real problem.

In theory, they should be wonderful to work for! No lender pressure, no contact from brokers who ask for "just one more comp...." etc...Basically you get an order, do a fair appraisal with no pressure or worries about a value, and you get paid on time! It is all done via the internet - so no paper, no faxes, mailings, etc. Also, AMCs have a strict list of requirements that you must follow - or you do not get work. They ask for listings, comparables that sold within 6 months, at least one being within three months, foreclosure activity, analysis of the current market trends, etc. So, they make it very difficult for an appraiser to do a less then par appraisal. Or try to anyway!

The one and only gripe is that their fees are terrible. But why?? Because they have appraisers bidding on their fees. So, you wind up being in competition with other appraisers in your area for work. With the market the way that it is, it is driving down our fees because every day another appraiser signs on and says "ok, I will lower my fees a few more dollars to get volume..." and so on.

We appraisers are to blame for the low fees. The AMCs are smart - collecting their fee of say $350 for 1004 - then having a bidding war amongst us - and shell out $150 to an appraiser and keep the rest.

I personally think that if AMCs are our future - then these low fees are our future as well. There will always be appraisers who will work for less then the next guy, just to draw in volume. What can we do about this??? Any thoughts???

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Sara Goodwin

Estimation Nation Corporation - Portland, OR

Portland, Oregon Appraiser

Hi Michelle -

I'd have to disagree with your statement regarding not being pressured or asked to do comp searches, etc. My opinions and experiences with AMCs are generically wrapped up here and here.

Aug 14, 2008 11:45 AM

Michelle Tucci

LIRA Corp - East Islip, NY

Hi Sarah!

I can only speak from my own experience working for AMCs...of which I appraise for two of the larger ones. I have to say that lately - with the market the way it is - it has been nice to just do my appraisal based on my expertise of an area....rather then a brokers opinion of what the value should be - or what the homeowner thinks.

Believe me - I am no advocate for AMCs - I just feel like everything I read blasts them and those of us that choose to work for them....suggesting you must be submitting sub-standard deals and are a sell out! I just wanted to add my two cents that thus far, my biggest gripe with them is their fee structure. Which is the appraisers in the areas fault. Mostly though, I have had a decent experience thus far. And that I am no way less of an appraiser for working for them!

Thanks for the response...

Aug 14, 2008 12:39 PM

Tom Horn

Thomas Horn, Real Estate Appraiser - Alabaster, AL

Appraising The American Dream

Michelle,

I will have to disagree on the low fees being our (the appraisers) problem. What I see happening is the AMC dictating how much they will pay, not us bidding and then them taking the lowest bid. I have spoke with FISERV and they said they will only pay $200 for a drive by and $250 for a full 1004. They are setting the price, not us. Appraisers have been competing with each for years (without AMC's) and the average fees were much higher than they are now. Only when the AMC entered the picture did I see the average fees begin to drop dramatically. Just my thoughts.

Aug 15, 2008 03:42 PM

Anonymous

Typically, in my experience - when you apply to become on their approved list, you send them your fee schedule. After I was not receiving any work, I contacted them and was told that there were other appraisers who had lower fees, and therefore they would get the work first. They then tell you what the average fee is for your area and you can choose to lower your fees to match, beat - or not at all....so, they most certainly do have you bidding out your work...

Like I said though - this is my experience in my area - so I do not know if it is different elsewhere. It is different then when you are marketing yourself against other appraisers in your area for a specific bank or broker. You arent competing with hundreds in a database - but local appraisers only - where the fees are higher and typically remain that way.

Aug 16, 2008 02:04 AM

Richard Glesser

North Country Appraisal Services - Gaylord, MI

As with all of life, there are good AMC's and bad ones. We as appraisers must collectively choose not to work for the bad ones. Fees are lower because, as a business, they must also make money to survive. With the possibility of some version of HVCC on the horizon, more and more "AMC's" are springing up as independent appraisers attempt to mask themselves as an AMC. Unfortunately, with the expansion in the number of AMC's, also comes increased competition among them. The result, in my opinion, is that now the formerly good AMC's are forced to cave in to lender demands and requirements to continue getting work. Formerly, the good AMC's were appraisal oriented and backed the appraiser on most issues. Now I see more and more request that a report must include statements with concise wording to meet the lender's requirements, obviously because the lender has hired underwriters who are unable to comprehend the English language unless it's written exactly as they're programmed to recognize it.

