It is interesting for me to wonder if the AMC dynamic/strategy of of recruiting all (or many) appraisers in a market and forcing them to compete against each other in the digital world is going to start taking over in other/all industries. Good for the consumer, devastating to incomes. Henry Ford was widely considered a genius regarding his strategy of paying his workers a higher wage, which in-turn resulted in more sales of his product. Uber and appraisal illustrate the opposite outcome.
Uber (IMO) was a disruption to the existing process; one that happened fairly quickly and has had a significant impact on the traditional taxi service. There were always alternatives to a traditional taxi, but none as widely available today (AMCs have had a bigger footprint prior to their widespread adoption after HVCC, but certainly HVCC was the tipping point).
The taxi industry, like appraising, is highly regulated as well. Uber is not as deeply regulated (like AMCs) but much talk about increasing their regulations. Obviously, appraisers have a higher level of training than taxi drivers (I never said... I didn't think I would have had to say... there aren't differences there); but the similarity as a disruptive force interrupting a traditional service platform seems to be there (at least to me).
Further, Uber (I'll just say "Uber" to represent all the Uber-like companies) is using technology to a greater degree than traditional taxi service to connect the consumer with car/driver. Taxi companies are playing catch-up in this regard.
There is a technological advantage that AMCs have over independent appraisers. I'm not saying that independent appraisers cannot avail themselves to those same technologies and eliminate the advantage (just as taxi companies are attempting to do) but it exists.
Somewhat funny. You'd think, in a battle to get an upper edge, there'd be interest in looking at historical models to see if there are any similarities in other industries where such battles have been or are being fought? (I'm not making this comment against you, FC).
Uber and appraisal illustrate the opposite outcome.
vs. Heny Ford.
So far, that may be the case. It would be foolish to kill the goose (appraisers) that lay the golden egg.
I look at Costco and Walmart as an alternative model. Costco and Walmart's pricing is an advantage to the consumer. Costco doesn't sell junk (some might think Walmart does: I happen to like shopping there myself!). But what they do sell is sold at a low margin and they make it up on volume (Costco, on their membership.... which sounds
similar to the cost-plus model if you ask me!
).
It is not in the best interests of Costco or Walmart to grind their vendors down so that their vendors go out of business. It is in the best interests of Costco and Walmart to hit that sweet-spot where they can get their product at the lowest reasonable price while their vendors can continue to earn a profit and stay in business.
However, Costco and Walmart are fine with their vendors competing against one another to offer their product at a price they (the vendor) think they can make money and beat the other competitor. That's what's happening with appraisers and the AMCs.
I see only two (realistic) ways to break out of this model at this time:
A. Find consumers (clients) who don't shop at Costco or Walmart and are willing to buy direct.
B. Fine-tune your product so that you can make a profit selling to Costco or Walmart. Obviously, in the Costco/Walmart world, there are vendors that are doing that and they are successful.
EDIT TO ADD:
I'll add a third one: but it doesn't change the competitive force that exists between appraisers pricing their product:
C. Go to a Cost-Plus Model.
