Prohibition is Back!

Third Party Services Prohibited - Prohibition is Back!

AMC strictly prohibits the use of third party services.

A recent review of an engagement letter from a large national appraisal management company revealed something pretty peculiar…

“An appraiser is prohibited from using any third party services.“

Wait, What? No third party services?

I am no attorney, and certainly do not know all the aspects of law, but it seems that the definition of third party services is pretty self-explanatory.

To be sure I am not mistaken; I researched the definition of third party.

“A person who is not a party to a contract or a transaction, but has an involvement… The third party normally has no legal rights in the matter, unless the contract was made for the third party’s benefit.”

“Someone who may be indirectly involved but is not a principal party to an arrangement, contract, deal, lawsuit, or transaction.”

Or from the more traditional source:


1: of, relating to, or involving a third party. 2: of, relating to, or being software that is created by a vendor to be compatible with the products of another vendor. “

So our client the lender, is a party to the transaction and the borrower is the other party. Everyone else is a third party; exactly what I thought.

I am already in trouble here. I used Google to access the online versions of the dictionaries and Google is considered a third party by definition. So appraisers, make sure you do not use Google or any other search engine to access locality tax records, areal maps, neighborhood demographics, or what-ever else you need to obtain for a credible appraisal report. It simply is prohibited by this appraisal management company. What about my internet provider? They too are a third party service.

Now that we understand what a third party service is, the appraisal management company is a third party service. So appraisers, make sure you communicate directly with the lender as you are prohibited from using any third party services. Remember, don’t use Google or any other search engine to locate the lenders phone number, it is prohibited by this third party appraisal management company. Please, what-ever you do, do not use Mercury Network, Appraisal Port, Appraisal Scope or any of the other portal as they too are a third party service. Wait, the phone service you have is also a third party service!

Don’t even think about contacting the Real Estate Agents, they too are third parties as is the MLS systems owned by CoreLogic and others. Better camp out in front of the subject and wait for someone to let you in because the lockbox on the front door is operated by a third party service. You, the real estate professional are prohibited from utilizing these third party services.

Do you think it would be OK if I drove my leased vehicle to the subject and comparables? The leasing company is a third party you know.

Now dig through your attic and pull out the old typewriter. You see, alamode, ACI, Bradford, and the other software providers are also third party services. As is Datamaster, Spark and others that are designed to import data. This appraisal management company strictly prohibits the use of third party services.

Clearly this is not what this appraisal management company intended, but it demonstrates their lack of appropriate communication and understanding of the appraisers responsibilities. It demonstrates a very one sided “dictatorship” not a partnership.

What I really find to be disturbing is the huge push for hybrid appraisal products where someone the appraiser does not even know nor trust; an anonymous third party is providing the data for the appraiser to rely on to complete an appraisal.

I consider myself fairly intelligent, but certainly not the smartest out there, but the concept of accuracy, credibility and professionalism seems to have gone away with the onset of appraisal management companies. The appraisal management company fast and cheap mentality is harmful to everyone and has really damaged the profession.

Legislative sessions are approaching soon for most states. I encourage each appraiser to sit down face to face with your representatives and share your experiences with appraisal management companies. Provide documentation on how consumers are being harmed by their use. Show conflicts of interest with amc staff appraisers, and offer solutions in a positive professional manner. If you cannot do this, please support your state coalitions. Appraisers represented individually and through coalitions, are making positive change.  Legislators are listening. Please be a part of the solution so we can get back to real appraising.

By TJ Everett, Certified Real Estate Appraiser

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24 Responses

  1. Avatar Pete says:

    I agree 1000%. JT please tell us which AMC has this in their engagement agreement?

  2. Baggins Baggins says:

    It’s time for us to stop talking amc or not though, the direct lender models are mirroring the amc’s quite often.  The problem with these engagement letters is they’re copied, altered, copied again. Just ask appraisers to comply with fnma and hud handbook, if they’re gse bound orders it’s that simple.

  3. Avatar Mark C. says:

    Is it TSI that’s has that verbiage?

