Fight Unfair AMC Practices – Leverage State Authorities

Alarmed by predatory practices among AMCs, a peer has drafted letters urging appraisers to call on state authorities to address unfair AMC conduct and potential regulatory violations. 

[Your Name]
[Your Address]
[Email Address]
[Phone Number]
[Date]

[Your State] Real Estate Appraisers Commission
[Address]

Dear Members of the [Your State] Real Estate Appraisers Commission,

I am writing to formally express my concerns regarding the unfair business practices conducted by several Appraisal Management Companies (AMCs) operating within [Your State]. Specifically, I would like to bring to your attention the troubling actions of Class Valuation, Fast App AMC, and Nationwide Appraisal Network [add name of AMCs]. These companies have consistently engaged in practices that I believe are not only unethical but also harmful to the appraisal profession as a whole.

The issues I would like to highlight include:

1. Unreasonably Low Fee Offers: These AMCs consistently offer fees that are significantly below the customary and reasonable rates established by independent studies and industry benchmarks. This practice devalues the profession and pressures appraisers to accept assignments under unfavorable conditions, potentially compromising the quality of appraisals.
2. Inconsistent Fee Structures: There is a noticeable lack of transparency and consistency in how these AMCs determine fees. Similar assignments often come with varying fees without clear justification, raising concerns about the fairness and integrity of their fee-setting practices.
3. Pressure to Complete Assignments Under Compressed Timelines: These AMCs have been known to impose unrealistic deadlines on appraisers, often without offering adequate compensation for the expedited service. This practice places undue stress on appraisers and increases the likelihood of errors in appraisal reports, which can have significant repercussions for all parties involved.
4. Bid Wars and Their Impact on Fair Fees: I have also observed that these AMCs are inciting bid wars among appraisers for standard assignments with no obvious complexities. This practice is designed to maximize the AMCs’ profit margins while denying appraisers fair compensation. These bid war appraisal bids do not establish either customary or reasonable fees and should not be considered as such.
5. Disregard for Appraiser Independence: There have been instances where these AMCs have subtly pressured appraisers to meet predetermined values or outcomes, undermining the impartiality and objectivity that are fundamental to our profession.

Recommendations:

To address these critical issues, I respectfully request that the [Your State] Real Estate Appraisers Commission take the following actions:

• Establish Minimum Customary and Reasonable Fees: I strongly recommend that the Commission establish minimum customary and reasonable fees through its own survey of appraisers statewide. These fees should serve as a baseline that AMCs are not permitted to offer below. This survey should be conducted annually to ensure that the fees reflect current market conditions and the evolving costs of doing business.
• Prevent Bid Wars for Standard Assignments: The Commission should implement regulations to prevent AMCs from inciting bid wars among appraisers for standard assignments. These assignments, particularly when they lack complexity, should be offered at the established customary and reasonable fees on a rotational basis to ensure fairness and equity in the distribution of work.

The True Cost of Professional Appraisal Services:

It is important to note that consummate appraisal professionals base their fees on the average time required to complete an assignment, multiplied by an hourly rate that accounts for the cost of doing business. This includes, but is not limited to:

• Appraisal software fees
• Fuel and vehicle expenses
• Professional memberships and associations
• Taxes
• Lockbox key access
• Data memberships and subscriptions
• Adjustment software costs
• Continuing education
• Office supplies and overhead

These expenses are integral to maintaining the high standards and quality of the appraisal profession. When AMCs offer fees that do not reflect these costs, they undermine the financial viability of appraisers and the quality of the services provided to clients.

I believe that by addressing these issues, the [Your State] Real Estate Appraisers Commission can help restore fairness and integrity to the appraisal industry in our state. I am more than willing to provide further details or participate in discussions to support this cause.

Thank you for your attention to this important matter.

Sincerely,
[Your Name]