AMCs Billing Scheme, Hidden Profits & Deceptive Practices
Appraisal Management Companies (AMC’s) do not pass on cost savings for reduced appraisal services to consumers. Instead, they keep the savings for themselves without disclosing the amount to the consumer or the appraiser. What should have been cost savings for the consumer are pocketed by the AMC in secret. This is considered a junk fee or unearned fee billing scheme under current law.
Appraisers who participate in this system are in violation of The Management Rule of USPAP, and providing “a thing of value” to the client, in order to be selected ahead of other appraisers. They know very well they are participating in concealing transparent billing from consumers; they agree to as much in AMC engagements. They know when they reduce the appraisal fee, the AMC company keeps the difference, the very financial incentive why that appraiser gets all the work ahead of other appraisers.
Where as with alternative more honest models, like direct lenders or VA panel, who have fair fees set per region, all appraisers get that same base standard fee and there is no financial incentive to drive the appraisers fee down, drive the consumers fee up, and secretly pocket the difference. In fact, those same fee tables are what they pay the AMC’s and bill the customers for, prior to the farming out of the order for discounted appraisal services. Discounting for AMC volume is nothing short of a gratuity fee or a bribe.
Federal Registry guidance previously clarified that entities who assign appraisal orders, must not assign solely based on fee, but rather skill, experience, qualification, merit, and geographic competency. Read the actual rules here.
‘Please advise when the fictitious safe harbor rule pertaining to Customary & Reasonable billing will be rescinded.’
Appraisal management companies often force appraisers to adhere to unethical engagements, which not only violate antitrust laws but also create an unfair playing field. By enforcing hidden billing methods and excluding appraisers who do not comply, these companies are essentially creating monopolies and engaging in price fixing and collusion. This not only goes against ethical business practices but is also illegal and can be considered racketeering. Appraisers who do not agree to their hidden billing methods are excluded from the majority of the GSE lending marketplace for appraisal orders. This creates unfair competition. It is crucial for the authorities to take action against these practices to ensure fair competition and protect the integrity of the appraisal industry.
The subject of the past three articles has been appraisal management companies. It is clear AMC’s are a cancer to the profession / industry. Appraisers can choose to decline to work with AMC’s. The problem is many appraisers continue to work with AMC’s and sustain the corrupt business model. Look what happened to Bud Light. Boycotting does work and the same affect can happen with the appraisal industry. Hit them where it hurts.
The issue is, AMCs have been planning for that by hiring staff appraisers they control. So, you have to sign up with them to work with their clients who require you to use their AMC of choice. But, then the AMC prioritizes their staff appraisers before independent appraisers.
That is correct, and the appraisers who jump ship from their independent practice to work for AMC’s are really failed appraisers.
AMC’s control 80% of the lending work. That’s pretty hard to ignore as an Indpendent Appraiser…………… don’t ya think.
95 – 99% of my business is direct lender and 1 – 5% is private. It can be done. That is a myth that too many appraisers believe that you have to work with / for AMC’s to sustain an appraisal business. The reality is many banks / mortgage companies do not like AMC’s either.
Cool for you city boys. Rural Appraisers have to work with everyone they can. Nobody in the process likes AMC’s – they don’t even like themselves, it’s just a cash grab created by the Feds and it needs to stop.
From Class Valuation Regulators???
So basically they are saying they’ve researched fair and reasonable fees in a particular and that is what they are offering the appraiser? Sure doesn’t sound like it to me. Seems to me if an appraiser has statistical, reliable information of what that is and responds with that they need to accept it and not look for a price lower than that. Their talking out both sides of their mouth is bs. Appraisers need to feel a little pain and stop screwing themselves over and over again. Tell them to take a hike if your interested in doing this kind of work. But, I don’t see that happening. Appraisers will sellout there mother for $25. All why shooting themselves in the foot.
One of the main challenges facing the industry is the dominance of AMCs, which account for more than 60% of the work volume. This leaves most professionals with little choice but to accept their low fees and unfair practices. To address this issue, we need to tackle the root cause that has been undermining the industry for a long time.
Excellent. I’m reading some older Mike Ford articles. Mike, we need you now. He wrote the best in depth articles, hands down, without a doubt.
For people late to the game; Please take time to review any number of Mr Fords previous articles. He was a prolific and detailed author from about 2015 to 2020. Nobody is as well informed through both the professional administrative side and the working side for every day appraisers as Mr Ford.
https://appraisersblogs.com/author/mike-ford/
Collateral Underwriter, what’s under the hood?
https://appraisersblogs.com/collateral-underwriter-under-hood
Although not the focus of this white paper linked below, the statistics regarding appraisers and how many appraisals were associated with amc’s, provided invaluable insight regarding how many appraisers no longer were willing to provide GSE lending side work appraisal services, as well as proportional relationships of amc related appraisals dropped into the CU system, vs what was not amc related.
https://appraisersblogs.com/FHFA-working-paper-credibility-questioned
FHFA working paper credibility questioned.
quote: Following the implementation of HVCC, lenders searched for ways to achieve and to demonstrate the segregation it required and turned increasingly to using appraisal management companies to this end. This suggests that their potential to act as a firewall between loan origination and collateral evaluation, outweighing their other reputed value additions, ultimately caused AMCs to flourish.8 This trend brought a considerable amount of anxiety to the appraiser community, however. The U.S. Government Accountability Office (GAO) reported that, according to mortgage industry participants, AMCs “typically charge lenders about the same amount that independent fee appraisers would charge lenders when working with them directly” and absorb at least 30 percent of this fee.9 Many appraisers believe that as a result of this, an appraiser’s marginal compensation per appraisal has generally fallen with the rise of AMCs and exacerbated a long-term decline in the number of appraisers.10 The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, addressing appraisal activities among a host of topics, replaced the HVCC and to some extent responded to the concerns that arose from it. Having established appraisal independence requirements
consistent with those established by its predecessor, the act decreed that fees paid to appraisers must be “at a rate that is customary and reasonable.”11 (end)
Forgot the PAVE link. Here you go.
https://pave.hud.gov/about
The vast majority of appraisers are just individual sole proprietors. How can the decision makers have mis managed this industry this severely? Things used to run smoothly and most of the people all these rules were meant to reign in over the years, those people washed out or were de licensed anyways before most of these policies even came forth. As if any of us, just doing the best we can, most of us working from home and earning a fraction of bureaucrat pay, are to blame for systems mis management of this epic scale. Most appraisers could earn more mowing lawns or managing janitorial systems. We hang on because we believe in the dream of home ownership, fair and safe consumer navigation of complex lending systems. The very mantras of so many of these organizations which they are not upholding themselves.
