Influencing the Appraiser

The AMC Control Over the Appraiser and the Content of the Appraisal Report

The AMC control over the appraiser and the content of the appraisal report…

The biggest issue that threatens the appraisers and the appraisal industry is the AMCs intrusion into the appraisal process. Many competent and experienced appraisers have left the industry due to the AMCs involvement in the appraisal process. The AMC is the most influential party in the appraisal process and they control the money which comes from the borrower and goes to the appraiser which gives them the power to dictate to the appraiser. The intent of the AMC process was to put a firewall between the production department of the lender (Loan Officer) and the appraiser, to reduce or eliminate influencing of the appraiser. What has happened is that the AMC is now the major influence on the appraisal process and they are not the “User” or “Intended User” and do not sign or take any responsibility for the completed appraisal report. They control the content of the appraisal report and what it must or must not contain, how much the appraiser is paid and when the appraiser is paid. They also require changes in the appraisal that the appraiser need to make to the appraisal report after it has been completed and sent to the AMC before they will send it to the lender which is listed on the report. I believe that this is or should be a violation of USPAP when a third party who is not the “User” or “Intended User” requires that the appraiser make changes to a completed appraiser report before it is forwarded to the lender.

Other ways the AMC influences the appraiser and appraisal report:

this gives the AMC control over the appraiser and the content of the appraisal report…AMCs require that the appraiser sign an agreement prior to receiving appraisal assignment from them. These agreement often contain requirements that no prudent business person would agree to. However, the appraiser has little choice since the AMCs control 75-80% of all appraisal assignments. You may ask why the appraiser would sign such an agreement. The answer is simple. Sign the agreement or close your doors. When you get an appraisal assignment, typically it will come with instructions from the lender on what their requirements are for this appraisal report. This is usually one page or less. The AMC will include their instructions and requirements which can be 8, 12, 16 or maybe 20 pages. This is in addition to the requirements of the lender. Since the AMC collects the fee from the borrower and pay the appraiser, this gives the AMC control over the appraiser and the content of the appraisal report.

The problem is compounded by the fact that over 80% of all states have no policies or procedures for monitoring the AMCs. The federal regulations give the states the power to regulate AMCs. However, most states only require them to register, pay a fee, and do not have a procedure in place to file a complaint or have any requirements on their operation. Most states do not enforce federal regulations on AMCs.

The industry has lost sight of the purpose of the appraisal report. The purpose of the appraisal is to assist the lender in evaluating the risk of a loan request. It is not to protect the lender from a loss or a foreclosure. In my over 20 years as a Banker in lending, much of it as a senior lender, I never saw one mortgage loan that went into foreclosure do to a faulty appraisal. Appraisals do not make loan payments, borrowers make loan payments.

There are solutions to these problem. However, most appraisers are independent business people and cannot afford to fight the AMCs which are large national companies. If we want to make the appraiser truly independent we need to level the playing field and remove the pressure which third parties such as AMCs are putting on them.

John Pratt
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Image credit flickr - David Blackwell
John Pratt

John Pratt

Self-employed since 1999. Banking Industry for over 20 years: Real Estate Loan Officer, Commercial Loan Officer, Manager Loan Dept, Senior Loan Officer in charge of Lending. President & CEO of an Independent Bank in California. Chief Financial Officer of 2 startup firms in Silicon Valley which raised over $5,000.000 in startup venture capital. He also conducts meeting which are open to all appraisers on a monthly basis with an open format discussing anything related to the appraisal industry.

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29 Responses

  1. Cynthia Lianna on Facebook Cynthia Lianna on Facebook says:

    This is why I’m no longer an appraiser.

  2. Avatar Jack of all Trades says:

    There are so, so, so many things wrong with this profession, that fees are only just a part of the problem.

    • Retired Appraiser Retired Appraiser says:

      The fees are 99.9% of the problem.  I would jump back into the “profession” and swim across the river Manure on a daily basis like the rest of you IF fees were commensurate with what is now required of appraisers.  Considering the increased liability (10 x) and the amount of time now required to complete reports (2.5 x) fees should be at least $800 for a simple 1,000 sf home.  AMCs could tack on $25 for broadcasting their orders if they wish.

