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Are Appraisal Management Companies the answer?

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JC California

Thread Starter
Sophomore Member
Joined
Oct 31, 2006
Professional Status
Certified Residential Appraiser
State
California
Appraisal Management Companies are not the answer to our problems. Will we be forced to work for them to stay in the residential appraisal business? I believe TSI currently receives lender appraiser request.

Check out the link below and scroll down toward the bottom of the page. You will see one of their Additional Products. This is just one example of the many continuing problems with AMC’s that we share with each other every day.

It is bad enough that appraisers feel compelled to do comp checks for MB’s, but this is worse than the one-man shop trying to make a living.

While I appreciate the noble efforts by some, I am not satisfied with the uncertainty that remains for many of us. Those that believe that the new plan in how we do business and receive work is positive need to look at just how little/much power we have. Setting up an appraiser network may be of value to some appraisers, but unless we can eliminate AMC’s, most residential appraisers will be working for them.

I am concerned that my reasons to stay in the business will be few if I am forced to work for AMC’s. I know some of you will tell me to diversify, but we need to face the fact that there are more appraisers then there are non-lender assignments.

I would be glad to hear that I am wrong and the reason for my mistaken opinion, but a discussion on the options that we have seems more productive.


TSI (Title Source Inc.)
https://www.titlesourceinc.com/products/appraisal.aspx


Comp Search

The comp search is completed by a licensed appraiser…
 

Marcia Langley

Senior Member
Joined
Aug 26, 2005
Professional Status
Certified Residential Appraiser
State
Missouri
JC,

I don't think it is legally possible to eliminate AMCs. But show me a feasible plan of how AMCs might be eliminated and I'll certainly consider supporting it. The only possible plan I've ever seen is for all appraisers to simply stop working for them and while that's possible, it does not seem to be very likely.

In the mean time, it is urgent that we focus on what we can do.

It is not merely the existence of AMCs that is the problem, it's what they do. The recent activity with Fannie/Freddie and lawsuits against AMCs is in fact affecting what they do. And the opportunity to affect what they do, to an even greater degree, is open to us right now.

You do understand, don't you, that if the code proposed for Fannie/Freddie remains as written, the link you posted would no longer be offering appraisals that could be used to originate a loan intended to be sold to Fannie/Freddie?

And I applaud the new AMC being formed by members of this board (and others) because the idea is to have an AMC that does not do all the bad stuff that other AMCs do. Don't you think that would be sublime? And it is doable.

I would be glad to hear that I am wrong and the reason for my mistaken opinion, but a discussion on the options that we have seems more productive.

What I posted are the options that are actually available right now, already in the works, real immediate opportunities.
 

Jonsey

Member
Joined
Feb 24, 2007
Professional Status
Appraiser Trainee
State
Florida

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
I think AMCs are here to stay, maybe not in their present form but still here to stay.
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
Let's say I'm working in a small market and my primary competition is a sweatshop that's cutting a lot of corners. They cannot prevail in a competitive market environment unless the clients and lenders tolerate and enable them to get away with cutting those corners.

I don't need an angel to come down and strike the sweatshop dead in order to make a living. I just need the clients and lenders to be prevented from allowing the sweatshop to get away with cutting those corners. Once that sweatshop stops cutting corners they become just another competitor. If they've built a business that's carrying a lot of overhead that they can't otherwise support without cutting the corners then that's their problem. They can either choose to reorient their program or they can go bust - it's the same choice I'm faced with on a daily basis.
 

Hamlet

Elite Member
Joined
Aug 14, 2006
Professional Status
Certified Residential Appraiser
State
Ohio
I don't need an angel to come down and strike the sweatshop dead in order to make a living. I just need the clients and lenders to be prevented from allowing the sweatshop to get away with cutting those corners.

This is such a reasonable request, it certainly should be possible.:)
 

moh malekpour

Elite Member
Joined
May 25, 2002
Professional Status
Certified Residential Appraiser
State
California
JC,

I don't think it is legally possible to eliminate AMCs. But show me a feasible plan of how AMCs might be eliminated and I'll certainly consider supporting it. The only possible plan I've ever seen is for all appraisers to simply stop working for them and while that's possible, it does not seem to be very likely.

In the mean time, it is urgent that we focus on what we can do.

It is not merely the existence of AMCs that is the problem, it's what they do. The recent activity with Fannie/Freddie and lawsuits against AMCs is in fact affecting what they do. And the opportunity to affect what they do, to an even greater degree, is open to us right now.

You do understand, don't you, that if the code proposed for Fannie/Freddie remains as written, the link you posted would no longer be offering appraisals that could be used to originate a loan intended to be sold to Fannie/Freddie?

And I applaud the new AMC being formed by members of this board (and others) because the idea is to have an AMC that does not do all the bad stuff that other AMCs do. Don't you think that would be sublime? And it is doable.



What I posted are the options that are actually available right now, already in the works, real immediate opportunities.

