Dear AMC, Goodbye…

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Dear AMC, Goodbye - Why I'm leaving Residential Appraisal

Why I’m Leaving Residential Appraisal – Dear AMC, Goodbye!

The Law of Unintended Consequences is a law, like Murphy’s Law, which is always lurking in the background to foil the attempts we humans make to control the world around us. It is particularly true of government attempts to reduce crime. A couple of examples follow:

I used to love air travel. I was a flight test engineer at Boeing and for many years I flew all over the world for both work and recreation. Then came the shoe bomber. Now I wait in long “security” lines while thousands of security workers peer at video screens as billions of pairs of shoes go by and more thousands of security workers watch as billions of travelers shuffle along in their stocking feet. Do I feel safer now?

Then came the underwear bomber and now billions of travelers will have to suffer through crotch inspections by full body scans.  Am I even safer now?

I used to love appraising. Long before there was any appraiser regulation my clients came to me for valuation opinions because of my years of experience in real estate and their recognition of my accurate and reliable reports. Then came HVCC (Help Violators Cover Crimes). Now my clients of 24 years are not allowed to contact me. They have to order appraisals through a third party Appraisal Management Company (AMC) which takes up to 60% of my fee for their trouble. Is the consumer safer now?

I have signed up with about a half dozen AMCs. One went out of business owing me over $7,000 dollars. Three asked for all my exhibits and I’ve never heard from them again. One expected me to complete a URAR for $90. My most recent AMC has not sent me an assignment in months due to their lack of volume. Am I happier now?

I recently testified before my State Legislature in support of a bill to regulate AMCs.  My first suggestion was to support the repeal HVCC at the federal level. Secondly to ensure that a certified appraiser is on staff at the AMC to do review work and third to require the AMC to have a surety bond of $500,000 to $1 Million so payment to appraisers is assured if the AMC defaults. Others recommended that AMCs become regulated by the State Appraiser Licensing Board. Will any of these recommendations solve the problem? I’m not hopeful.

So, why are these well-meaning regulatory actions so useless and demeaning? They are re-active and not pro-active. Instead of looking at billions of pairs of shoes the security personnel should be searching for terrorists and bringing them to justice. Likewise the financial services police should be looking for appraisal and mortgage fraud and punishing the offenders; not ruining the livelihood of many thousands of law abiding appraisers in the name of consumer protection.

Personally I have 24 years of appraising experience, am licensed in two states as a General Certified Real Estate Appraiser, have been HUD approved for the whole 24 years without any complaints and have completed hundreds of hours of special education. What good has that done for me?

So what is driving this patchwork quilt of ineffective appraiser regulation? Have you heard of “The Golden Rule”? The man with the gold rules! The greed of lenders is the source of the problem and always has been. They are the ones with the money to lend. They are the ones that establish the lending guidelines that have to be followed by everyone else in the lending chain. They are the ones with the “pipeline” to keep full and flowing. When they run out of borrowers with 20% down they reduce the requirements to encourage borrowers with 10% down. Keep that pipeline full. When they run out of borrowers with 10% down they reduce the requirements again to encourage borrowers with 5% down, then 0% down, then “no doc loans”. Keep that pipeline full.

What about the increased risk? Well, they just pack the loans up and sell them off to someone else in a mortgage backed security that is so far removed from the valuation process no one can figure out the value any more … not even the sophisticated investors. (Nobody thought to ask the appraisers!)

Now it’s time for me to say goodbye to my clients and friends in the residential real estate and financial service fields.  You’ve heard of the theory of “Trickle down economics”. Well here is how my exit from the business will trickle down to you all.

Dear MLS Provider, I will be cancelling my subscription for data services at the end of my current period ($105/Q).

Dear Title Company, I will be cancelling my subscription for data services at the end of my current period ($85/mo)

Dear Software Company, I will not be renewing my annual software maintenance agreement at the end of my current period ($399/yr).

Dear Board of Realtors, I will not be renewing my annual dues this year ($375/yr).

Dear Appraisal Institute, I will not be renewing my annual dues this year ($330/yr).

