Lenders,

I would like to relay a firsthand account of what kind of quality you might expect when you choose to work with AMC's:

A very large bank, in fact one of the largest BANK's in AMERICA, uses eAppraiseIt for appraisal management services.   Now, I would agree that if you wanted to deter having the LO's pressure the appraisers, a firewall such as an nonaffiliated AMC just might be a good solution.  The AMC orders the appraisal, the chosen appraiser does the best possible work (or at least what you might expect for a +/-$200 fee split), he/she sends it back to the AMC, and the AMC delivers the report to the lender (after stripping out any relevant information so that it can add it to its database to eventually put the appraiser out of business anyway, but that's another blog post).  Simple process, fundamentally sound, right?  But what if...

What if the subcontractor appraiser, working for his $200 split, could find people willing to do the work for even less?  What if this subcontractor had built a pretty good business subcontracting it out again?  What if he had somehow managed to get eAppraiseIt to believe he could handle any appraisal in a 5 hour radius, but actually was just subbing them out? 

Well, I guess that if the AMC's are getting all of these quality appraisers to work for $200 each, the quality must get even better at 50% of that, right?

So to Chase and Wells Fargo and you other large lenders, remember that scenario when you are going through your defaulted loans in the next several years and wondering how it's possible that you have so many.  I mean, you fixed the whole lender pressure thing, right?  And got rid of all those greedy appraisers who were asking for full fees, right?  And your AMC continues to provide you with appraisals done for the least amount of money and in the shortest amount of time, so how could these loans be so bad and the appraisals so far off? 

Well, you might want to keep in mind that the person that did that crappy appraisal just might have worked for 8 hours to earn an $80 or $100 fee split off of the $200 fee split the AMC paid to the original vendor.  So maybe $10 or $11 per hour?  What is the starting pay at Burger King nowadays?  At least you spend less on gas and get a free meal. 

My housekeeper charges $25 per hour, I wonder if she is hiring...     

 

 
Post is included in group: Appraisers

11 Comments on The benefits of using an AMC for appraisals

FEB
06
2009
109,736 Points 3 Featured Posts

Touche' - I'm contemplating Anne O'Rourke's idea of doing the 2010 census work for $15 an hour... I bet it's like golf, though... a way to ruin a good walk ;-)
5:00pm • #1

You want fries with that?

 

That's all I have to say.

Hey Sara
6:17pm • #2

Ok, I get the sarcasm here...BUUUTT....

I currently work for both AMC's (gasp!) and brokers....And over the past year the AMC work has increased, while the broker work decreased.  In the beginning I agreed to work for low fee splits and still churned out a very good appraisal (if I do say so myself!).  Dare I say I needed the money and doing a few appraisals a month was far better then one or two!!  The broker work did always get priority - as they pay me full fees and are generally more cooperative with turn-times, etc.  However...now that there has been an increase in AMC work...I do want to raise my fee.  I am scared to death however that I will be undercut again...and back to no workload! 

What is a decent appraiser to do??  Pack it in and call it a day??

My issue is that come May - we will all be working for some sort of AMC for residential work - and while I know there will always be some schmuck out there who will work for nothing....why cant we appraisers band together and NOT reduce the fees.  If all of the quality appraisers out there Demanded a decent fee split, then these AMCs would have no choice but to use us. 

Am I too naive?  I mean, are we all going to switch professions in the next few months??? 

I also have to add this comment....Yes, I hear all the time how we that work for AMCs must be terrible inexperienced appraisers.  I must defend myself!  This week alone, I have seen two appraisals done by appraisers NOT working for AMCs and both were totally form-filled junk.  I was shocked and even said to my colleague that maybe we put too much effort into our jobs and to see that some deals go through that are 25% - is a slap in the face.  Thanks...just needed to vent!

 
8:11pm • #3
1 Featured Post

Michelle,

I don't doubt you do quality work, and I don't doubt that people who charge $500 a pop do crappy work.  But in theory the crappy work should get weeded out and replaced by the good, and in most markets "quality" is rewarded with a price premium.  Not in this business, though.  The "Tiffany" work sits side by side with the "Walmart", and the price is the same. 

Of course, I don't want any appraiser to starve either.  But when someone offers me an appraisal for $200 that is going to take me 8-10 hours to complete, if I had the time I would prefer to spend it doing things that would increase my own business and fatten my own bank account:

I don't have any problems with AMC's conceptually -- in theory they provide a necessary service.  What I have a problem with is the fees they pay.  And by working for an AMC that you know is charging $400 for an appraisal and paying you $200, I feel like you exacerbate the problem.  If one of my customers came to me and said "sorry, but we don't have the money or expertise to set up an internal firewall system, so we are going to have to go with an AMC", then I would recommend one that pays full fees.  I might lose most of the business, but will feel better that some appraiser somewhere is making $325 or $350 off of the deal because I referred them to AlaMode or AppraisalPort or Solidifi, or whatever other ones are out there that pay a reasonable fee.  Operating an AMC is not rocket science, and making $200 off of the deal is just downright theft in my opinion. 

