AMC Allocation of Commercial Jobs?

[J Grant]

Let's exercise your empathy superpower with a role play. Pretend that the lenders are prohibited from passing the AMCs end on to the borrower so that "appraisal fee" is strictly limited to the fee paid to the appraiser and excludes the reviewer's fee or the mgt fee or anything not being paid solely to the appraiser.

Your AMC (Fly-By-Night Appraisal Mgt Co) is competing for the same lender accounts as 3 other AMCs. What do you think the various aspects are by which these AMCs will compete with each other?

• Geographic coverage
• Turn times
• Quality or stip/rejection rate
• Amount of the appraiser's fee being paid

My god how can you still fail to understand?
The AMCs' will have NOTHING TO DO WITH THE APPRAISAL FEE BEING PAID.

If that is the case, then how can the AMC compete on the amount of the appraiser's fee being paid?

The AMCs will compete on the AMC MANAGEMENT SERVICE FEE that the AMC charges to a lender.

 

[George Hatch]

"The AMCs' will have NOTHING TO DO WITH THE APPRAISAL FEE BEING PAID."

What are you talking about? They're the ones who are going to engage the appraiser. Of course the negotiations and the ultimatums over the appraiser's payment will continue. Without pause.

Regardless of a lender paying their own end, the AMCs will continue to compete with each other by shopping for the lowest fees. There is no business model that will stop their lenders from wanting to pay less.

If you think I'm wrong then just ask them. We have several members here who are or who have previously worked at the management levels of these companies. There's no need to blindly assume anything.

I guarantee you're not going to like the responses you get from them.

 

[J Grant]

"The AMCs' will have NOTHING TO DO WITH THE APPRAISAL FEE BEING PAID."

What are you talking about? They're the ones who are going to engage the appraiser. Of course there will be negotiations and ultimatums.

Regardless of a lender paying their own end, the AMCs will also compete with each other by shopping for the lowest fees. There's no business model that will stop their lenders from wanting to pay less.

If you think I'm wrong then just ask them. Talk to them about this topic the same way I have over the years, then you'll hear what I have heard. We have several members here who are or who have previously worked at the management levels of these companies. There's no need to blindly assume anything.

This is your version of the business.

Like any business, the AMC model can change. Right now, the few AMC's who work on "cost plus", (usually owned by a lender, but a lender can contract for it)- in cost plus, the AMC takes a smaller, set fee from the appraisal fee and pays all of its panel the same agreed-on fee in an area. There is no bidding except on a complex order, though an appraiser can ask for more $ on a regular order.

Outside of cost plus, the AMC model, which you seem to believe is not capable of being changed, is the AMC's bid or compare fees to get the lowest fee on a regular order. If the AMC was prohibited from any involvement with the fee ( the lender pays the appraisers ), the AMC can do all the rest of the management and review, or the lender sends the AMC a set $ C and R amount for each order and the AMC pays that amount to the appraiser and selects by expertise, availability, turn time. The Lender pays the AMC a separate fee per order or an annual retainer, as agreed.

Why is this so hard to understand? The idea is to eliminate the AMC getting paid, and choosing the appraiser based on the fee split, which appraiser hire will profit the AMC the most is plain wrong on so many levels- it sets up a conflict of interest for the AMC to choose the less qualified if their lower fee profits the AMC's more. It has gotten so bad that few want to enter or stay in the res lending side of appraisal work.

 

[George Hatch]

Now it looks like you're assuming the AMCs will choose different appraisers if the lender pays the AMCs end.

And for the last time, please stop accusing me of somehow not understand your line of reasoning. Just because I think your reasoning is illogical and oblivious to human nature doesn't mean its too complicated for anyone to understand.

 

[J Grant]

Now it looks like you're assuming the AMCs will choose different appraisers if the lender pays the AMCs end.

And for the last time, please stop accusing me of somehow not understand your line of reasoning. Just because I think your reasoning is illogical and oblivious to human nature doesn't mean its too complicated for anyone to understand.

I believe that the AMC would choose different appraisers if the fees were not in play, as the selector would choose the appraiser with the lowest fee to bring the most profits to the AMC.

There is nothing illogical about an lender paying the AMC for AMC service instead of the compensation to the AMC coming from the appraisal fee split.

 

[Terrel L. Shields]

their market not being so oversupplied.

It's slowly becoming undersupplied as best I can tell. Few want to make the effort to get the CG and old CGs are too busy to train a replacement for themselves. It's hard to recruit a CG in my area.

Do legal firms in CA [divorce, estate, BK] often rely on AMC's for residential or commercial appraisals???

I bet not. They don't need generic appraisals. They need expert testimony...real experts.

I believe that the AMC would choose different appraisers if the fees were not in play, as the selector would choose the appraiser with the lowest fee to bring the most profits to the AMC.

Clearly the AMC chooses appraisers by the fee and turn time, and no other criteria is in play. Nothing. It does not matter that the regulators SAY but do not enforce their regulations that require the bank to choose an appraiser upon the sole basis of their qualification to do the job. And that would mean matching an appraisers skill level with the assignment. Cookie cutters anyone can do. But what about complex and rural assignments.

From experience of myself and my former trainees, I know for a fact that banks do not want to pay a single dime more for a report for a large rural property, a complex older home that has been remodeled two, three or more times, a house on the historical register, a home on a commercially zoned lot, next to a rock quarry or factory. Everything is the same to them. $325 and 3 days. Take it or leave it. And hungry appraisers will take it regardless the complexity and their lack of expertise in that kind of property.