Dear E&O Insurance Company, I will not be renewing my policy at the renewal ($500/yr).

Dear State of Washington, I will not be renewing my Appraiser License at the end of the biennium ($500).

Dear State of Oregon, I will not be renewing my Appraiser License at the end of the biennium ($500).

Dear Education Provider, I will not be needing any more CE credits so will not need any more expensive classes ($500/yr).

Dear AMCs, Goodbye.

Dear Consumer, you are the only one I feel sorry for. I will no longer be in a position to provide you with an independent valuation for your largest lifetime investment. Your lender does not want you to know who I am, how to contact me, how much I charge, what value opinion I reach, they just want you to pay for some conforming paperwork. If they receive any bad news they just shoot the messenger.

By Michael N. Read, 2010

Image credit flickr - Zeitfixierer
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21 Responses

  1. Bryan says:

    It appears this was written in 2010. Things are sooo much better now………………………..

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  2. Donna Taylor says:

    Very well written. I’m sorry to say I will be leaving the appraisal business within the next couple of years. I have plenty of business, I’m just tired of all the BS for the AMCs.

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  3. Tricia says:

    Agreed. I have just taken an ‘indefinite leave of absence’ from my 27 year career for the same reasons, plus I am making less money now than 5 yrs. ago, for twice as many hours. So sad.

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  4. C Delehanty says:

    I went through all of the licensing classes, I joined all of the suggested groups, I looked and added up all of the costs to just get started, I looked at the requirements to be an apprentice and get your independent license.
    I came to the realization that eventually all of the restrictions to do this job were not worth the 1. aggravation 2. degrading menial work required from appraisers who “mentor” 3. the lack of realistic income levels and time required to gain your licence 4. Reading all of the complaints about the industry and how it was managed and regulated. You have to be nuts thinking it will be a good “fit” to an independent lifestyle. The patients are running the institution and there is no way in H double hockey sticks it will end up in a good way.

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  5. bubba jay bubba jay says:

    the question has been raised before – “Do they just want us to go away?”, and at this point i think we have to believe its true. if you think about the direction things are going with how outrageous USPAP is written, outsiders controlling how much we get paid and us having no control anymore of our businesses, and all the extra requirements being dumped on us on a daily basis, i just dont see how we can come to any other conclusion.

    i try to keep up with as much information as i can, and the majority of the information i see coming from our state agency is about prosecutions and convictions of appraisers. who would want to stay in any business where all people see is outsiders with influence not doing something that may actually help them, but instead are constantly focused only on hurting them?

    appraisers are logical people, we have to be, its our job. but hammering appraisers with so many things that are not logical, pushes them away even further. if i go somewhere to get my car worked on, they charge me for their time. if i ask them for more work, they bill me for that too. attorneys do it, trades people do it, any business does it, but not ours. nobody should be expected to work for free or as little as we are getting all things considered. look at a plumber – they get paid well and for their time, and all they have to worry about is getting theirs clients shoes wet. they have to do their work by a code book that changes once a year. we have no code book, and our requirements can change daily, (often without any notice), and often are different from lender to lender. if we dont keep up with those requirements and meet those requirements, then we are violating USPAP, and we can get prosecuted for it, and right or wrong, have to spend thousands of dollars because of it. just lovely. does anyone not understand how difficult this job is nowadays? and then on top of all those requirements and all that liability hovering over our heads, we are allowed to get pushed into a bigger financial hole every year. why?

    why is all this allowed to happen? nobody is willing to stop the bleeding? this is how we expect to keep good people? this is how we expect to attract new people? the goal has to be to push everyone out, it just makes no sense otherwise.

    appraisers are some of the smartest and most ethical people i know. we have discussed in forums for years all the problems we face, how our problems can be fixed, and what product these problems will produce in the near future. has anyone listened? nope. does anyone care? i dont think so, and i really think now its all on purpose. how can it not be? if the plan is for us to go away like the vinyl record and the cassette tape, then so be it. i have accepted that and i will continue to retrain myself so i at least have a backup plan for me and my family when i need it.

    am i crazy for think this way? maybe. but after looking at everything that is going on, and then on top of all that, getting emails telling me that i also have to now spend my time writing letters to all my AMC’s informing them that their license is about to expire, i am left with no other choice but to wonder what the heck is going on? our scope of work now includes doing our states work too? is taking the loan app and pulling credit right around the corner for us? i understand i cant take an order from an unlicensed AMC, but how about telling the AMC if they send me a order they will get fined heavily? why is the monkey getting thrown on our backs again?

    again, if the goal is to kill this business and every other business affiliated with this business, then we will just have to accept that and move on. but if it isnt, then someone sure is doing a rotten job making us think otherwise.