Don’t some states require or allow appraisers to list fees in the actual report? My state California is not one of those. I’ve had clients state “I paid $900 for a 30 minute appraisal?” They’re obviously just talking about the inspection with measurements, photos and not the research or report writing which takes much longer. I generally only get $350 of the borrowers “appraisal fee.” I’ve sometimes though rarely seen the price borrowers pay for appraisal fees on some orders. It’s generally at least double my fee. Obviously AMCs are legally necessary because of Dodd-Frank. They obviously have business expenses and need to make a profit. I’ve also seen AMCs do in-house appraisals. Does that comply with Dodd-Frank? Do appraisal waivers comply with Dodd-Frank? Do the use of desktops and AVMs comply? A lot of technology has changed since Dodd-Frank. Maybe it should be re-examined in light of today’s market and technology.
Some states require it only disclosed in the report what the appraiser was paid. Other require the AMC fee and Appraiser fee disclosed in the report. Only 1-2 states require it on the settlement statement I believe. But 35 states have no laws requiring the disclosure and the profit made by the AMCs is clearly a junk fee that is not disclosed to the consumer.
AMCs aren’t even required legally. Any lender, bank, or broker can use a portal and operate their own approved appraiser list. They just have to have a member on their staff that is not compensated by the closing of a loan or part of the loan origination process.
Most lenders either do not know that or find it easier to farm it out to the cheapest AMC…NY State requires that an invoice be in the report that discloses the fee paid to the appraiser and the amount retained by the AMC. When this first came to be the AMC’s were in an uproar, most still do not disclose or don’t like it. I ALWAYS state the amount retained by the AMC or state that the AMC did not disclose even though it is required. There is NO oversight of AMC’s, they do what they want, when they want and to whom they want.We are totally getting screwed and no one except us appraisers care.
Colorado is awesome. Appraisers must disclose the appraisal fee, but not the AMC fee.
“In compliance with Colorado HB 12-1110, the appraiser must disclose in the appraisal report the fee paid to the appraiser for a residential real property appraisal, if the appraiser was engaged by an appraisal management company to complete an appraisal assignment.”
Wake me when the DORA board enforces anything to do with amc’s. There has not been a single substantial penalty levied against the amc industry since the inception of amc licensing in this state. Minor infractions which happen routinely are also glaringly absent. From all the agents I’ve talked to whom were to complain about amc process, to the appraisers, the constant violations of rules, nothing happens. To this very day, amc’s will demand appraisers to sign indemnity agreements, despite that being prohibited practice, and those same amc’s retain state licensing. Riddle me this, riddle me that.
All an interested regulatory person would have to do to test and prove this violation, is sign up as an approved appraiser with every amc, then document the onboarding activity, as well as the workflow activity thereafter.
Pepsi challenge; Enter your fees as $1. The amc industry is irredeemable. Because they still over a decade later, have not been able to justify their service fees, over and above what is otherwise considered a C&R customary and reasonable market rate fee for independent appraisal service. The truth is traditional lender process of direct engagement with appraisers is both more cost efficient and fair regarding appraisers compensation and consumer billing alike. Compared to the bloated amc appraisal management process. Hence, the death clutch on improperly co mingled fees. Talk to me about ‘free markets’.
Baggins, as I tried to state, the AMC CONTROL the entire appraisal process for mortgage lending purposes. Appraisers need to totally comply or get no work.
“Obviously AMCs are legally necessary because of Dodd-Frank.”
That’s not true. It was at first but has not been for years. As long as the employee ordering the appraisal report has no direct interest in the outcome a lender may order the appraisal report directly from an appraiser.
Leders use AMC’s for their convenience. The lender does not have to maintain a current list of active and qualified appraisers. They can call up the AMC and they do it.
There is a lot of oversight and costs as well as compliance for a lender to have their own appraiser panel, so that would be why they choose to use an AMC
Those guidelines regarding lenders responsibility in engaging appraisers are located in AIR, appraiser independence requirements. Separation from mortgage loan production is section 4.
https://singlefamily.fanniemae.com/media/4711/display
I’ll come through with another post for investigators and legislators to read later, busy now.
USPAP – SEEMS THAT IS PRETTY SEWN UP.
USPAP, which is the set of standards that governs the appraisal practice, states that the appraiser must not disclose the fee, terms or conditions of the appraisal assignment to anyone other than the client and persons specifically authorized by the client. Therefore, it seems that the appraiser can state what he was paid for the appraisal in the report, but only if the client allows it. Otherwise, the appraiser must keep the fee confidential.
USPAP also allows for kickbacks to getting the assignment as long as it is disclosed within the report, typically the letter of transmittal.
PD, where does USPAP state that the appraiser MUST NOT disclose the appraisal fee?
It doesn’t say to disclose or not. It does say the following though:
USPAP requires that the “disclosure of fees, commissions, or things of value connected to the procurement of an assignment must appear in the certification and in the transmittal letter in which conclusions are stated.”
So would technology fees that we pay considered something of value connected to the procurement of the assignment? If so, all most all AMC’s have this we would have to disclose this in the report, of which ANOW would not allow this nor, solidifi, CV, CFV, FRISCO, ETc.
Spencer. no. Portal fees are not connected to the procurement of an assignment. Per USPAP, the portal fee is similar to an overnight shipping fee.
However, discounted appraisal fees for volume business, paying a fee to be on an approved appraisers list, or a coupon offering a discount/reduced fee must be disclosed because they are considered a thing of value.
I don’t discount a damn thing. Keep the p**p hand strong and charge a proper fee.
Don’t you in your appraisal state: This appraisal is for the client ABCXYZ Bank and no one else? The AMC is not a user but a pirate in this game. The borrower, seller, realtor nor lawyer are “suppose to have or rely upon any information in the report”. Therefore your disclosure is of the pittance received is fine.
When you get that proof in writing let us know please
Pat to whom are you speaking to?
Great article!
ESPECIALLY THIS RIGHT HERE: “Where as with alternative more honest models, like direct lenders or VA panel, who have fair fees set per region, all appraisers get that same base standard fee and there is no financial incentive to drive the appraisers fee down, drive the consumers fee up, and secretly pocket the difference.”
