Shouldering the Weight of AMC Hidden Costs

Brian L. Trotrier

Brian L. Trotrier

Executive Vice President and Chief Operating Officer at FREA
A former practicing attorney with more than 30 years experience in real estate and risk management. The Foundation of Real Estate Associates (FREA) has specialized in providing Errors & Omissions Insurance to appraisers and home inspectors since 1993. As a membership organization with over 6,000 members, FREA is one of the largest and most well respected professional associations in the country, providing E&O Insurance for appraisers and inspectors as well as educational opportunities, member benefits, and legal support.
Brian L. Trotrier

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Shouldering the Weight of AMC Hidden Costs - Imagecredit Flickr - Steven DepoloThinning wallets and dwindling fees for work performed are nothing new for the appraisal community. Yet in their latest income-reducing move, AMCs have sparked an outcry by requiring appraisers to foot the bill for additional services. These charges are further cutting into appraisers’ fees, which already suffer from AMC management fee deductions.

Recently, FREA uncovered three hidden costs being introduced by AMCs – which of these have you experienced?

Technology Usage

An increasing tendency among AMCs is the passing of technology fees on to appraisers. When an AMC orders a home valuation, the appraiser must submit the report through the AMC’s authorized software. However, software providers, such as Mercury Network, charge a per-report transaction fee, which is billed to the vendor (i.e., appraiser) rather than the AMC. Essentially, in order to submit a completed work order as requested by an AMC, an appraiser must cough up anywhere from $5.00 to $15.00 per report filed, costs that add up quickly.

In effect, appraisers are taking a pay cut on top of their already-reduced fees. In some instances, when appraisers choose not to pay the fee up front, they must keep their credit card and other related personal information on file with the AMC, to be charged after each transaction is made. While some appraisers are fighting back by tacking on the technology fee to the agreed-upon fee for the appraisal, not all AMCs accept this practice.

Background Checks

Whereas performing background checks is a necessary measure taken by state regulators, some AMCs are now requesting these checks be done on new appraisers before adding them to their approved vendor list. Selection of the background check vendor is made by the AMC, who in turn places responsibility for paying the associated fee on the appraiser. Such fees can range from $10 to upwards of $100 per background check, and appraisers who accept the work orders before being made aware of these fees may feel obligated to pay them.

One such AMC has instituted a policy which appraisers are paying a $99 annual subscription fee and issues civil and criminal background checks on all subscribers via a third party. This company claims no liability for the accuracy of these background checks and instead places it on the shoulders of appraisers. In order to remain active on their panel, appraisers must agree to these annual background checks and renewal costs.

There is growing concern over the potential risk of fraud and identity theft that can result from allowing frequent access to their personal information. Some appraisers are responding by refusing to pay the fees and keeping a copy of their background check handy for when AMCs demand a background check be performed.

Brian L. Trotrier

Brian L. Trotrier

A former practicing attorney with more than 30 years experience in real estate and risk management. The Foundation of Real Estate Associates (FREA) has specialized in providing Errors & Omissions Insurance to appraisers and home inspectors since 1993. As a membership organization with over 6,000 members, FREA is one of the largest and most well respected professional associations in the country, providing E&O Insurance for appraisers and inspectors as well as educational opportunities, member benefits, and legal support.

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5 Responses

  1. David 25 years says:

    I feel the crunch of these added fees, and yes I’m beginning to add them into my fee. I really have a distaste for the background checks as I need these things to have my state license, so why isn’t this good enough. Just like UAD it’s another form of control.

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  2. Retired Appraiser Retired Appraiser says:

    Dear Appraisers:

    Take a moment from your busy day to read the bio of Harland Sanders on Wikipedia. You may just be stunned by this guy’s path to success. He may have lacked for education but he made up for it in COMMON SENSE and determination.

    Colonel Sanders would refer to anyone wasting their time as a residential appraiser as a “Bovine, Clodpated, Citified Moron”. He would then attempt to knock some sense into with his cane. Sanders was quick to recognize an opportunity and just as quick to recognize a wastrel who was pretending to have a career.

    Study the man appraisers. There’s a hint in there for those who are still clueless after five years of paying extortion fees to banks.

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  3. Jeremy Hall Appraisals - Colorado Jeremy Hall Appraisals - Colorado says:

    During my many year apprenticeship, the fees were 350 to 450 on average, with many coming in at 550+. That’s a frozen compensation structure anyways, and it’s going backwards, not forwards. Analysis of comparative fees to remain commensurate with brokers and salespersons, points to a $750+ appraisal fee per standard order. I’ve dropped all the amc’s who distribute unfairly, or pass off costs. This industry is falling apart quickly due to external pressure. One obvious problem is bundled amc and appraiser fees which provide financial incentive to drive down appraisal fees for variable opportunistic profit. And another problem is the issue of business expenses, and amc’s forcing their chosen business expenses upon appraisers. Lenders and amc’s should be insisting that these pressures not be applied to appraisers. Myvaluetrack software provides a web portal that can be used free of charge for appraisers. Suppliers of appraisal distribution technologies need to get their head out of the dirt, and force a position where these fees are not levied upon appraisers. I already pay for software, email, and high speed internet access, so on my end, I’m covered with the necessary technology. If the amc’s and lenders want a pay per use system, they should be the ones paying for it, because alternative free to appraiser per use systems are readily available and comprehensively structured already.

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  4. Jeremy Hall Appraisals - Colorado Jeremy Hall Appraisals - Colorado says:

    Sorry, provided the wrong spelling for the product reference. I’m not associated with this company, but find this software easy to use, simplistic, and best of all, it never costs me anything to use. Also I don’t worry about data privacy issues, because it’s not some central portal system where a third party is actively managing anything and charging for that service. It’s merely a portal software program. Would be nice to see more clients using this. / http://www.valutracsoftware.com I think is the right website, but I’m not entirely sure. On the appraisers end, this always reads as myvalutrac software.

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