My prediction on 3.6

[TerryRohrer]

You have failed to provide a comparable example to that of appraisers, and instead of admitting it, you attack me with sarcastic comments.

Other fields have all kinds of issues affecting them. But it is still not the same thing with supply and demand and who pays the cost for a third party..

In managed health care, for example, the health care insurance company offering the plan charges the patient a cost for the plan. If that plan means the customer forgoes paying a big deductible or has their reimbursement capped or has a limited choice of doctors, so be it.

AMCs do not charge their lender or customers a cost, and you know it. BTW, I do not argue to abolish AMCs, and I do not argue for fee disclosure, though I think the fee breakout that should be present, AND done at time of loan application, not in mouse type at the end of an appraisal.

I argue that if a lender wants to enjoy the benefit of an AMC service, the lender should pay a hard cost to the AMC , just like any other business or person pays a cost for a service that benefits them. The appraisal fee should not be split, resulting in the appraiser portion of the fee being reduced to provide the third-party compensation.

If the lender wants to pass that hard cost on as a disclosed fee to the consumer, so be it. Leave the appraiser's fee out of it.

That you are ignorant about how most of the world works doesn't mean it isn't happening. Alebrewer's example of freight brokerage was very apt, but you dismiss it because it doesn't include "appraiser" or "AMC". Frankly, corollaries, math, and logic are lost on you because they are not emotions. Of course, all of this has been explained to you, ad nauseam, over the past several decades, but you remain willfully obtuse and disingenuous. In a nutshell:

"Freight brokerages predominantly operate on a negotiated "spread" (or margin) basis rather than a strict cost-plus model. They make their profit from the difference between what they successfully negotiate to charge the shipper and what they pay the trucking company (carrier) to move the freight. [1]"

How Freight Brokers Get Paid: Commission, Spread, and Margin

Freight brokers get paid on the spread between shipper and carrier rates — not commission. Here's how spread, margin, and agent splits actually work.

www.loadtraining.com

Key industries utilizing the spread model include:

• Financial Services and Brokerages: Firms like Charles Schwab or Fidelity generate revenue on the spread between interest rates or bid-ask prices. In investment banking, underwriters negotiate a spread by buying newly issued shares at a discount and selling them to the public at a markup. [1, 2, 3, 4, 5]
• Mortgage Lending and Banking: Lenders negotiate the spread between the wholesale interest rate they pay to secure funding and the retail interest rate they charge borrowers. [1, 2]
• Foreign Exchange (Forex) and Crypto: Platforms facilitate trades by capturing the difference between the buy (ask) and sell (bid) prices for currencies and digital assets. [1, 2]
• Wholesale and Retail Arbitrage: Rather than marking up the cost of manufacturing, distributors and retailers negotiate bulk purchasing discounts and sell at market value. Their profit is the spread between wholesale acquisition and retail selling prices. [1]
• Insurance: Underwriters and brokers negotiate the spread between the premiums collected and the expected cost of payouts and administrative overhead.

AI Overview



Yes, many industries operate on a negotiated "spread" or margin basis rather than a strict cost-plus model. In this setup, the middleman acts as a buffer, generating revenue by buying a service or product at a wholesale rate and selling it to the end user at a retail rate, keeping the difference (the spread). [1, 2, 3, 4]
Your example is spot on: this is exactly how Appraisal Management Companies (AMCs) operate. [1]

Industries Operating on the Spread/Margin Model

• Appraisal Management (AMCs): The AMC negotiates a fee with the lender (e.g., $600) and a separate, lower fee with the independent appraiser (e.g., $400). The $200 difference is the AMC’s spread, which compensates them for panel management, compliance, and quality control. [1, 2, 3]
• Mortgage & Loan Brokerage: A mortgage broker negotiates an interest rate with the borrower and a different rate with the wholesale lender. The broker earns their revenue (often called Yield Spread Premium) on the difference between the two rates. [1, 2, 3, 4]
• Third-Party Logistics (3PL) & Freight Brokering: A freight broker negotiates a flat rate to move a shipper's freight (say $2,000), then negotiates a separate, lower rate to hire an independent trucker (say $1,600). Their margin is the $400 spread, compensating them for logistics and risk.
• Wholesale & Specialty Distribution: Distributors buy bulk goods (like medical supplies or industrial parts) from manufacturers, add a markup, and sell them to retailers. The spread covers logistics, warehousing, and sales networks.
• Insurance Brokerage: Similar to AMCs, brokers interface between the insured (buyer) and the insurer (provider). They negotiate the premiums and take a percentage/spread as a commission. [1]

Why Use a Spread Model Instead of Cost-Plus?