The AMC’s offers $XXX for the assignment. You bid is higher? The AMC moves onto the next bottom sucker. The AMC is NOT telling the appraiser that “we’re receiving $850 for the appraisal and we’re giving you $250, but you can’t tell anyone. NO THEY DON’T REVEAL THIS INFORMATION. Appraisers are unaware of what the AMC is charging for the appraisal (not to mention their handling fee charged to the bank/creditor). Saying that the appraiser is culpable in this theft is intellectually dishonest.
When an appraiser agrees to the Appraisal Management Company’s engagement not to disclose their fee to the borrower, they are essentially participating in a form of theft. By keeping the borrower in the dark about the true cost of the appraisal, the AMC is taking advantage of consumers, charging them more than they should and profiting from their lack of knowledge. Furthermore, when the AMC instructs appraisers not to include their invoice in the appraisal report and the appraiser agrees to comply, appraisers are facilitating this deception. It is the responsibility of appraisers to be transparent and honest, and by agreeing to these terms, they are compromising their integrity. We should not be complicit in this type of deceptive behavior.
Appraisers should not be forced to refrain from disclosing their fee and should have the freedom to include their invoices in the appraisal report. This allows for transparency and ensures that consumers are aware of the true cost of their appraisal. Appraisers should advocate for fair and transparent billing practices, and by standing up against the concealment of fees, we can work towards a more honest and ethical industry.
It is time for appraisers to take a stand and refuse to participate in such unethical and deceptive practices.
Do you get a copy of every settlement statement on the appraisals you do? Are you aware of all of the fees the borrower has to pay?
“When an appraiser agrees to the Appraisal Management Company’s engagement not to disclose their fee to the borrower, they are essentially participating in a form of theft.” How is this so?
How are we facilitating this deception and how are we compromising our integrity? They are not our client. Do you follow the USPAP requirements or are you disclosing your fee if it is not required by your state regardless of what your engagement says about fee disclosure?
If this is such a problem for consumers then every state should require AMCs and appraisers fees be disclosed.
We are not paid to be advocates for the consumer.
Just my opinion nothing more nothing less.
Not for every settlement but I ask and do get them for new constructions.
Russell, can you tell me if you’re allowed to share your fee with the borrower for an AMC assignment? Do you include your invoice or have you agreed not to disclose your fee as part of the AMC engagement?
I always include an invoice in my reports, for both private and lending work.
As appraisers, we have continuously fought against any practices that compromise the accuracy and reliability of appraisals, as well as erode consumer protection. We have petitioned legislators when pressured for value, opposed the raising of appraisal thresholds, and criticized the use of hybrids, waivers, value acceptance, PDCs, and the hiring of felons as property data collectors. However, there is one crucial issue that has not received enough attention: fee transparency.
This issue is just as crucial to protecting consumers and the integrity of our profession. By advocating for fee transparency, we are ensuring that consumers are not being overcharged for our services and that our profession is not being devalued. It is our responsibility as appraisers to uphold the highest standards and to advocate for transparency in all aspects of our work.
The two states I work in require all fees pertaining to the loan be disclosed in settlement sheet. Also, this is generally true for the Truth and Lending for people getting a loan.
One of the states require my fee be disclosed in the report. An invoice is not required to be in any of the reports I complete so I do not include them.
Fee transparency is not an for me. I feel all of the other things you mention are far more important.
The consumer knows what they are paying on the settlement report. I do not know if they list the actual appraiser fee or they lump them all together as one fee.
We have to pick our battles and this is not one of mine. What other fees being charged in relation to the appraisal is not my concern because I have no control over them other than what I charge.
Maybe Ralph Nader, Senator or Representative can take this on.
Please allow me to introduce you to the concept of consumer protection.
‘The fees pertaining to the loan.’
Exactly why does the appraisers fee, which is independent of the amc total ‘appraisal services fee’, get to be disclosed as co mingled with the amc fee as one lump sum fee? Distinctly different services, distinctly different fees. Every other industry has to abide these basic consumer protection rules. Why not the valuation services industry? Did you hear the one about the CFPB looking into title insurance over charging and junk fees recently? Penalties for everyone involved are forthcoming.
Even as the amc employee or manager posted here today; The amc’s operational fees come from the total appraisal services fee which is billed to the consumer, which drives the appraisers compensation down, due to high cost of amc operations.
The traditional model; The lender paying for their own processing fees, rather than making the appraiser whom provided the appraisal service, also pay for the appraisal service processing fees. The double whammy is the lender gets to still write off the cost of doing business, aka the ‘appraisal services fee’.
The amc writes off the cost of doing business with appraisers, yet mysteriously the appraiser does not get any such write offs. The appraiser having not received the appropriate compensation for their own market service fee, as clearly established by the VA panel fee schedule, as well as the easily verifiable billable amounts from 75% of appraisers operating outside of the amc realm whom clearly and undeniably get more than twice the compensation per order for most appraisal requests. The appraiser instead receives reduced compensation, gets no write offs or taxable relief benefits from having been forced by the lender into the amc management system, lest they be removed from the majority of industry workflow opportunity.
Or if you’d prefer an alternative argument, please feel free to justify the position that among all other federally regulated fees consumers pay in relation to GSE lending, why the amc and appraisers fee are co mingled and not provided their own individual line item fee disclosure.
‘The consumer is not our client’. Then if consumer protection is not a prioritized consideration, why is there federal regulations for literally everyone involved in federal lending regarding transparent billing disclosure, except the amc industry? How can an appraiser be required for consumer protection principals, standing as an independent check to the balance, then be permitted to conceal fees from borowers to facillitate variable fee raking from amc’s?
The argument is that the amc industry is a racket, a criminal enterprise. People involved with this have no business being involved with consumer protection, on account the the entire business model being based around variable undisclosed junk fee raking of the consumer.
This; https://appraisersblogs.com/how-many-fees-are-needed-for-one-appraisal-order/#comment-40127
Argue about the semantics of the minutia all you want. An appraisers presence in the process is to protect the viability of GSE’s, protect investors, and citizen consumers investments and commitments, all on an equal unbiased basis. Appraisers whom would argue about free market capitalism, while engaging in deceptive practices, within the confines of a regulated market who’s very purpose is to provide increased transparency and accountability… Good luck, you’re going to need it.