      People will put up with a great deal of crap in their jobs IF they are paid for doing so.

  3. Avatar Chris says:

    Very true and very well written. I refuse to work for most AMC’s. Thanks to the VA.

    Thank GOD for the VA. All lenders should have followed the VA rules. There would NOT be cancels 1 day before the inspection, or even sooner, so that the AMC can make an extra $10.00. Borrowers would be paying less than they are now. And appraisers would be willing to work again for a fair wage and NOT be stressed by most AMC’s.

    A national lender, i have been told, is MAKING 10 MILLION a month on ordering appraisals.

    Times that by 7 years !!!


    • Avatar bill johnson says:

      In San Diego County CA Chris the wait time to get you number called to the VA panel can take 10 years if you lucky (1,000 appraisers in the county / 5,000 within a few hundred miles), some people have never been able to get on the panel. I often refer to the 4 year degree, 2.5 years of apprenticeship training and the fill in the blank (in my area 10 years / VA panel) before one can be fully employable (16.5 years). When I ask real estate agents if they would wait 16.5 years to be able to practice in the zip codes of their choice (similar analogy), they stare at me with a blank look. Our issues, are local, city, regional, state, federal, etc.

  4. Avatar Ken B says:

    John, this sentence state what the problem is, “The AMC is the most influential party in the appraisal process and they control the money which comes from the borrower and goes to the appraiser which gives them the power to dictate to the appraiser.” I have seen AMC use this as leverage to get appraisers to violate USPAP. Something needs to change and soon.

  5. Avatar Seneca says:

    Name another business model that works like this?

    • Retired Appraiser Retired Appraiser says:

      Managed healthcare is the only thing that comes close (think Humana).

      Both the healthcare model and the AMC model narrowly escape being defined as extortion by incorporating the Robbin(g) Hood twist.  “We protect one group while collecting our fees from the potential abuser”.  Both models fall under the umbrella of legalized extortion.

      Neil Young hinted at the future of appraising (AVMs) nearly four decades ago with his song Sample & Hold.

  6. Avatar Koma says:

    I’m thinking it won’t change unless the borrowers start to complain or there’s a big scandal involving these AMC’s (other than the obvious one of taking up to have of the fees, not from me, for doing nothing). Unfortunately nobody is listening to us appraisers.

    Not to tell anyone how to run their business, but I ask and receive my fees from all my clients (3 are AMC’s for the past 8 to 10 yrs) and they pay because if they don’t I won’t do it.

  7. Greg Wilkinson on Facebook Greg Wilkinson on Facebook says:

    Most AMC’s are shady as hell. They want fast and cheap. And if it’s an AMC that is owned by a lender they want ALL contract prices supported even if it means fudging the numbers. We fired every last one of them. They can all go to hell.

  8. Bubba Jay / Retired Appraiser II Bubba Jay / Retired Appraiser II says:

    with lenders and regulators pushing appraisers out of the business, any intrusion and influence of mortgage appraisers will soon be a thing of the past anyway, so dont even worry about it.

    just announced today:

    i heard Wells Fargo is also now skipping the “conventional” appraisal process and has gone fully automated too. face it, its only a matter of time now till most if not all mortgage appraiser businesses go broke and implode.

    (ironic isnt it, that the states, the feds, the lenders, have all over-regulated and over-burdened mortgage appraisers to death with all their BS and now it takes forever to do an appraisal, but are now bitching because it takes too long to do an appraisal?) DUH.