1. Market Clearing Price: Instead of tracking the exact hours or costs required to complete a single transaction, the company charges what the broader market will bear, incentivizing efficiency.
2. Scalability: Companies can manage high volumes of transactions without having to justify the internal costs of every single job to the end-client.
3. Risk Mitigation: The middleman assumes the risk of the transaction (e.g., finding a trucker on time, vetting a competent appraiser). The spread acts as a premium for taking on this operational burden. [1, 2, 3]

 

[J Grant]

"Freight brokerages predominantly operate on a negotiated "spread" (or margin) basis rather than a strict cost-plus model. They make their profit from the difference between what they successfully negotiate to charge the shipper and what they pay the trucking company (carrier) to move the freight. [1]"

My point, which you seem to have missed, is that the AMC;s do not CHARGE a cost to their customer ( the lender is the AMC customer ). In the above example, the freight brokerage charges the shipper. With the AMC, they don't charge their customer; they get compensated from taking a big split of the appraiser's fee.

The fact that the AMC's offer free of hard cost service to lenders gives them a huge market share advantage . Thanks to the govt perk of a split fee in the HUD. I am surprised that you are defending a govt perk like the HUD split fee, which is a form of corporate welfare.

Why are you defending the practice of the AMC getting compensated from the appraiser's portion of an appraisal fee. Instead of charging the AMC, are they charging their lender customer a cost?

 

[TerryRohrer]

My point, which you seem to have missed, is that the AMC;s do not CHARGE a cost to their customer ( the lender is the AMC customer ). In the above example, the freight brokerage charges the shipper. With the AMC, they don't charge their customer; they get compensated from taking a big split of the appraiser's fee.

Your point is based on your false premise that AMCs don't charge their customers. DW has pointed out the facts to you many times. Since you don't work for AMCs, you don't have a clue. I have been told many times over the years that my quote exceeds their revenue for that assignment. Of course, you will dismiss that because you are ignorant and assume your lack of knowledge of anything means that it can never be so.

No AMC has ever "gotten" a "portion of my fee". Not one penny in 39+ years. I suspect you cannot find an appraiser who can say otherwise, except in the case where AMCs did not pay them all or part of the fee they agreed to accept. But no one can dumb that down enough for you to grasp reality. God knows, dozens have tried. Does it ever occur to you that it might be you, and not all of the other 8.3 (minus 1) billion people on the planet?

 

[J Grant]

Your point is based on your false premise that AMCs don't charge their customers. DW has pointed out the facts to you many times. Since you don't work for AMCs, you don't have a clue. I have been told many times over the years that my quote exceeds their revenue for that assignment. Of course, you will dismiss that because you are ignorant and assume your lack of knowledge of anything means that it can never be so.

No AMC has ever "gotten" a "portion of my fee". Not one penny in 39+ years. I suspect you cannot find an appraiser who can say otherwise, except in the case where AMCs did not pay them all or part of the fee they agreed to accept. But no one can dumb that down enough for you to grasp reality. God knows, dozens have tried. Does it ever occur to you that it might be you, and not all of the other 8.3 (minus 1) billion people on the planet?

I have worked for AMC's in the past.

DW did not point out that AMC does not charge its customers. He pointed out that when I incorrectly used the term " appraiser's fee " instead of appraisal fee .

Ask him yourself- the AMC typcially does NOT charge their lender customer a cost charge that the lender pays for out of their own funds.

The lender sends the appraisal fee that the borrower paid over to the AMC, and the AMC keeps a split of it for themselves, and the AMC pays a split of it to the appraiser for the appraiser's fee portion.'
The lender paid zero out of their own funds as a cost charge for the AMC service.

 

[J Grant]

Your point is based on your false premise that AMCs don't charge their customers. DW has pointed out the facts to you many times. Since you don't work for AMCs, you don't have a clue. I have been told many times over the years that my quote exceeds their revenue for that assignment. Of course, you will dismiss that because you are ignorant and assume your lack of knowledge of anything means that it can never be so.

No AMC has ever "gotten" a "portion of my fee". Not one penny in 39+ years. I suspect you cannot find an appraiser who can say otherwise, except in the case where AMCs did not pay them all or part of the fee they agreed to accept. But no one can dumb that down enough for you to grasp reality. God knows, dozens have tried. Does it ever occur to you that it might be you, and not all of the other 8.3 (minus 1) billion people on the planet?

You still have not answered why you defend a system that sees low $ go to the appraiser - calling me names does not change that.

The AMC may not have ever "gotten" a portion of your fee, but the AMC got a portion of the appraisal fee, which means you got paid less than if that entire appraisal fee had gone to you. God knows, you must be so dumb in order not to understand that reality.