Lest we forget that FNMA is using products that have been proven to be highly risky will still in government conservatorship and telling the sparse hope to write every report. Say this point they are an extension of the government and your contention is appraiser fees? This is but a pin prick top of what the whole we are dealing with. The only answer is for all of us to walk away and that won’t happen. Furthermore, even if we walked they would push the hybrid and AVMs even more, forget the sanding and loan scandals and the 08 crash, this would make us all blush. At least this way, with the appraisers still here working, the run away train is on the proverbial tracks. So point the finger all you want, but there is only so much one can do. The regulatory agencies are bought out and neutered; Dodd Frank, CFPB, or chasing pop culturally misguided themes of racial bias. You’re on the a very high soap box with no answers and no means to pull off what you’re saying. You create someone with actual change and I will shut my mouth and get behind it. Until then, I will grind one assignment at a time and do my professional due diligence on such creating an unbiased appraisal report at my damn fee.
This is the most serious issue affecting the profession. Some of the most unethical AMCs are Solidifi, Class Valuation, and Clear Capital. They have eliminated many appraisers from receiving any assignments and caused them to go out of business. This is unjust and intolerable. Who is going to hold them accountable for their actions?
To answer your last question: I held them accountable, along with every other appraiser who chose to walk away from appraising mid career. Think of it as a 15 year boycott….and counting.
Retired, I’m not trying to be rude, but no one noticed. Since no one noticed the boycott, the boycott was meaningless. You simply quit.
I saw the writing on the wall in 2009. Another 10 to 20 percent left around the same time. Since then another 15 percent have left and when the new form kicks in you will lose at least an additional 20 percent because of lousy fees. I didn’t say that AMCs had to take notice…I said we held them accountable for hijacking the business…and refused to participate in their criminal enterprise. Kudos to all who refuse to assist in the crime of the century.
No one is going to hold them accountable; the 3 you mentioned are bad, they always shop for the cheapest appraiser, funny thing is, when I give them my absolute lowest fee I usually don’t get the assignment as there is always another appraiser behind me with a cheaper fee. I go the other way, charge more, do less assignments and still make the same amount of money. I specialize in oddball and complex properties that no one else wants to do…
Just what I do too!
That’s exactly what I found was working for me, I had a few select AMC’s that sent me mostly complex assignments and paid the fee I quoted them. I liked being the ‘Complex Property Specialist’ because I knew my market well. Then I moved to another state, thinking I’d activate my license as my new state is reciprocal. But, after about four months of not doing any appraisals, I realized I didn’t miss it at all and decided to retire and look for a fun part time job. No regrets! I had a good run and enjoyed being an appraiser for about 20 years, and am glad to not be doing it anymore!
Nann, that makes me feel sad inside.
Agree! The first one had a Monthly Performance Rating. Via good ratings YOU could get on their Magazine Cover !! ( NO thank you.) Every so often, the State Rep’ you had was switched for a Rep’ that had been covering another State. Just so we don’t get acquainted??? Performance: The rating is their software, be it right or wrong. Several times, when a rating error was questioned, the response was “that’s no big deal, don’t worry about that. I am your local State Rep’. I decide whether or not you get an order.” (One would assume, you’d be asked for a Revision first.) However, because the error was never “fixed”, it can & will be used against the Appraiser (Their way out!). And If you don’t accept ” their Fee “, the order is declined, so you are also rated on Acceptance of Orders. If you counter the Fee, their quote was “someone else will. If you want to receive work, then accept the assigned fee.” Loose Loose situation. Exception: They start by getting a Large Number of appraisers signed -up from a specific Area or City. (Competition) Hence, the auto-decline & it would be rare to get to explain WHY for your UPed’ Fee Counter. This would be very unlucky by having a Narcissist Rep’ that continually knows more about appraising than the “Licensed” Experienced Appraiser. You become ” a problem”. After all a Third Party can ask for most “anything”. If you innocently communicate… perhaps in thinking “they just didn’t know what it is they are asking” YOU are a Problem.
Google Past Employees & research their comments: Reps’ get bonuses based upon time-line to place-orders & within their “Fee Offer”/ Due Date. NOT based upon the SOW, property complexity, or distance.
An example: where A Lender charges the Borrower a lower cost than otherwise typical: The AMC still gets their Fee and you get what’s left-over. Accept or be Rated.
As Time went by, less & less orders. Gosh knows it was that Performance Rating after some 20+- years.
No Orders … Freedom! Upon request, a Formal Letter of Removal was received. Thought about Framing It!
Happy Days!
Is the word “Appraisal” (generically-used) still being tagged for “Unlicensed Property Observers”, Desk Tops, AMC Fees, Waivers?? Seems Communication & Disclosure may aid to the Borrowers (Anger).
As far as disclosing the Fee breakdown: When Order provided: what the Lender charged borrower & what the AMC charged appraiser, it was disclosed in every Report. Why: Disclosure! AND needed to separate myself from “Their Practices” of non-disclosure regarding the Borrower. Often asked by the homeowner, why am I having to pay $xxx for this appraisal? Never was asked with a Smile. Word “Appraisal” is a very generic Label not fully explained. My gut response: Please ask your lender to breakdown and explain not only the type of Appraisal Ordered but also the Fee you were charged. I am not allowed to discuss their business. The Lender uses a Third Party ordering service. The Appraisal Fee you were charged may not be the Fee for the Appraisal Service. And since you asked, an appraiser is not allowed to speak with a borrower or anyone other than the Lender-Client ‘after the service is delivered to the lender. Perhaps unaware, the lender has several pages of their specific instructions, including the Appraisal Report. And the Third Party service the lender HIRED can also have additional requirements.
If you have any questions, please do contact your Lender Rep’ and request to speak with a person Educated in the Field of Appraisal, as your Rep’ may only be knowledgeable on the lending side of the process. And may not be ware of their own Confidential – Requirements. Respectfully, thank you for understanding my limitations.” Never once: was there a misunderstanding with the Borrower. It’s a Blame Game so be a Scout!
** WHY I am taking the extra for this Post: communication is one way to aid and avoid miscommunication. WE DON’T Make the Rules, we just have to follow them.
As appraisers are we responsible to police AMCs fees or any other fees besides our fees? What is it to us? Is it our job to protect the consumer on this matter?