 

1. Visiting lenders and mortgage companies and dropping off cards
2. Signing up with AMC's that pay reasonable fees
3. Writing letters to other potential lines of business (divorce, tax appraisals, pre-listing values, etc.)
4. Working on my marketing materials
5. etc

If any of the above got me just one more client, that $200 I "lost" could earn me thousands more.  So in my mind, the opportunity cost of taking that job was thousands of dollars lost.

$200 for 8 hours work is $25 an hour, not including overhead like MLS membership, internet, consumables, gas, car wear and tear, insurance (including health and life for the small business owner) etc.  So at the end of the day, it's probably closer to $20/hr.  I'm fortunate to be in a good sized city so there are other opportunities at that pay range ($40k/year) that would be a lot less stressful.  

It's just my personal opinion, and certainly doesn't apply to everyone, but I'm worth more than that.  And when I say no, and you say no, and enough others say no, then the cheap AMC's start to get the picture and pay a fair wage. 

I subcontract work on occasion, and I can tell you that my cost to do it roughly $50.  And I am no where near as automated as some of these guys are.  So if Appraisal Port makes a living on $15 per transaction, Rels and others must just me shoveling it into the bank by the truckload.  I just don't see any reason to support that.  But as long as people do, and others are willing to subcontract from the subcontractors (as was the original point of the post), then we are all likely screwed.  

 
10:47pm • #4
FEB
07
2009

Well, I do agree with you.  On all points.  Unfortunately at the end of the day I still have to work. 

My only hope is that when the AMC world gets flooded with new appraisers who are willing to work for nothing - they will eventually get kicked off lists for sub-standard work.  There I will sit - presumably at the top of a list since there will be many below me willing to work for peanuts - waiting!

Maybe after a while all that will be left in this profession are decent appraisers who will be paid what we are worth.  This is the only profession I know of that fees have been decreasing over the years, rather then increasing!   However, if all the decent appraisers run for new careers - and crappy appraisers churn out crappy work - the industry will phase us out all together....

Guess we will have to wait and see.  Glad I have a degree to fall back on!
10:37am • #5

Here are a couple of reasons that appraisal fees should increase under AMC's, instead of declining.  Appraisers will not be able to hide their cash payments, or run to the clients bank to cash checks made out in their personal name.  Next reason, the 1004MC.  If anyone plans to lower their fees because they're intimidated by the AMC's, you might as well go hand up your tape.  I intend to ask $400 for a 1004, and do my best to provide them with the quality of service that they expect.  Good luck to everyone during this ridiculous transition. 
9:32pm • #6
FEB
08
2009

My primary work comes from AMCs and has for the last several years. The lowest fee I get from 1 AMC for a 1004 is $315, but mostly it's in the $350 - $400 range, and market rate in my area is $400 - $425 for a standard 1004. I also mark fees up for complex properties and/or travel to outlying areas, and I usually get it thru AMCs - they just need lender approval, and then I'm good to go.

I prefer working for AMCs vs brokers, as there is now zero pressure from AMCs, and brokers are still pulling the usual: Hit this number and you can have this appraisal or the ever popular: Can you check comps for me? No thanks, I'd rather keep my license and sleep at night, even if it means I make a little less thru AMCs. It's consistent work and I get paid in a timely manner.

And I also get full fee thru AppraisalPort (minus $7), so that's pretty cool.

I get a fair amount of estate work and private party inquiries at full fee plus, depending on the situation, mostly from my website and being on the Appraisal Institute appraiser list, HUD list, etc.

I don't know why any appraiser would agree to a $200 fee thru an AMC. Tell them what your fees are, even if you need to reduce them a little, but don't cave. There's a lot more work out there now, and it will find you, especially if you do good work.

And I think I need to raise my fees, now that we have to do the Market Conditions Summary, which I already am required to do for 1 AMC. It adds about an hour and a half initially, but I dialed it in for my areas, and add stats that I just update every few days, so it's much easier once you figure out what they want/need to hear.  And we don't have many REOs here, so that's not usually an issue
10:04pm • #7
1 Featured Post

Marti,

Are you in a major metro area?  I think if you have very little competition full fees are definitely possible, but here in Austin there must be plenty of people willing to work for pennies.  I signed up with Rels about 4 years ago at the urging of a potential client, and they were nice enough to just TELL me what they would pay so I didn't have to go to the trouble of filling out my standard fees.  Every once in a while they send me an order, and I decline it with the message "Fees too low", and I don't hear from them for another 6-9 months.  I use Appraisal Port on occasion as well, and have no problem with them (despite the rumors of them aggregating our data).  They are, in my opinion, a pefect example of all that an AMC needs to be.