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  6. I feel the author’s pain, but I have a different perspective based on lifelong lessons from my father.

    I do not quit. Not ever.

    I did not quit when a lost helmet in the last play of the season made it painful to block during high school football. That effort got me my school letter despite being 3 quarters short. It was worth the headache.

    I did not quit Boot Camp in 1969 when at 129 pounds and six feet, very few thought I’d make it. To this day I am proud of my earned title United States Marine.

    I did not quit when my city council (1986) started abusing my fellow live aboard boaters. Instead, we replaced 4 out of 5 of those members; one harbor director, made them appoint a harbor commission rep that actually knows what boats are, and forced them to draw a completely new general plan. Certain Army Corps of Engineers also had to redo hydrographic studies.

    I did not quit when HVCC came along. I went to work as a senior appraiser for a federal agency that I had been fighting vigorously for over 25 years (IRS) . I did not quit after I ’embarrassed’ my boss “suggesting” she sat on a million and a half dollar refund for over a year and she tried to force me to resign. When I was eventually terminated after a case was constructed over 6 more months; I took her down with me. I do NOT quit, not ever. When I err, I am the first to admit it. When I have not, do NOT make the mistake of thinking my polite attitude is acquiescence. By the way, my ‘gift’ to IRS was to post their (unclassified) policies on Discounting for Lack of Marketability DLOM, which major CPA firms accessed off my site for three years before IRS posted it on their own.

    I rebuilt my appraisal business from scratch. Like the author, I too lost contacts and clients of over thirty years standing. I sought and continue to seek new ones. In four years I went from my home office to one on PRIME Wilshire Blvd., in Beverly Hills.

    When my ‘peers’ accept $300 sfr fees; and as low as $185, I still do not quit. I seek to educate them, instead.

    I joined my state appraisal coalition (CCAP) . Recognizing that is not enough, I also joined a national appraisal guild that is part of the oldest Union in America. I do not quit!

    When UAD was implemented I did not quit. Nor did I quit when CU came along. I educated myself.

    Crooked politicians and dirty players in my profession had better fear me, rather than thinking that I should fear THEM! You guessed it, because I DO NOT QUIT!

    For those of you that ALSO do not quit, join me in the American Guild of Appraisers (AGA). Yes, it IS a union, but it is NOT your grandfathers union. It is OUR union. YOURS and MINE. I do not blindly follow opportunists. I work WITH like minded appraisers trying to reclaim our profession.

    Together we can show those that need and use professional appraisal services, that WE DO NOT QUIT!

    We WILL reclaim our profession.

    Call me at (714) 366 9404 or email me at mike@mfford.com for information on joining our California Chapter AGA, OPEIU/ AFL-CIO. Alternatively call Jan Bellas, National Membership Coordinator at AGA, or Peter Vidi, President. Her number is 1(800) 660-1835. The website is http://www.appraisersguild.org.

    It’s long past time to stop WHINING and start DOING SOMETHING CONSTRUCTIVE!

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    • Retired Appraiser Retired Appraiser says:

      I love your can do/do not quit attitude Mike but I simply refuse to believe it applies in this situation. Nothing and I repeat NOTHING positive has happened within the appraisal profession over the past six years. In fact, every change that has been been implemented over this time period has had serious negative consequences on the appraiser.