No one set my fees! I set my own fees. Period! Pay the fee I set or find someone else! When I receive the fee I set for the scope of work involved that is good enough for me. Anyone that will work for cheap fees then that is what they feel they are worth and it is not any business of mine.
I do not care what other people fees are and I surely do not waste my time thinking about it. People have the right to operate their businesses however they see fit and any consequences that come from their decisions.
It’s really a bummer that the AMCs mentioned set the tone for the entire AMC industry. As an anonymous contributor here, I do work for an AMC (not one listed) and we pride ourselves in paying a true customary and more than reasonable fee to our panel on each assignment. We continually ask our panel what their fee is and do everything we can to pay it. However, there is an overwhelming amount of overhead to run an AMC; state fees, insurance premiums some lenders require of AMCs are insane, maintaining a compliance department to manage AMC licenses and everything regulation related is expensive, the way in which the many of today’s lenders pit AMCs against each other with performance where 0.15 of a day on average could mean loss of business for one AMC and more for another – requires operational process and management that is expensive just to stay competitive, let alone the amount of human capital it takes to staff teams to manage all of the appraisers (licenses, E&O, state reporting, recruiting, compliantly on-boarding and off-boarding etc.) and act as an extension to our clients for daily reporting, ad-hoc audits, etc. Needless to say, for those who haven’t worked at an AMC, much of this is unknown and not fully-appreciated. We didn’t ask to be in this position, yet with all of the regulation and expectation and performance scrutiny we find ourselves in daily, AMCs are not non-profits and require dollars to operate.
There has never been, nor will there be, a single transaction where our AMC has taken more of the total fee than the appraiser nor any games played with what fees are disclosed, etc. We typically pay our appraisers more than double (sometimes triple) what the AMC fee is. But in order to operate our business, it can’t be the entire fee given to the appraiser. Sure, appraisers can find work in non-AMC channels – there are plenty out there. But as some have mentioned, many lenders use AMCs as they don’t want to own the expense of managing their own appraisers and product procurement processes so they rely on the AMCs to do that for them – but then pay fees that make it very challenging to pay C&R (and more) and run an AMC operation that would cost the lender more to manage than what they are paying. It’s not an ideal set up for anyone.
To conclude, there are some really good AMCs out there. There are some that don’t have assignment processes that prioritize the lowest bidding appraisers. There are some that really put a ton of effort into making the experience working with an AMC enjoyable and as supportive as possible. Don’t let those AMCs cited prior ruin the entire landscape of what a good Appraisal Management Company is capable of doing. If you don’t want to work for those guys, don’t. I can assure you, as I have seen them with my own eyes, there are plenty of better run AMCs that compete for work against those mentioned AMCs that you could be working for. Cheers to rates dropping and everyone getting healthier bank accounts and minds in 2024!!
Anonymous AMC Person, are you a staff appraiser or in an administrative role?
Does your AMC allow appraisers to share their fees with borrowers and include an invoice in their report?
Cue the Violins.
First. There are NO good AMC’s in my opinion. Appraisers don’t want you, we don’t need you. Lenders want you because AMC’s make their job easier. Period.
Before AMC’s I had a stack of banks and lenders I worked for. No middleman. They called said do this for this amount and I did. I trusted them. They trusted me.
Now the only way I do that is with the VA or with private work.
AMC’s tell appraisers how we can get paid. Don’t like it? Don’t work for them.
AMC’s tell appraisers how much we will get paid. Don’t like it? Don’t work for them.
AMC’s tell appraisers how and when to contact them. Don’t like it? Don’t work for them.
AMC’s tell appraisers when we will do the inspection. Don’t like it? Don’t work for them.
AMC’s tell appraiser’s how and when to contact the homeowner. Don’t like it? Don’t work for them.
AMC’s tell appraiser’s to complete frivolous revisions for free. Don’t like it? Don’t work for them.
Doesn’t sound like appraisers are independent self-employed contractors…. does it?
Don’t like it? Don’t work for them.
I DON’T. Doing quite well BTW.
YES, THEY MAKE MY SKIN CRAWL. I QUIT WORKING FOR THEM LAST YEAR AND APPRAISING STARTED BEING FUN AGAIN. THERE IS SOMETHING THAT SHOULD BE DONE, BUT NO ONE HAS ANY ANSWERS. MY ANSWER IS WHEN ON THE TELEPHONE AND THEY STATE A FEE, I ANSWER…” YOU’RE JOKING RIGHT”? THEY SAY THAT ISN’T VERY PROFESSIONAL WAY TO RESPOND. I QUICKLY STATE, “THAT ISN’T A PROFESSIONAL FEE THAT YOU’RE OFFERING” GOOD BYE!
Bullship!
AMC Person, you stated….”there is an overwhelming amount of overhead to run an AMC; state fees, insurance premiums some lenders require of AMCs are insane, maintaining a compliance department to manage AMC licenses and everything regulation related is expensive, the way in which the many of today’s lenders pit AMCs against each other with performance where 0.15 of a day on average could mean loss of business for one AMC and more for another – requires operational process and management that is expensive just to stay competitive, let alone the amount of human capital it takes to staff teams to manage all of the appraisers (licenses, E&O, state reporting, recruiting, compliantly on-boarding and off-boarding etc.) and act as an extension to our clients for daily reporting, ad-hoc audits, etc”. You just explained why the AMC BUSINESS MODEL has always been a bad idea from day 1. Appraisers who work within the AMCs have also suffered financially. Plus, the integrity of the impartial unbias appraisal process and the proper compliance with USPAP does not really exist.
How about this perspective; Imagine asking a corporation, whom provides your primary source of income, asking them for more benefits and broader client access. To your surprise the corporation readily agrees, funds a certain working benefits program, hires and trains people to administrate that program, then cuts your working compensation in half to fund the program. Business partners!
Nobody is addressing the elephant in the room of the AMC(s) owned by the lender. That’s money going from the left pocket into the right pocket of the same pants. Can anyone say AMROCK? There are zero protections out there for the consumer and the appraiser, as is per usual, is taking the blame. Perception of Bias? Blame the appraiser. High out-of-pocket fees? Blame the appraiser…its all right there on the TRID under the appraisal services line(s). Padded. Not broken out. How could it possibly be correctly reflected when a borrower pays a fee for the appraisal and then the appraiser advises complexity and doubles or triples what the borrower paid up front or outside of closing? AMCs should be a dying breed and going out of business left or right because as a business model, it should not only be performing, but should not be profitable. Yet they’re still out there, just hiring appraisers as direct employees instead of contractors. I wonder how many of those who work for AMCs directly get benefits? How many AMCs pay employer taxes? And then of course, there’s the newest hybrid on the block…PAM Value. Anyone else get an email from their guy in the last few days like I did? I not only got an email, I got a telephone call first.
