More AMC and PDC Bull

[DWiley]

Leading National Appraisal Management Companies (AMCs)

• Class Valuation: Recognized as a top national AMC known for rapid turnaround times, often averaging around four business days.
• Amrock LLC: A prominent, large-scale provider of appraisal management services.
• Appraisal Nation: A nationwide firm specializing in compliant, unbiased, and high-quality appraisal reports.
• Nationwide Property & Appraisal Services: A major player with significant acquisition activity in the industry.
• PCV Murcor: A national firm with a large panel of independent appraisers.
• Valuation Connect: A division of Mortgage Connect, focusing on technology-driven efficiency.
• Opteon Solutions: A high-growth firm driven by technology and acquisitions.
• Fastapp AMC: Known for its extensive national appraiser network and, established in 2018, rapid growth.
  lass Valuation +6

Industry Context & Trends

• Market Concentration: While there are over 500 AMCs, the market is highly fragmented; however, about 13% of firms account for a significant portion of volume with revenue over $50 million.
• Acquisition Activity: Large firms like Class Valuation, Nationwide Property & Appraisal, and Opteon frequently acquire smaller regional firms to expand, according to MtgeFi.

I believe the above large firms are the most active in Florida in addition to some others. ( Value Link, Red Sky Risk 0

as for the small firms, it only cost $150 to register in Florida so if they do business in one county, then it could work for them.

At least you admit that what you are posting is just what you “believe.”

 

[J Grant]

AI Overview


While a precise, industry-wide percentage of total appraisal volume handled exclusively by "major" Appraisal Management Companies (AMCs) is not explicitly quantified in the provided search results, it is established that a
large percentage of residential real estate valuations are coordinated by AMCs, making them the dominant force in appraisal ordering.
Appraisal Today
Key insights on AMC volume and market share include:

• Dominance of AMCs: For residential appraisers, working with AMCs is described as "almost a necessity".
• Top 100 Influence: There are over 500 AMCs operating in the country, but the top firms (including those licensed in all 50 states) represent the largest and most scalable vendors.
• Volume Distribution: While 86% of AMCs have annual gross revenue of less than $10 million, a small percentage (13%) have gross revenues over $50 million, indicating a concentrated market.
• AMC Size Variance: 8% of AMCs manage over 50,000 appraisals per year, while 50% manage less than 5,000 orders annually, indicating that a small number of large AMCs handle a massive volume of the total work.

Thank you AI-

 

[Zoe]

AI Overview


While a precise, industry-wide percentage of total appraisal volume handled exclusively by "major" Appraisal Management Companies (AMCs) is not explicitly quantified in the provided search results, it is established that a
large percentage of residential real estate valuations are coordinated by AMCs, making them the dominant force in appraisal ordering.
Appraisal Today
Key insights on AMC volume and market share include:

• Dominance of AMCs: For residential appraisers, working with AMCs is described as "almost a necessity".
• Top 100 Influence: There are over 500 AMCs operating in the country, but the top firms (including those licensed in all 50 states) represent the largest and most scalable vendors.
• Volume Distribution: While 86% of AMCs have annual gross revenue of less than $10 million, a small percentage (13%) have gross revenues over $50 million, indicating a concentrated market.
• AMC Size Variance: 8% of AMCs manage over 50,000 appraisals per year, while 50% manage less than 5,000 orders annually, indicating that a small number of large AMCs handle a massive volume of the total work.

Thank you AI-

That is where market structure changed when fees were commingled. Any time a market participant has market power on price, it is considered to be like monopoly, monopsony, oligopoly, oligopsony depending on players.

The sad part is borrowers are suffering from fastest and cheapest and have no clue how much of their money is going to an AMC because fees are not separated on truth in lending disclosures.

The original bill was written for AMC and APPRAISAL fees to be separated on truth in lending disclosures.

 

[sputnam]

That is not how cost plus works. Cost plus is the lender requires the AMC to pay the same X amount to all of its panel in a region, and agrees to only charge the lender Y amount - so that the AMC does not have to solicit bids. The AMC typically pays the appraiser about 15% less than the C and R the lender gets from the borrower-paid appraisal. Cost plus is often an AMC that a lender owns under a different name.

It's exactly how it works... I see it every day. There are also AMCs that operate in the manner you indicate. Contract with the Lender to provide all appraisals at $X per and then get the lowest price appraiser.

The fail that I see over and over... more in newer appraisers than in experienced ones... is measuring their success as an appraiser by the number of reports they churn out. That's a mistake. It doesn't matter how many appraisals you do, it's how much money you get to keep.

Bottom line.... I don't think I have any super power than any other appraiser doesn't have or can't develop. I don't accept assignments with fees that are lower than my requirements. I decline assignments regularly. My income hasn't suffered.