      Collect at door (sorry…it’s gone)
      C & R Fees (if you consider working for 1990 fees fair)
      More work load (do 1004MC, UAD, CU ring a bell?)
      Cheaper Software, E&O, & MLS Fees (not hardly)

      The only thing that seems to be going the appraisers way lately are the gas prices. LOL

      Persistence and a refusal to quit often make the difference between success and failure. This does not apply in this case however (think buggy whip manufacturers).

      A residential appraiser is more likely to reap a greater return for their effort in launching another business venture rather than spitting into a 200 knot headwind (trying to rebuild your appraisal business).

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      • RA- As usual, I still disagree with you. IF I am to become the last buggy whip maker in America, then I will become the BEST buggy whip maker in America and find my niche.

        We have made tiny steps in the right direction.
        1. Many states now have AMC regulations. They need work, but they exist.
        2. A lot of appraisers that are philosophically opposed to unions, HAVE joined state coalitions. Once they realize that organizations ALREADY LARGE ENOUGH to get Congress attention are also needed, I have hopes our Guild will gain support and grow.
        3. We are going after the unfair manner in which black lists are used and disseminated in the industry, depriving appraisers of the most basic due process.
        4. We are going after the reasonable part of C&R…which has never been the focus of anyone, except for lip service.
        5. I am volunteering for the Guild to do “peer review” of appraisals for those wrongfully accused of unsatisfactory work. Where warranted we will educate; but try to do so in a way that preserves honest appraisers right to earn a living. When needed we will step in to help defend.

        RA, We may or may not prevail in every effort. We may not even prevail in most efforts. What we WILL do is to at least make the effort to save our profession.

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      • Retired Appraiser Retired Appraiser says:

        I certainly appreciate the effort that you guys are making; I just don’t see myself living long enough to survive such a fight (I’m 53 now). During 20 years in the business I spent years building it from scratch and was forced to rebuild it a second time when we lost two HUGE clients to appraisal rotation requirements around 2004. We managed to make a comeback from that fiasco. When HVCC hit in 2009 I knew there was no way I would waste my time struggling to stay afloat and rebuild again. Applying that effort elsewhere paid off for me. Walking away was the best business business decision that I ever made with regard to the appraisal business.

        I appreciate your point of view though Mike and I’m glad that it’s working out for some people. The thumbs down wasn’t mine BTW. I gave you a thumbs up on both posts.

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      • RA you’re just a kid! Waaay too young to ‘quit’ / retire!
        *G*

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      • Retired Appraiser Retired Appraiser says:

        I was 48 when I quit/retired. I saw the writing on the wall then and refused to wait around for them to chisel it onto my headstone as well.

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  7. Retired Appraiser Retired Appraiser says:

    Congratulations! You’ve made the decision to join the ranks of a truly elite group. Those who REFUSE to continue being raped under the new rules (AMC fee plunder, CU, 1004MC, etc.). In my opinion you’ve just joined the most intelligent group of appraisers in the U.S. today. If ever there was a time in your life to burn bridges this is the day…lest you be tempted to return in the future. Burn your license tonight or mail it to your board covered in feces with a note stating: “As a professional appraiser, I have found that the highest and best use of this license was toilet paper.”

    I encourage more of you guys to step up and make the only intelligent decision regarding your appraiser’s license. There are careers out there and each of you deserve a better life than the one you are leading as a residential appraiser.

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  8. Bryan says:

    Ya know – if EVERY Appraiser said NO to EVERY AMC the majority of the issues would fix themselves. What – Appraisers stick together?? 23 years and I haven’t seen that yet. I will throw down the challenge: NO AMC ORDERS FOR 30 DAYS – NONE – ZERO – ZILCH. Refuse them all. Take a vacation. Rake your yard. Tell the institution that is using the AMC you will gladly accept the order directly from them. Eventually they will need your report -they haven’t eliminated the need.

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  9. Bryan,

    I like the thought but its impractical. Why?

    Say B of A decided today to phase out its LandSafe Division. They have to replace it with something that works across the full spectrum of their entire residential loan programs.

    IF their Board decided (again) today to do that, it would still take them two years plus to implement it. Banks have divested themselves of their appraisal staff and self administered appraisal policies. They now depend on AMCS for compliance with Dodd Frank and other federal regulations.