Yes, appraisers have a choice however, in some market areas they are the only game in town. I am fortunate in the area I work in as the Lenders who use the services are small banks who pay my normal fee and open to increases for complex and jumbo properties. I do get inquiries from one AMC that wants best price and turn time. I am cordial and respond with a fee in keeping with the scope of work as well as turn time. I gave that to them most recently and did not hear from them until about 2 weeks later….guess they could not find anyone else? What some are doing is blatant abuse and criminal. It is so obvious they are taking the law into their own hands and screw everybody. There is a word for this when one gets away with it for so long it becomes normal until the law shows up and they are crying that they didn’t mean it. No, they are crying because the chickens have come home to roost. These are the criminals that the government should be looking at. They are screwing everyone over with immunity. Washington needs to get their priorities in order.
Wow… A lot of good comments on appraisal fees. But the big picture is that AMC control the entire appraisal process from appraisal fees, TT, comp selection, adjustments, report documentations, etc, etc. Appraisers need to comply with these AMC REQUIREMENTS or get no appraisal work. USPAP standards are interpreted by AMC for the own advantage. So, fee structures is just ONE element that AMC control. Bottom line is that the AMC business model, designed for lenders and lenders interest groups has hijack the appraisal process from appraisers. When will the appraisers take back control of their profession and gain some respect?????
Comp selection? What the adjacent should be? Don’t know who you have been working for or with but run.
I haven’t done AMC work for 17+ years because the AMC control all elements of the appraisal process that includes the low appraisal fee structure. When AMCs make the appraisers sign off on all their restrictions and demands to accept work, the appraiser has loss all control of his/her appraisal responsibilities, including impartiality and being unbiased. I don’t think appraisers should work under those demands and restrictions.
AND YET NOTHING IS DONE ABOUT IT… THE THREE LETTERS A M C SENDS HATRED THROUGH MY VEINS. THAT WAS REASON ENOUGH FOR ME TO END ENTERTAINING THEIR CRAPPY “BEST FEE AND TURN TIME” MASS EMAILS I GET DAILY. THEY ARE A SLIMY CREATURE THAT SHOULD HAVE THEIR HEADS CUT OFF AND BE DONE WITH, ONCE AND FOR ALL!!!
Another problem?
There are an estimated 70,000 licensed or certified real estate appraisers in the U.S.
There are about 100 (including myself) that comment on this page regularly.
Maybe another 1,000 that complain on Facebook.
The other 68,000 + roll over and accept it. They continue to do appraisal reports for $200/each. AMC’s just laugh.
I suppose I have a defeatist attitude now. I don’t see it changing.
I work for AMC’s as well as attorneys. The problem is that I don’t get work from AMCs the way I used to because I don’t accept their low fees. Maybe 1 or 2 a month. I have the skill, experience, qualification, merit, and geographic competency. 22 years in the business with a clean record. So, I agree that unfair and illegal practices by the AMCs are taking place. What gets me is that everyone knows this, and nothing has ever been done to stop the AMCs from ruining our profession. If I’m wrong, someone please enlighten me. There is much to do about bias, which is so minute and nothing to do about the cancer (AMCs) that really infects our appraisal world. So many articles, hearings, outcries and yet it seems impossible for anything positive to happen in favor of the appraiser…frustrating.
Just follow the lobbyists to your state representatives and see what kind of money we are up against. I’m that’s what it is all about, money. They have it in a very organized manor with representation. We do not. This is why it’s much harder to get things to be right with our laws and institutions. The people that make the law may or may not ask the right questions, but they definitely don’t ask the right people.
The AMC’s are doing what they were designed to do; manage the appraisal profession…we as appraisers do not like it but are powerless to do anything about it. Do you think for one minute if Mr Cuomo or someone like him wanted to start a “plumbers management company”, or PMC, or “electricians management company”, or EMC it would ever fly? NO WAY!!! The unions and lobbyists would be all over that idea in a NY minute to end the notion. Our “beloved” Appraisal Institute” has done NOTHING to stop this freight train of deceit, lies, thievery AKA the AMC. We are on our own, get used to the idea ,fellow appraisers, and start looking for new cheese as the book said “Who Moved My Cheese?”, good reading.
Everyone has been complaining about AMC’s for the last 20+years. What’s changed? NOTHING. WHY? We’re our own worst enemy. STOP working for the AMC’s like they did in Hawaii. The AMC’s buckled and started paying a decent fee. We don’t, won’t why? Because there are offices/appraisers who think: Let them stop working for them, I’ll get all their business for $300 a pop or less. REALLY? EVERYONE should be charge what the VA is paying $850 for non-complex work. Our own worst enemy. You running a business or a charity?
I’ve been saying the same thing for years. One has to wonder how someone can actually pass the appraisal exam for certification yet not have the common sense to understand they are destroying their very livelihood. How they can’t see that is so frustrating. Well, I’ll be long gone by the time it catches up with them and then they will have no assignments as they will have driven themselves out of business. The time for unity is now and needed more than it ever. Our industry is known for selling out their mother for $5. but now is not the time or place for that way of thinking. Everyone needs to man up and have each other’s back. Listen to me, that’s never going to happen as long as those mother-sellers are out there.
The AMC and REVAA have been using our Independence against us from the beginning. Dudd-Fwank destroyed our business model and have left us with the crumbs for time, $$ and any resources so the AMC will always be able to find someone who needs to make the mortgage that month, and they have the time and resources to “shop” until they find them – especially now. We missed our window a couple of years ago when things were very busy we had a little leverage – but we didn’t have the time or resources… the State Coalition “volunteers” were bogged down trying to run their own show while the AMC lobby was working full force in DC throwing around $Millions.. WE are not our own enemy – WE have been dealt a horrible hand by our Gubment while AMC’s were handed a Golden Ticket and have been allowed to treat us and the borrower as Chattel since 2009. Nothing will change until we have an advocate in Washington, DC. and it ain’t gonna be Dave Bunton or Maxine Waters. We need HELP from the FEDS!! But be careful what you wish for…. It’s a sorry world we are living in.