I reckon that if I can do that, so can most people.

 

[J Grant]

It's exactly how it works... I see it every day. There are also AMCs that operate in the manner you indicate. Contract with the Lender to provide all appraisals at $X per and then get the lowest price appraiser.

The fail that I see over and over... more in newer appraisers than in experienced ones... is measuring their success as an appraiser by the number of reports they churn out. That's a mistake. It doesn't matter how many appraisals you do, it's how much money you get to keep.

Bottom line.... I don't think I have any super power than any other appraiser doesn't have or can't develop. I don't accept assignments with fees that are lower than my requirements. I decline assignments regularly. My income hasn't suffered.

I reckon that if I can do that, so can most people.

If that is the extent of your reckoning, it indicates that you do not understand the problem for residential license appraisers.

The fact that you have a commercial license gives you access to a far greater choice of work than the residential license has. If the res license appraiser could get other work than lending through marketing, then almost none of them would accept the low AMC fees.

IDK why you decided to do QC reviews for an AMC, considering the other work you have access to, but that is your choice. I admire the extra effort those with a commercial license put in to get it. It is also not practical or possible financially for the majority of res appraisers to get a commercial license mid career.

Most people with a residential license can not find enough non-lender work to make a full-time income from it, because the work simply is not out there. A few develop a niche in legal or ROW, for the rest, private work can be a side income.

 

[J Grant]

Regarding the pushback of "there are a few hundred AMC's registered in your state." - that is true ( of most states ); however, anyone can poll appraisers and it will reveal that those doing AMC work get assignments from the same big AMC's across states with perhaps a limited number of smaller companies in the mix

A small AMC might send 10 orders a year, a large AMC can send 10 -40 orders or more a month.

But whether the AMC has a big national or statewide reach or is smaller, if most of them procure apprasials the same way, ( The lender sends them the borrower appraisal fee and lets the AMC procure work by fee bids or fee comparisions from the appraisers ), then these AMC;s have an incentive to get low fees that is not true of direct order work, where the lender simply wants the cost to be reasonable ( C and R) so that it is covered by the borrower. The AMC's act like wholesale buyers, but the appraisal is not designed to be a wholesale product or service. It is too labor-intensive, too few in quantity of production, and too low in the retail (borrower covered portion) to work well in that capacity. That is why appraisers whose main income comes from AM: C suffer from such a big income reduction. Since the fix for it is relatively simple ( have the lender pay a hard cost to the AMC for the AMC service, or cap the AMC split ), it is interesting that those defending the system are not on board with either solution.

 

[DWiley]

The AMC's act like wholesale buyers, but the appraisal is not designed to be a wholesale product or service. It is too labor-intensive, too few in quantity of production, and too low in the retail (borrower covered portion) to work well in that capacity.

It may not be designed to work that way, but that is exactly how it works when appraisers seek work from AMCs rather than making the effort to do their own marketing and secure their own direct engagements. I have heard that directly from appraisers in the field. They think it is better to let the AMC find the orders rather than finding them on their own.

I used to spend a great deal of time and effort on marketing. I have met very few appraisers who even have a formal marketing plan or a marketing budget. In short, they are acting just like wholesale distributors who don't want to deal with connecting with the actual buyers and instead provide their products to Walmart or others to find retail customers.

There was a group of estate managers (attorneys) in town that held a golf tournament every year. Want to guess who was always there as a sponsor? The return on that was usually 10X or more.

There is a very large slice of work that does not involve AMCs, but it takes effort to find it.

 

[Zoe]

Doesn't matter. Appraisal management fees and Appraisal fees should be separated on truth in lending disclosures for the borrower's benefit and transparency.

The profession would benefit because "fastest and cheapest" is in the mix. Market power on price. It is anti trust law violation in more ways than one. I am surprised the FTC hasn't jumped in.

The regulators may jump in with some of these lawsuits going on in some States.

Take somebody like FTC, the FTC has power over HUD, the banks, the AMCs etc.

 

[Non Sequitur]

It may not be designed to work that way, but that is exactly how it works when appraisers seek work from AMCs rather than making the effort to do their own marketing and secure their own direct engagements. I have heard that directly from appraisers in the field. They think it is better to let the AMC find the orders rather than finding them on their own.

I used to spend a great deal of time and effort on marketing. I have met very few appraisers who even have a formal marketing plan or a marketing budget. In short, they are acting just like wholesale distributors who don't want to deal with connecting with the actual buyers and instead provide their products to Walmart or others to find retail customers.

There was a group of estate managers (attorneys) in town that held a golf tournament every year. Want to guess who was always there as a sponsor? The return on that was usually 10X or more.