I also agree with you that working for brokers can be a pain, and often I would like to get rid of all the phone calls and lookup requests.  But at the same time, a 100% AMC model in any major city would put a lot of appraisers out of business.  I hustle, make the effort to do the required marketing, get in front of potential clients, and put out a good product.  However, if I just decided to sign up with every possible AMC, that entrepeneurial approach is out the window.  What do you do if the business you get from your current AMC clients gets slow?  Sign up with more?  I don't want to be at the mercy of someone elses marketing efforts (not to mention the subject of random performance ratings that I am not privy to).  That's why I work for myself. At the end of the day it's my responsibility to generate new business.

I can tell an AMC that I charge $375 for a standard report, but if the other 300 or so appraisers in town are willing to work for $350, I'll likely never hear from them.  Referrals, references, and word of mouth are out the door.  And if I'm willing to do it for $325, there are still 150 that will do it for less.  

Also, what do I do with the people that work for me?  They depend on me to keep them busy.  Do I tell them that they can either work for me for a split of my 60% split with the AMC?  Or do I just kick them out the door and tell them "good luck"?

All right, enough ranting.  I'm happy you can get full fees, and happy for anyone whom is not really going to be affected by the HVCC. 

I'm with you on the 1004MC, I plan to raise prices to cover the extra work involved.  I filled out my first one last week because I had a little time and I'm a glutton for punishment.  It took me about 30-45 minutes.  I've got a pretty good MLS system that will gather a good bit of that data without me having to break out Excel.  But I'm not looking forward to doing it on every one...
11:26pm • #8
FEB
09
2009

Hi Mike -

I'm not in a major metro - I'm about 2 hours outside of Seattle, but there's still plenty of competition from the guys that have been in this area for the last 20 years. I've only been here for the last 3 years, and have had to establish myself basically from zero, but at least I had a couple of AMCs that I have long term relationships with, so I was just able to update my coverage area and fees, and got work almost immediately. Not true of local lenders, though. I've done a small amount of work for a couple of brokers, and some I won't work for due to their questionable work ethics, if you can call it that.

I feel your pain about competition in a large metro, as previously I worked in the Sacramento area, and similar story as yours: there's always someone willing to do it faster for less. But with the tough economic times in the last year or so, haven't a lot of newer appraisers left the biz to find something else to do? Sad but true.

And when I was in CA I had a trainee and a couple of office staff, and it was tough keeping them all busy at times. Now I work on my own, and that's the way I prefer to operate. I can see it would be really tough having other appraisers depend on you for work... I think it's every licensed/certified appraiser's duty to help train at least one other new appraiser, and keep the new blood coming into the profession. So I've done my duty! :)

Lately I've been doing a little work for real estate agents prior to listing a house for sale, and estate work. Have you marketed your business to agents, lawyers and financial planner types in your area? I've also done insurance work, which is a little creepy when you know people actually died in the fire that destroyed their house, but it's interesting work. This work is all full fee on GPAR forms, which is kind of a nice change.

I get a fair amount of inquiries and from my website, which is nothing special, but I think it's more than what a lot of appraisers have out there, which is nothing.

My point of the original comment was to show that working for AMCs is not always just a bad thing, as a lot of appraisers seem to just bad-mouth the whole lot of them, instead of strategically selecting some to work with that makes sense for their particular situation.

OK, I'm done for now... gotta get some work done. Have a good one!
9:35am • #9
OCT
03
2009

Im an appraiser in the Atlanta area. Im the only one left of all my colleagues that i know in the appraisal business. And with the changes this week, Im probably going to lose the FHA work I had,because now it will be ordered from management companies. What other work is an appraiser qualified for? Does any one know?  Should I try to become a loan officer at a mortgage company? im so tired of the ups and downs my business has had over the past three years. thanks
sandra
4:24pm • #10
OCT
04
2009
1 Featured Post

Sandra,

I think everyone here knows how you feel.  It has been a tumultous year at best.  Personally I just want to know what to expect in the next 6 months, but it feels like every 2-3 months there is another big change to accommodate, and it is nearly impossible to plan for your business' future.  The only positive I can take away from it is that I am still in business and still busy, so I must be doing something right.  As those less fortunate (or just sick of the hassle) leave the business, in theory that is more business for me.  I'm still staying away from the AMC business unless they pay full fee (or pretty close) and keep the "status update" BS to a minimum. 

Good luck to you, whatever you decide to do!
12:17am • #11

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