AMC Allocation of Commercial Jobs?

[Zoe]

If fees were separated on truth in lending disclosures, appraisal management companies would go into a death spiral on fees. It would be what is called ruinous competition. The one that could charge the lowest fee would win and they couldn't stay in business.

 

[Zoe]

Again, if fees were separated on truth in lending disclosures, it would change the market structure of appraisal profession. Many other factors come into play per State and Fed like business taxes.

 

[J Grant]

You're the one complaining about the markups. Those have always existed in the appraisal business in one form or another. The owners/managers get their cut. What might be different is the percentages.

I am not complaining about the markups of appraisal shops. They hardly exist anymore on the res side anyway. On the commercial side, an individual appraiser can compete against them, or join them. Do commercial shops control the mass of volume in commercial work?

I am complaining about how the bundled fee allows the AMC a huge market share on the res side by offering free-of-cost service to their lender customers ( thus giving them leverage over fees ).

The appraisal fee shops you reference charge a cost to their lender customer for an appraisal . Thus, an individual appraiser could compete well against them, both charge a fee to their customer to provide an appraisal. The AMC, due to the bundled fee, government perk, gets to offer free-of-cost service.

 

[Zoe]

I am not complaining about the markups of appraisal shops. They hardly exist anymore on the res side anyway. On the commercial side, an individual appraiser can compete against them, or join them. Do commercial shops control the mass of volume in commercial work?

I am complaining about how the bundled fee allows the AMC a huge market share on the res side by offering free-of-cost service to their lender customers ( thus giving them leverage over fees ).

The appraisal fee shops you reference charge a cost to their lender customer for an appraisal . Thus, an individual appraiser could compete well against them, both charge a fee to their customer to provide an appraisal. The AMC, due to the bundled fee, government perk, gets to offer free-of-cost service.

yeah, you are like me. You want more of a free market structure. A free market can't exist totally because of other market forces but the commingling of fees in appraisal profession is way away from free market structure. Market power on price is when you get into anti-trust law.

 

[J Grant]

Even if the AMC fees are somehow limited, they're still going to shop by fee on behalf of their clients.

I know, I know - you disagree. You apparently believe the AMCs have no incentive to compete with each other by offering wider coverage than their competition and by selling their ability to deliver at the lowest costs relative to their competition.

I am not sure who you are addressing here.

Right now, AMC's compete in the res realm on turn time, quality, or coverage areas. IDK if any of them offer kickbacks? But they do not compete on THEIR price - they do not charge a price.

If the AMC was divorced 100% from getting compensated by the appraiser's or appraisal fee, and ONLY could charge separately for its management service, THEN we would really see them compete as any other business does. Which terrifies them and thus they fight against it. They know a lender would only pay $75 or so for each file because if a lender had to pay more, they would simply revert to running their own fee panel.

If the AMC was limited to only the bundled fee, not collecting more than 15-20% of it, that would help - but better yet, get AMC compensation divorced from the appraisal fee altogether and let the AMC;s sell their service on the open market to lenders. If a lender can pass that AMC cost on to their customer, fine by me.

 

[JM2187]

Just curious, are you all aware that all state AMC reg's allow appraisers to note their and the AMC fee in the report (in fact there are specific fields for this on the new URAR)?

A number of states, at least 21, REQUIRE the appraiser to indicate the fee split in the report and/or the AMC to report the fee split to the lender.

See https://goldenstateamc.com/state-fee-disclosures/

 

[J Grant]

Just curious, are you all aware that all state AMC reg's allow appraisers to note their and the AMC fee in the report (in fact there are specific fields for this on the new URAR)?

A number of states, at least 21, REQUIRE the appraiser to indicate the fee split in the report and/or the AMC to report the fee split to the lender.

See https://goldenstateamc.com/state-fee-disclosures/

There should not be a fee split.
What difference does it make if after an appraiser gets ripped off for half the fee, they can disclose it on the appraisal? Just saying.

 

[JM2187]

There should not be a fee split.
What difference does it make if after an appraiser gets ripped off for half the fee, they can disclose it on the appraisal? Just saying.

Wouldn't it be great if every business had to report fee splits? AMC's have to do a lot more fee reporting than say gas stations, grocery stores, clothing stores, doctors, even independent appraisers themselves.. just saying.

 

[Zoe]

Just curious, are you all aware that all state AMC reg's allow appraisers to note their and the AMC fee in the report (in fact there are specific fields for this on the new URAR)?

A number of states, at least 21, REQUIRE the appraiser to indicate the fee split in the report and/or the AMC to report the fee split to the lender.

See https://goldenstateamc.com/state-fee-disclosures/

Not the same as truth in lending disclosures to borrowers. Totally different. Use your brain a little and tell me how that is different.

 

[Zoe]

I'll give you one difference vs truth in lending disclosures. Who would pay the appraisal management company? The borrower?

I am just saying separation of fees on truth in lending disclosures and appraiser disclosing fees in report are different animals.

Commingling of fees is basically a lie to the borrower on truth in lending disclosures.

Separation of fees on truth in lending disclosures would almost force the lender to pay the appraisal management company. They have limits but I doubt they would pass that fee to the borrower. Plus it would create intense competition between appraisal management companies on fees. Ruinous competition to appraisal management companies.

AMCs would not survive with separation of fees on truth in lending disclosures.