I do believe in the old saying “no pain, no gain”. Nothing is free in life and sometimes people need to do the right thing to make a point. Sure, it stings but if one can endure the fallout I believe the awards are well worth it. As one commentator pointed out Hawaii did it and it stopped the AMC’s dead in their tracks. Does anyone believe those appraisers didn’t suffer for their cause? Hell yea they did. The AMC’s need to be put on the defense and we have the power to do it but they have intimidated appraisers to the point they think they are helpless. Look it, they are dead in the water if no one will accept their demands. As it is now, rather than coming to the table they have time to scheme and plan ways to exploit us. See this is why we have organizations such as the Appraisal Institute who are SUPPOSED to start these grass roots movements but instead they are licking the boots of big banking and throwing us all under the bus. There needs to be an appraisal organization willing to really represent us. It takes money and we all need to make that sacrifice if we want to be relevant. Anyone out there interested?
YES. What state are you in?
My dream site would be hosted by an appraisal co-op that made calls to every US appraiser pretending to be an AMC to inquire about fees. The fees would then be posted online for all to see, thus exposing the deadbeats in the industry.
Actually there is a magician in New Orleans who could automate the entire process. The same guy who sat up the recent Fake Biden robocall in New Hampshire. He charged $150 for that job…imagine what he could do for appraisers for $1,000.
Fantastic idea!!!
Late follow up here, worth the time though. Retired appraiser said; (paraphrasing) Pretend to be an amc and survey all appraisers fees nationally, then post them online. Thus exposing the deadbeats of the industry.
Or an even easier method to look at other appraisers fees; Get a Mercury MVP, Scope, Regorra, AP client appraisal request distributor access account, or one of the half dozen others, and simply look at all the appraisers fees and availability yourself. Phone a friend or just buy in, appraisers can and should be able to see the other side of these tech systems as well.
Appraisers still in the mix would certainly be surprised to learn far less than half of all currently licensed appraisers are even still a part of these tech based appraisal request distribution systems, and how wildly varied the fees are. Cumulatively there has been over 300,000 appraisers on these systems over the past two decades, tracking total licensed ASC appraisers. These days, less than a third of that number is present, which does not add up, unless one accounts for multi state licensing, which would bridge the gap from 70,000 or so remaining appraisers vs the just over 100,000 current ASC licensees these systems recognize as being active appraisers to include in the appraiser indexes. Even then, various individual clients will often only have about a tenth or less of all currently available appraisers on any given approval panel, sometimes far less than that, hundreds if not thousands more in the awaiting panel acceptance sort of section. As many as in the block or denial lists.
One of the more disheartening revelations from looking at these systems from the other side of the desk is the nature of appraiser performance rating. Because over time the appraisers performance grading ratings do not reset, and all previous clients, even if the appraiser dropped them or vice versa, the ratings applied to the appraiser from the past, are pulled forward to the future. If an appraiser received a poor star performance or similar rating fifteen years ago on these systems, that negative rating still affects you today. There is no rating for appraisers to network and coordinate which clients are better. And as clients have total control of system peramiters by which they engage appraisers, aggressive or impatient clients carry a higher probability of dragging the appraisers score down. When ever they set time acceptance to a mere two hour window, as one example. Every time the appraiser misses that, a negative grade which carries to the appraisers master profile, permanently in perpetuity and the data is never reset, an infinite shelf life of appraisers performance data.
Rendering proprietors whom for whatever reason had individual instances of negative performance grading (quite possibly due to the clients vindictive behavior or the clients own processing inadequacies having contributed to poor grading on an individual order, or something like untenable one hour to acceptance windows which the appraiser failed to respond and had lower star rating) those appraisers to this very day still have consistently lower performance grading, aka index deranking. Which the appraisers tech systems grading limits the appraisers exposure and subsequently ability to pick up new clients, as companies seeking new appraisers are shown ‘best rated’ appraisers at the top of the available appraiser index lists in the ‘build a panel’ type of interfaces. Either through general systems development incompetency, by pure accident, or possibly intelligent purposeful design, these tech systems constantly deranked sole proprietors and instead promoted appraiser firms, aka prioritizing the amc model.
Companies seeking appraisers have a myriad of options to sort the appraisers out of the data set to build their panels, most of which sorting options are tech peoples ideas of better performance, and not necessarily what matters to astute lenders or appraisers. As my appraiser pal and I were joking about this as he commented on my low appraiser rating, I had said; ‘Perhaps it’s like golf, and the lower score is better. Ha!’
These are not well developed technical systems with intelligent design, and they have failed to evolve in over a decade after their original conception. Better described as an appraisal industry version of Python or something more focused on managing large informational data bases, having various script solutions to pull and organize data in different ways as necessary. Script kiddies run the show these days. Appraisers whether they have understood this or not, as well as lenders whom bought into the illusion of the reliability or legitimacy of these systems; have had their business futures held at the mercy of tech people whom know absolutely nothing about the appraisal industry.
One somewhat unexpected revelation is how the tech companies may have shared interfaces on the assignment systems with both amc’s and lenders, and how they can readily simply click an appraiser on or off of the effective approved panels, move them into denied status category. Thousands of such instances of that as well. In retrospect we can see more clearly why one really good part of the HVCC rule set was dropped; The requirement that if an appraiser were to be removed from a lenders panel, the lender had to justify the action in writing, and inform the appraiser.
Not these days; One click and the appraiser is gone forever from that lenders panel. The appraiser is not kicked back into the pool of appraisers and simply taken off panel, possibly being able to be picked up again later. The appraiser does not know this, but the appraiser is put on what is essentially a lenders or amc’s black list. Except appraisers no longer can engage in discovery process like we used to, having found lenders blacklist and do not use appraisers lists, sharing that around, highlighting possibly unethical behavior. It’s all technical now, the appraiser is scooted into the back ground, put on the do not use list, never to be seen again. Rather than abiding rules of ethical engagements, being more transparent and prudent, they coded in do not use blacklists into the assignment systems instead. Of course they did. Why do you think amc’s bought these companies in the first place? Special pro hint; ROV’s are part of the grading sequence with some of these.