Marcia,
You are right on the target. Lets not kid ourselves. AMCs are 800-pound Gorilla in the room, which is very hard to push them away. They are heavy weight financially and politically. They already have big banks and lenders in their pockets and very soon they are going to get all those orders from MBs as well and are going to be even stronger.
All they have to do in order to stay in business is to comply with the new system and to embrace the new code and I am sure they are going to do it. They are not in the business to make loan but they are in business to make money and they make their money from our fees so if the new system is requiring to comply with the code and lenders are not permitted to request from them anything that violates the new code, they are going to accept the new system and keep their money making enterprise going.
They are not going to ask appraisers anything that violates the code and they are not going to violate the code themselves but they are going to pay us 1/3 of appraisal fees for our works and we cannot do anything legally against them.
In the free market system, an independent contractor cannot object to the low fee because they say it is a matter of supply and demand. As long as they are not violating the new code, they can make as much money from appraisers as they want and there is no legal base to complain against it. As you said, the only practical way is to stop taking their orders all together and you know there is no such unity amongst appraisers to do that.
 
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Mike Siegfried

Junior Member
Joined
Nov 6, 2005
Professional Status
Certified General Appraiser
State
California
I remember years ago when I was a Realtor, the fear was that the internet was going to take over the real estate market and brokers were a dying breed. As an appraiser for the past 16 years, there have been numerous claims that AVMs would put us out of business and that we would be reduced to doing Drive-Bys. It seems that the sky is always falling for some reason. During the 90s when things slowed down and the local AI newsletter had a regular column discussing which appraisers had quit and were now working at the local diner, I was out calling on new MBs delivering jars of candy with my logo on it. I always walked out with a new order or two. I guess what I'm saying is that we're not just appraisers, we are in the appraisal BUSINESS. As such, it is always part of our job to analyze the marketplace for our services and make necessary adjustments to marketing our services. I have slowed down tremendously, but I'm using this time to hone my marketing efforts, investigate opportunities in legal & expert witness work, tune up the website, etc. Tomorrow morning, for instance, I'll be addressing a Beverly Hills real estate office, something I do frequently. I have to believe that in the end, quality work and solid customer service has to win out. There really are people out there who want to know what this stuff is worth. You just have to find them. Costco hasn't put Macy's out of business and the AMCs don't have to put you out of business either.

Mike
 

Marcia Langley

Senior Member
Joined
Aug 26, 2005
Professional Status
Certified Residential Appraiser
State
Missouri
They are not going to ask appraisers anything that violates the code and they are not going to violate the code themselves but they are going to pay us 1/3 of appraisal fees for our works and we cannot do anything legally against them.

moh,

One thing the code has (as written) that I had never dreamed would actually be possible is the effort to force the appraisal arm of the AMC into a seperate company. I believe that has extremely far reaching implications. (I wish we could get rid of the allowed 20% ownership by banks.)

What more would we ask for during the comment period?

The effect of that is to isolate the AMC into an entity being held to account in the same way that a fee shop is held to account.

I'm also aware that additional restrictions may end up being put on the AMCs directly (aside from the code). The investigation and lawsuit in NY is still open.

This isolation of an AMC into a stand alone appraisal company reveals that a lot of their abuses are very similar to the abuses that we also see in unethical fee shops.

One thing that could be pressed for is a sort of overall review of the IRS-implicating contractor versus employee status of the appraisers and/or trainees that work for either fee shops or AMCs. If that were done and a more realistic compliance with IRS regs were enforced, wouldn't that have a big impact on how AMCs did business? I'm thinking it might even change the fee structure. Also it might affect turn time demands and the contract AMCs make you sign.
 

moh malekpour

Elite Member
Joined
May 25, 2002
Professional Status
Certified Residential Appraiser
State
California
Marcia,
One thing the code has (as written) that I had never dreamed would actually be possible is the effort to force the appraisal arm of the AMC into a seperate company. I believe that has extremely far reaching implications. (I wish we could get rid of the allowed 20% ownership by banks.)
That might happened and it is good but still is not going to stop them from taking the big portion of appraisers fees.
This isolation of an AMC into a stand alone appraisal company reveals that a lot of their abuses are very similar to the abuses that we also see in unethical fee shops.
True, but the demand for the abuse was coming from the lenders. It is hard to prove that poeple are abusive by nature unless they are sick or psychopath. If it became illegal for lenders to demand from the AMC and illegal from AMC to demand from appraisers to violate the code, then it is going to be what the new system is based on. The new system doesn't care a bit about the appraiser's fee
One thing that could be pressed for is a sort of overall review of the IRS-implicating contractor versus employee status of the appraisers and/or trainees that work for either fee shops or AMCs. If that were done and a more realistic compliance with IRS regs were enforced, wouldn't that have a big impact on how AMCs did business? I'm thinking it might even change the fee structure. Also it might affect turn time demands and the contract AMCs make you sign
It might affect the turn time because it can affect the quality of appraisal but is not going to affect the fee structure in a free market system unless it is required by the GSEs . I personally believe that both the turn time and fee has effect on the quality of appraisals but some believe that the quality of appraisal should not have anything to do with the fee for that appraisal.
 
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