    SO – does this explain why it has seemed that nobody ever cared that the mortgage appraiser ship was obviously is sinking? does this also explain why ZERO necessary changes have been implemented or have even been attempted? certainly seems possible.

    this article proves that us “alarmists” who have wondered WTH was going on, and have yelled about the profession imploding and going completely automated, were right after all. those who also said it was “a plan”, get double bonus points.

    plenty of data has been gathered over the years thanks to appraisers. should be interesting to see where reliable data comes from in the next decade or so as that data becomes old and obsolete, and all the appraisers are long gone and not coming back. most realtors are too stupid and lazy to fill out an MLS sheet properly, so i doubt reliable information will be coming from them any time soon. NAAR is too big to force their members to do accurate work.

    for those mortgage appraisers who are are too young to retire, i recommend this service:

    give yourself plenty of time. there are plenty of good paying jobs out there that carry none of the BS, pay well, give you a life again, allow you to sleep soundly at night, and come with full benefits, but it takes time to find them.

    this should be a very entertaining show to watch over the next few years. popcorn ready baby!

    • Cynthia Lianna on Facebook Cynthia Lianna on Facebook says:

      They never wanted appraisers in the first place. They just want a rubber stamp.

    • Retired Appraiser Retired Appraiser says:

      Thanks for the update Bubba!  This is great news by the fact that it may finally awaken appraisers to the future of appraising (there is no future in appraising).

      Ignorance is bliss though as tens of thousands appraisers will ignore your update and continue to toil away within their tiny cocoons. It’s only a matter of time before they realize their cocoons are death traps.

      You can leave now appraisers (voluntarily) and with a few cents left to your name or you can be kicked out of the business by AVMs penniless.  The choice is yours.

  9. Avatar TruthBTold says:

    Yeah and now that business is getting slower, look for the “sell out” reviewers at these AMC’s to “create” additional revisions so they can justify their position and avoid being laid off during slower times.

  10. Cynthia Lianna on Facebook Cynthia Lianna on Facebook says:

    Maybe if they didn’t wait so long to order the appraisal in the first place. We’re not the ones holding up the process.

    • Avatar koma says:

      Or stop shopping around for the lowest fee! I submit my fee then two days go by nothing. The third or fourth day arrives and what do you know they have accepted my fee, but guess what now I’m out 7 days and your now at the bottom. Lenders WAKE UP!

  11. Avatar Tom D says:

    i got sucked into this business during the golden age of appraising.  such fond memories of that time.  now it’s like watching the walking dead.  now sure where i fit in, maybe one of the original survivors just hiding and surviving.  hoping to get to the end, before someone bites me. 

  12. Avatar Michael Curtis says:

    The only reason why the AMC’s exist at all is because appraisers are such poor business people.  Most did not pay attention to their client’s needs.  They were only interested in doing the report and getting paid, rather than courting their client to keep their business.  Lenders found it easy to deal with a single management company rather than 10 or 20 separate appraisers.  Lenders were not, and are still not, forced to use AMC’s but find it less of a hassle.  AMC’s are like drugs; you just have to say no!  If more appraisers would do this, the AMC’s would be out of business or would be paying higher fees.  It is appraisers that accept the low fees and quick turn times to “keep their doors open”, that keep the AMC companies in business.  When I recently bought my house, I had to pay the lender $600 up front for the appraisal in order to get the loan started.  When I talked to the appraiser, he was only getting $275.  He only accepts AMC work so he can keep his doors open.  I have been an appraiser for nearly 33 years.  I do work for a couple of AMC’s that will pay me a decent and fair fee.  I get too many requests for work at the fee I charge to compete with appraisers who accept this dirt cheap work.  I produce a high quality work product and will not lower my standards for a low fee.  If it comes to the point where all I can get is AMC work, I will sit at home until I can get some decent work.  If none comes, I will either retire or find something else to do to pay my bills.  No sense in blaming the AMC’s guys; we did it to ourselves.

    • I partially agree with you, Micheal. Creating large appraisal firms was the response appraisers had for lenders that wanted to work with fewer appraisers. This business model allowed appraisal firms to “court” their clients. No doubt appraisers are to blame for some mistakes. But, your overall conclusion is like the kid being bullied for several months and when he finally fights back you blame it all on the kid for fighting. Lenders are “supposed” to do whatever it takes to maintain the integrity of collateral and a very large portion of this nation’s economy is hanging on real estate. There is overwhelming evidence that it’s about the lenders creating a system to make a profit off regulation that they are required to adhere to. Instead of them paying for their expense, they pay for it from appraisers fees and even make a profit.