There is a very large slice of work that does not involve AMCs, but it takes effort to find it.

I don't disagree that most residential appraisers have no marketing plan and do no marketing. But let's put it into context; the truth is and has always been that the vast majority of residential work is lender originations. And the vast majority of lender originations is GSE related work. I get it, even people who work at GSE's look down their noses at appraisers who rely on lender origination work but purposely overlooking how AMC's dominate that space and how they are abusing borrowers and appraisers when appraisers complain is tone deaf. And the AMC's are committing that abuse while the GSE's whistle past the graveyard.

Let's be honest, even the “very large slice of work” you claim is out there comes and goes. And I assume that's why you aren’t still competing in that “very large slice of work” space (I’m sure you’ll counter this but offer no details). The idea that there is utopia for the appraiser masses outside of origination work is fantasy and a deflection meant to disparage residential appraisers who are having a hard time right now because of AMC market domination. Every time that “very large slice of work” is brought up it implies that residential appraisers who aren't in that space are lazy or incompetent GSE form fillers who can't compete in that space. Truth is there isn't much space to compete in, that's just a fact.

Back to the AMC debate. IMO every time an AMC charges a borrower (as an example) $700.00 for an appraisal report, then bids it out to an appraiser who will complete it for $275, is flat out lying to the borrower about the appraisal fee. And the GSE's, lenders, the alphabet soup in DC who regulates us, and our professional orgs who refuse to stand up for us, are complicit by not standing up and calling out that lie. Again, it is a lie to quote the appraisal cost as $700 then only pay out $275.

 

[J Grant]

It may not be designed to work that way, but that is exactly how it works when appraisers seek work from AMCs rather than making the effort to do their own marketing and secure their own direct engagements. I have heard that directly from appraisers in the field. They think it is better to let the AMC find the orders rather than finding them on their own.

I used to spend a great deal of time and effort on marketing. I have met very few appraisers who even have a formal marketing plan or a marketing budget. In short, they are acting just like wholesale distributors who don't want to deal with connecting with the actual buyers and instead provide their products to Walmart or others to find retail customers.

There was a group of estate managers (attorneys) in town that held a golf tournament every year. Want to guess who was always there as a sponsor? The return on that was usually 10X or more.

There is a very large slice of work that does not involve AMCs, but it takes effort to find it.

Why not address the root problem, which is that the lender should pay a hard cost for the AMC service and the check the borrower paid for the apprasial goes to the appariser.

As you agree, the appraisal was not designed to be a wholesale product. There is not enough in the borrower's paid fee to allow for that steep a discount.

First of all, back in the day, when you spent a great deal of time and effort in marketing, the AMC chokehold on the market did not exist ! ( you helped develop that with the AMC called LSI at the time )

After the AMCs took the majority of direct-lender work and started assigning orders, who exactly are the appraisers supposed to market to?

I personally got lucky and about 8 years got referrals to several very good clients ( 2 wholesalers, one direct order lender and one decent pay cost plus lender-owned AMC ) But for years, I too was stuck in the AMC cycle and if I tried marketing to my former direct lender clients, they referred me to their AMC.

During your tenure at Freddie, the market for appraisals has shrunk further with the replacement of appraisals with waivers/value select, and then the income for appraisers diminished further with a big influx of PDC collectors to replace the inspection portion - on hybrids, which are assigned mainly through AMC's. The GSEs have decided to contract directly with AMC's for the PDC collection on value acceptance, instead of contracting with appraisers to do the work.

Please share with people the "very large slice of work" that does not involve AMC's. Many appraisers have been marketing for years and never found it. What exactly, does it consist of?
Again, my clients are outside the AMC system, but they only hire so many appraisers for their panel, and I am not aware of many others like them. I have no idea how much longer they will assign directly, either, given the current trends. Most small banks and credit unions that used to engage appraisers directly now use an AMC.

Surely, having AMC's pay the retail C and R fee to the appraiser and having the lender pay a cost for AMC service would solve the fee issues, since most of the lending work available for the majority of res license appraisers comes from AMC's.

If you want to be a hero instead of a villain in the legacy of the appraisal profession, consider using your influence to effect change in that direction.

The GSE's could well enact a rule that they will not accept an appraisal from an AMC that charges more than 15% of the split fee, for example, and request a fee disclosure on the appraisal. You can appeal to the lending industry to pay a cost to the AMC and then pass the cost on to the borrower if they can, and going forward, the AMC pays the retail C and R with no fee split.

I highly doubt that you will do either of these things, but they would solve the fee issues for appraisers far more effectively than telling appraisers to seek alternate work, which in large part does not exist.