My hope for the future of the appraisal industry is two-fold. First, we need to establish within the governmental regulations as well as the lending industry that appraisals are a necessary component of the lending decision and process and not another obstacle to overcome. By maintaining the highest of standards within our industry, we can help facilitate this. Second, I hope that, with the slower and less profitable real estate market of today, many of those who entered appraising for the "fast buck" will go elsewhere, the new qualifications of 2008 will limit and screen those able to enter the profession, and natural attrition of age will combine to reduce the number of appraisers to allow those of us who believe it is a respectable profession, to cultivate it to a place within respected professions

Aug 17, 2008 04:01 AM

Kenneth Miller

Miller Appraisals - Fremont, OH

NW Ohio FHA Appraiser

AMCs want it fast and cheep. As long as those requirements are met then they are happy. As for there being no pressure, I have two words for you Washington Mutual. eAppraiseIT was pressuring appraisers for higher values or selecting those who would hit the number because WaMu would send their business elsewhere if they didn't. Read about it here: http://tiny.cc/85EFQ.

I personally got tired of the constant phone calls asking for updates and how soon I could have the report. I live in an area where there can be more corn fields than houses sometimes and a only few sales here and there. If you ask me, it definitely wasn't worth the minimum wage fees they dish out.

Why should the AMC get half or more of our fees? Do the phone monkeys they employee have to have a degree or 2000+ hours of experience before they harass us? Are they required to update their license yearly or take continuing education courses?

Aug 18, 2008 03:04 AM

Michelle Tucci

LIRA Corp - East Islip, NY

Ok, I am feeling misunderstood. I am not an advocate for the AMCs. My point is that most postings I have read slammed the AMCs for paying such terrible fees...."who would work for that" type of comments...and obviously there are tons of appraisers out there that do work for them!

I hate their fee structure - and thankfully they are not my sole source of work. But it is the appraisers who set their own fees, and frankly it is smart business for them to take half +/- for an appraisal. That is how they make their millions. I would love to run my own - because as you stated, what do they do, really. Not much. But again, I was just venting that it seems no one takes responsibility for the fact that appraisers set their own fees...just as I feel that a lot of us in the industry are not taking the HVCC seriously.

As for pressure, I am familiar with WAMU and eAppraiseIt. But obviously that was fraudulent. There are always some bad apples. In theory though - the AMC is there as a barrier from the pressure. Again, I can only speak to my experience. I do get annoying QA calls...but never have I had them ask for more comps, or to change my value, etc....Maybe this isnt the experience of others...?

What is everyone going to do when (or if) the HVCC goes in as written? Are our fees going to dwindle to nothing as more appraisers flood them? Or are we going to put a stop to it - and how?

Aug 18, 2008 07:07 AM

Anonymous

Kenneth J Miller

Right now the fate of the HVCC is unknown. It may end up being abandoned altogether. As for the AMC and its fees, if enough appraisers stick together and say NO, I won't work for these fees or under these conditions, AMC's will have no choice but to change. Appraisers are no longer flooding the market since the 2008 changes have taken effect. Add to that the unstable market, and you have many appraisers seeking other types of employment. The average age for an appraiser is approaching retirement. All of these things will lead to fewer appraisers in the workforce. This will mean more work for those who are still in the industry. This also means we will be able charge what we feel is appropriate for our services. The fact that all appraisers must have at least a 2 year degree and all of the additional appraisal courses will be a driving force in increasing appraisal fees. The money and time spent on becoming an appraiser will deter those looking to make a quick buck. Eventually appraisers will be seen as experts again and paid for their expertise. Well my magic 8-ball said so anyways........

Aug 18, 2008 07:53 AM

Kenneth Miller

Miller Appraisals - Fremont, OH

NW Ohio FHA Appraiser

Right now the fate of the HVCC is unknown. It may end up being abandoned altogether.

As for the AMC and its fees, if enough appraisers stick together and say NO, I won't work for these fees or under these conditions, AMC's will have no choice but to change.

Appraisers are no longer flooding the market since the 2008 changes have taken effect. Add to that the unstable market, and you have many appraisers seeking other types of employment. The average age for an appraiser is approaching the age for retirement. All of these things will lead to fewer appraisers in the workforce.

This will mean more work for those who are still in the industry. This also means we will be able charge what we feel is appropriate for our services. The fact that all appraisers must have at least a 2 year degree and all of the additional appraisal courses will be a driving force in increasing appraisal fees. The money and time spent on becoming an appraiser will deter those looking to make a quick buck.

Eventually appraisers will be seen as experts again and paid for their expertise. Well my magic 8-ball said so anyways........

Aug 18, 2008 07:56 AM

Sara Goodwin

Estimation Nation Corporation - Portland, OR

Portland, Oregon Appraiser

Hey Michelle -

I didn't mean to make you feel under attack on your post. I just think that AMCs are even less regulated than lenders and there are a lot of kinks in the system. Also, as appraisers, our salaries have been steadily declining for quite some time even if we are lucky enough to find more work out there (ha!). It doesn't help when a 'broker' comes in and cuts the fee down even more. And sadly, it is often the more ethical the appraiser the poorer they are...

Aug 22, 2008 01:32 PM

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