    You are right on the other side though. We DONT collectively do enough. How about you? Join the AGA today IF you’re serious.

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  10. Bryan says:

    Michael,
    I belong to ICAP – my state’s coalition. They are amazing! You do bring up another Dodd-Frank water down though – Banks owning the Appraisal Management Companies they use. Worked so well for Countrywide they moved it over. If appraisers would not accept orders it would not take a year to figure something out. They would be so shocked we stood up for ourselves they would have to get up off of the floor! It is all a business decision. We have a couple (and I mean a couple) AMCs that pay well and soon. No crazy contracts to sign and no “look over these 20 comps” stuff. Anyway – the post that started this is 5 years old – kinda funny.

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

    Appraisers have a tough time reviewing the big picture, because we’re very limited in our participation in the lending process. The big picture with recent regulatory changes is smoke and mirrors to create the illusion of market correction and attention to necessary regulation. Meanwhile the Fed has still not been audited, and the market pricing points are essentially controlled by the rate. Rate alteration is a sellers market game, always has been, and always will be. Lender consolidation and extreme reduction in competing lower level banking and CU institutions is a major factor behind many new regulations. Monopolistic structure always seeks to eliminate the competition and corner the market. Regulatory bodies are eventually filled by the same companies they’re supposedly regulating. That’s called regulatory take over. The appraiser is a function of the checks and balances system, and I do not believe the focus on the appraisal for additional regulatory requirements was well intentioned or well focused at all, to respond the the article writers comments directly. A well intentioned regulation would be fines based on income so that lady justice could put her blindfold back on and there would be an appropriate financialized incentive for the various legal mechanisms that are supposed to be in place, to be effective. It’s impossible to pursue major corporations for wrong doing, because it’s not cost effective to do so and legal firms will go broke trying. That’s why we’re seeing all these cash settlements with major lending institutions with no jail time for people who admittedly broke the law and profited greatly from such action. As the fines do not exceed the gain, the game continues. No amount of additional appraisal scrutiny will secure the risk generated from those activities. But appraisal regulation makes a great smokescreen to keep the focus away from the major players who made billions on pump and dump schemes, and are continuing to do so. Did you read the one how AZ appraisers appraisal board is shutting down, and now appraisers will be regulated in what appears will very likely be a conflict of interest setting? If you don’t understand the function of the appraiser is a checks and balances tool, meant to secure the viability of lending institutions for the good of the United States citizen base, you don’t understand your own job. Keep up with appraisal? Hopefully, but if I do leave, I’ll never abandon the tenants of the checks and balances system. It takes a patriot these days.

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  12. claire ryder says:

    Don’t do AMC work!!!! and don’t put up with the bs!

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  13. Gene says:

    After 15 years of appraising I have decided to turn this work into a supplemental income. Why? Appraisers are attacked by realtors, home owners, underwriters and the like. Everyday I check my mail box and pray it is not a letter from my state appraisal board regarding a compliant from a homeowner or a realtor. No one respects you as a professional…the bias homeowner, realtor will challenge you and reviewers who are not appraisers for AMC’S will challenge you. Every year it is more stuff piled on the appraiser….UAD, C.U. 1004 MC form but yet the income does not rise. The AMC’s are pushing for 48 hour turn times which is tough to produce a credible report with such short work times. Also, the AMC’S are now making appraiser’s bid for jobs. What this does is lower the fee and you have no control if you will get the assignment or not…the AMC decides who gets the job. Your income is in the hands of a AMC. I have bills to pay and a wife to take care of and they are playing games with my income!!! AMC’S also have a tier system…if you are not in the top tier, you will not get first dibs at the assignments. This is bad news for the appraiser today. You can not rely on this for income.  My education is in a non appraisal field and I am waiting on a offer from a company as I write this. I will not let my license lapse as it was a lot of work to obtain it…but i will complete one appraisal a week on the side and use my full time income as security. I also believe the  interest rates will rise in the fall of 2015 and then the game will be over for the fee appraiser relying on mortgage work and AMC’S. Please be proactive and plan for life outside of appraisals.

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