The action of forming a blacklist for appraisers whom shall not be used is actually one of a dozen core functions of the appraisal distribution technical systems. Every single company whom uses these systems has this feature availability built in. Given the lackluster management, outsourcing of scripting, general ignorance about the unethical nature of this denial of service process, likely eroding informational and systems security, it’s only a matter of time before these systems are breached. The systems probably already have been breached, but this is simply not disclosed to appraisers. As more and more of these appraisal distribution platforms come forth with their high employee turnover, it would not be surprising if one day a data breach at these companies brought that information forth for all of us to review; all the lenders and amc’s appraisers blacklists at once!
Additional insights included a mesh based cross linking network where a lender whom uses these systems often will have multiple amc’s as part of their network, or vice versa, amc’s working with multiple lenders. That is taken for granted, yet the function of the system confirms one of my long held theories of these systems; That if lenders can identify if appraisers use amc’s, those lenders will not assign to those appraisers directly, and will instead outsource to the amc. Lenders see the exact same appraisers index lists as amc’s, able to readily determine if there are available appraisers or not, despite what the amc may tell them, and the fees, if only they take the time to look through the available appraisers index lists (w/ fee reviews.) I’m pretty sure that the $1 appraisal fee across the board short circuits this aspect; day hacks for appraisers having to navigate these systems. Appear at the top of the list!
Remember why these systems were put in place in the first place, which severed the appraisers relationships with lenders, restricted our access to the working space, inhibited our marketing ability, forced us to pay tech fees, drove a hundred thousand appraisers out of business, caused a proliferation of more of these tech systems and amc companies; To support ‘appraiser independence’, and provide better informational security. Who’s still buying this?
Free wrote this, blogs are super slow. Might edit down in an hour or so, probably too long.
“Get a Mercury MVP, Scope, Regorra, AP client appraisal request distributor access account, or one of the half dozen others, and simply look at all the appraisers fees and availability yourself. Phone a friend or just buy in, appraisers can and should be able to see the other side of these tech systems as well.” If anyone has done this, I’d like to know what my standing is on these platforms and whether or not I’m on a do-not-use list….probably very likely because I fight back when the AMC or lender is wrong in whatever assumption they’re making and I educate them. Seems like every time I educate one, that’s one less client I have. So, ANYONE DONE THIS? If so, Send me an email and let me know what you find, or give me a login to use so I can search for myself.
That is an incredible take on the current AMC model and appraisal relationship, and should be an Appraisalblogs.com thread by itself.
Well done, brother.
Thank you. Oh no, this can not be a full article stand alone. I buried this in the back ground on purpose. I do not break rules of access. After a decade and a half of navigating these tech systems, you learn things and stuff. Come across data accidentally from time to time, now and then a person with good working ethic is part of these systems, despite the hostile working climates. The bright side is when you call into these companies to ask questions or provide ideas how the system could be improved for the benefit of the appraiser; there is always a new person to communicate with. Just call more often, ask detailed questions about the technical processes, you may be surprised what you learn.
Most of the good faith arguments regarding the supposed benefits of automated assignment systems turned out not to be true. Prior to ‘appraisal modernization’, these systems were initially intended to be safe havens for appraisers to avoid amc’s and retain direct lender clients. The companies whom use these systems have been rotating in and out of the amc vs direct assignment circuit ever since, some have came and went multiple times. The appraisal assignments systems framework is designed to exploit appraisers. Only with reliable ethical lender side management which chooses to be fair, does the regular appraiser have a chance at fair dealings. Few and far between. “End of the line man.” To know more, simply hop on a light cycle and get in there. The internet is yours as well.
Missing the IVPI proposal yet?
https://www.workingre.com/wp-content/uploads/2013/08/IVPI-Proposalfinal.pdf
https://www.workingre.com/wp-content/uploads/2013/08/IVPI_Questions_and_Answers.pdf
I don’t access to that information but I’m sure I am on some “blacklist” due to my higher than hoped for fees by the AMC’s; I quote a fee and never hear from them again, ever, it’s like they add me to the “this guy is too high list” for other AMC’s to see…the AMC was an almost good idea when it was conceived but then greed set it whenever there is money involved, they preyed on appraisers fear of not getting any more assignments so lets offer them way less ideal. The ship has sailed, the train has left the station, there is no way we can get control back, we have to “find new cheese” to stay in this profession, the AMC’s do actually need us to stay solvent, they just hope we don’t know that. If we all would stop accepting fees from 30 years ago they would have to come around and offer us more.
Maybe, probably not. The blacklists are likely reserved for deal killers, appraisers whom dare to actually be independent. Sorting out the higher fee appraisers is as easy as clicking the ready made drop down arrow; sort by fee. They can sort by any number of performance metrics, fees, turn times, rov instances, etc. There are proximity tools to limit assignment to only near to the appraiser, adjustable proximity ranges. Panels within panels, mini lists. What most likely do is just pick the appraisers off the top, which the assignment systems automatically provide preference to large appraiser firms. The amc’s whom know how to game the system will not even add appraisers on to their panels, rather will spam them off the general appraisers index instead. I can’t even tell you how unethical these companies are, except to say if the people or even the companies themselves had state licensing, I would have easily had their licenses revoked at the state level for how they’ve treated me. This is the point of middle management, third and forth party outsourcing systems; circumventing licensing accountability. ‘Appraisal modernization’.
I’m really really bored right now and would rather be working. Looks like I’ve been modernized too.
not sure how to get this out – but The CFPB encourages comments and data from the public and all interested stakeholders. Comments must be received within 60 days of the request for information being published in the Federal Register.
on this from 5/30/2024
press@cfpb.gov
CFPB Launches Inquiry into Junk Fees in Mortgage Closing Costs
it says they want comments – so everyone should comment – with all the hidden fees – or anything – let it all out
The AMC’s are now in the process of hiring in house appraiser’s where they will pay them a salary and cut out independent appraiser’s altogether. This way they can keep a majority of the fee while paying the appraiser’s who work for them a salary. Also, they have now removed the requirement that you must train with a supervisor to become an appraiser and can simulate this online for DEI.
Government regulators are out of control and pandering to the money and ignoring laws on the books and getting away with it by our elected officials. As long as FNMA is pouring hundreds of millions in fees to Congress our members of Congress will turn a deaf ear until the shite hits the fan then they will demonize those they had been throwing accolades at. We are all so screwed.
They will be paying Billy Bob exactly what they are worth