      The most blame I have for appraisers is assisting appraiser “want to be’s” in getting their license fraudulently. Signing experience logs that were totally bogus. In Los Angeles, it has created a huge oversupply of appraisers allowing lenders to dictate fees. Maintaining an oversupply of appraisers is what the lenders want. That’s why they support doing away with the degree requirement. And finally and sadly, I just learned yesterday from an office Xmas party that the lenders that are offering these quick, ten-day approval loans, are using the AVM’s from Corelogic, based on a “confidence” score to determine the value of the property.  

      • Avatar koma says:

        TBT I just completed two appraisals and both were under size (GLA 1,000 sf +) than what was listed in the public records and have not had an appraisal within the last ten years. Let them lend using AVM’s because we cannot be blamed for the next coming disaster. I will sit back and watch the burn and switch back into doing all the foreclosures on those properties that had AVM’s…ching…ching

      • Baggins Baggins says:

        Welcome to your future if your local MLS approves the Corelogic Matrix MLS program.  Resist the Matrix!!!

  13. Avatar Michael Mendenhall says:


  14. Baggins Baggins says:

    Amc licensing as a company was a smoke and mirrors illusionary effort.  License all amc employees.  All should undergo records testing, take classes and be held personally accountable.  Some of these guys simply shuttle orders and to outsourced underwriting possibly overseas.  They run auto tools because that’s their only effective tool, to judge performance.  It’s all that’s left to judge if you’re not qualified to participate and contribute anything meaningful to valuation security.  Amc’s should hire appraisers for order distribution but it’s no coincidence the appraiser has less chance to run as an amc order distributor than a used car salesmen.  Amc’s are like telemarketers with one and only one list to run through.  These days the list gets recycled more frequently.  I don’t know, I’ll still work with them but typically apply a 100 to 200+ upcharge for the hassle factor of having to educate menial unlicensed employees all the time and also deal with irrelevant change requests.  With so many lenders moving back to direct, who even has time for amc’s any more?

  15. Avatar TruthBTold says:

    Just wanted to disclose the manipulation that goes on with the AMC’s. So right before the holidays, and just before the anticipated slow period that is predicted to come, a major AMC I do business with has issued a request to “revise” your fees if need be. This is an obvious suggestion that appraiser fees should be lower because there is less volume. Appraisers, your worth and pay are based on your time, expertise, knowledge, liability and several other things. You should not be trying to reduce your worth to accommodate your clients business problems. Especially if your client is an AMC that makes its profit by taking away what you should be getting compensated for! What other profession do you know reduces their fees because the volume is down. “Pimps and Prostitutes”. AMC’s / banks attempt to do this because they have created an oversupply of appraisers and know that many appraisers will starve if they don’t reduce their fee to continue to get work. To all you newer appraisers who seem to be the ones that think that this is commonplace for the appraisal industry, think again. If you are working as an independent appraiser and you’re trying to accommodate your client’s problems, “your business” is not going to succeed. If you are a staff appraiser, you’re being treated like an employee having to meet someone else’s timeframe and rules (oftentimes values), but all the liability including your license, is solely on “your” actions. If you get sloppy trying to make more money completing more appraisals in a shorter period of time (typical staff incentive), and your work gets questioned by the State, you will never be able to use anything that your employer requires you to do or “puts you under so much pressure”, as an excuse for sloppy work!!!!!

  16. Avatar Fritz Vogel says:

    Control is ultimate. If I want to get paid for work performed I have to play by their GAME. Not USPAP, NOT VA, Not FHA the AMC game.How many times have we been asked to make a “Change” or “Correction” (Really a “Change that was already Correct”, they just want it different)  in order to get our check?We already completed a report, it is compliant in all ways that we know of BUT now someone want’s a Middle initial added to a name, or Street turned into ST., really insane stuff.   If we don’t no pay, they already have a compliant report to sell/utilize but hold US hostage to make a “Change” in order for the report to be complete. 


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Influencing the Appraiser

by John Pratt time to read: 3 min