 

[Sadie]

It has, that's why the GSEs invested in a national "Get the Facts" campaign promoting waivers/PDCs (Value Acceptance and ACE) and aren't worried about a bottleneck.

Another reason why indie appraisers are sunk. Go back and really listen to what True Footage (self-proclaimed largest W2 staff firm) is saying: Fees for 3.6 are not going up and the use of tech will dominate the market for faster turn times. I have stated it many times over the past 2 years after I attended the AMC Expo in Vegas - National firms and AMCs with staff are salivating because they see 3.6 as a chance to gain market share by not raising fees for 3.6 (in some cases lowering fees) and delivering reports in record times.

Have you ever read a True Footage report? The ones I have read are awful and not Standard 2 compliant. But they are here to stay until the respective state boards wade through them and issue sanctions. Already when the state board gives talks at appraiser meetings, they are saying to please read and edit your report and not just regurgitate everything that the AI spits out at you. There have been appraisers who have gotten their hands slapped.

 

[TerryRohrer]

You still have not answered why you defend a system that sees low $ go to the appraiser - calling me names does not change that.

The AMC may not have ever "gotten" a portion of your fee, but the AMC got a portion of the appraisal fee, which means you got paid less than if that entire appraisal fee had gone to you. God knows, you must be so dumb in order not to understand that reality.

Prove it. Show me one place I have defended a system that sees low $ go to the appraiser. No AMC has ever taken any part of the fee I have agreed to accept. They ask me what my fee and turn time will be for a given assignment. They either accept that or don't. So only a blithering idiot would argue that an AMC took any part of of this appraiser's fee. Your continuing to be among the stupidest people on the planet does not change that simple fact.

 

[J Grant]

Prove it. Show me one place I have defended a system that sees low $ go to the appraiser. No AMC has ever taken any part of the fee I have agreed to accept. They ask me what my fee and turn time will be for a given assignment. They either accept that or don't. So only a blithering idiot would argue that an AMC took any part of of this appraiser's fee. Your continuing to be among the stupidest people on the planet does not change that simple fact.

What I actually said was... (please read my post again ) that the AMC took a part of the APPRAISAL fee. (not the appraiser's fee)

YOU are stupid if you do not understand the difference between the appraisal fee and the appraiser's fee, and if you misquote what I actually wrote.

Since the AMC is compensated from the APPRAISAL FEE the borrower paid to the lender, the amount left to pay the appraiser's fee as a split of the appraisal fee is typically a lower amount than the same lender pays an appraiser when no AMC is involved.

 

[J Grant]

Have you ever read a True Footage report? The ones I have read are awful and not Standard 2 compliant. But they are here to stay until the respective state boards wade through them and issue sanctions. Already when the state board gives talks at appraiser meetings, they are saying to please read and edit your report and not just regurgitate everything that the AI spits out at you. There have been appraisers who have gotten their hands slapped.

It's plausible deniability for the GSE's not to add an additional certification, which they have the power to do, a cert that says an appraiser must also manually review the AI results when they use AI to pick comps, make adjustments, or write the narrative.

 

[J Grant]

Prove it. Show me one place I have defended a system that sees low $ go to the appraiser. No AMC has ever taken any part of the fee I have agreed to accept. They ask me what my fee and turn time will be for a given assignment. They either accept that or don't. So only a blithering idiot would argue that an AMC took any part of of this appraiser's fee. Your continuing to be among the stupidest people on the planet does not change that simple fact.

AI Overview




Yes, Appraisal Management Companies (AMCs) are compensated from a split of the total appraisal fee. The consumer pays a single "appraisal fee" at closing, and the AMC typically keeps a large portion of it for their services, passing the remainder to the actual appraiser. [1, 2, 3, 4]
This practice has become a major point of contention in the real estate industry. Here are the key details surrounding this fee split: [1, 2]

• The Split: AMCs often retain anywhere from \(30\%\) to \(70\%\) of the total fee paid by the borrower, passing the remaining \(30\%\) to \(70\%\) to the independent appraiser doing the on-site work. [1, 2, 3, 4]
• Lack of Transparency: On many closing documents (like the Loan Estimate), the AMC's management fee is bundled together with the appraiser's fee as a single "Appraisal Fee," making it difficult for the consumer to know exactly how much the middleman is taking. [1, 2]
• The "Cost-Plus" Alternative: Some AMCs and industry advocates argue for a "cost-plus" model, where the appraiser receives the full appraisal fee, and the lender pays the AMC a separate management fee. [1]
• Industry Pushback & Legal Action: Professional groups, such as the Appraisal Institute, have long advocated for clearer fee breakdowns. There are also ongoing class-action lawsuits challenging this fee bundling practice as deceptive and unfair to consumers. [1, 2]