  4. Avatar Robert says:

    I work in house for an Amc and work independent as appraiser. Clearly this is an engagement error which would be corrected with a phone call . After 27 years of working I find Amc work refreshing. I am paid quickly, save thousands in marketing, have no pressure to meet a value , and believe strongly this has made our profession more credible . I worry about automated valuations, Appraisal waivers, and states like Colorado and Washington with enormous fees forcing lenders to press for other lending options rather than obtain an Appraisal.

    • Baggins Baggins says:

      Think of Colorado as a glimpse into the future of appraisal nationally, a correction of fee increases long suppressed by amc’s. You call $550 average in CO an enormous fee?  Quit while you’re ahead. I just wrote a letter to orep right now requesting the next fee survey included both the peer charge and the actual charge to the consumer. Let’s put these ‘enormous fees’ in proper perspective. Amc propaganda at it’s finest, thanks for playing, very entertaining post.

    • Avatar Appraiser Advocate says:

      Robert, Glad you find it refreshing to work for an AMC. Most appraisers are concerned about AVMS’s, waivers and the “hybrid” products that are being pushed as well.

      I respectfully disagree with you on no pressure to hit values. The reconsideration requests are through the roof and the requests are not coming from the agents or lenders, The AMC’s are searching for comparable sales all on their own; either from their CU findings, direct MLS access or  Zillow. There was a very good article a few weeks ago on AppraisersBlogs about that and how the AMC was in violation of state law. Even a USPAP instructor chimed in and sited where USPAP stated the reviewer must have geographic competency.

      As far as AMC’s adding credibility to the profession, you are kidding aren’t you? The destruction  the AMC’s have placed on the profession, and more importantly, the abuse to the consumer, is simply horrid. There is a reason every reputable lender has sold off their ownership in AMCs. There is a reason lenders are moving back towards in house staff appraisers. There is a reason states are revising their AMC regulations and laws and making them tougher. There is a reason so many appraisers and coalitions have attended the recent DC meetings. There is a reason the FHFA is seeking solutions from appraisers. If your comments were serious, you need to take off your blinders!

      • Baggins Baggins says:

        Those oldies but goodies, remind me of you. Songs from the past, memories so true. I’ll always remember the first time we met, the songs they were playing, I never will forget.


    • Avatar Tim says:

      If you work directly for an AMC, YOU ARE A SELL OUT. How dare you talk about fees when most AMC’s take a minimum of 30%  (my $400.00 fee turns into a fee to the borrower of $520.00). I doubt very much you are independant there, I bet your fee per report is far below $200.00 some independence you got going…

    • Awww come on…fess up. Your initials are B.C., right?

    • Retired Appraiser Retired Appraiser says:

      One man’s ENORMOUS FEE is another man’s minimum wage.

  5. Avatar Mark C. says:

    Robert, first of all I doubt very seriously you are an independent appraiser if you work as a staff Appraiser for an appraisal management company. I also I doubt that this is NOT an error on this TSI  engagement letter it’s simply another control mechanism that they think they are entitled to. They are much smarter than that ! I’ve been appraising for 25 years and most of my work WAS with appraisal management companies prior to hvcc. Once that became the rule of thumb the ” shit ” hit the fan and it was a green light to Institute abusive practices. The fees dropped the scope creep increased and the consumer began to pay substantially more for the appraisal then they did prior to AMC middleman involvement I see nothing refreshing about that! Alternatively, I find working for any NON AMC client refreshing because I do not get stupid revision request regarding issues that are already in the report from some kid that dosent know his ass from a hole in the ground or better yet someone that’s not even located in this country and that can barely speak English. These revision requests are  obviously attempts to justify the AMC’s existence. Also, you mentioned enormous fees. You are aware that appraisal management companies not only are gouging the appraisers fees but are also gouging the consumer sometime charging up to twice as much from what an idependent fee appraiser would charge arent you? Where have you been the last 10 years and what color is the sky in your world? Appraisal management companies want to put you out of buisness and replace you with alternative valuation products. Refreshing? Wow !

    • Baggins Baggins says:

      But Mark, ‘he saves thousands in marketing’.  Wow, must not be very good at making simple sales or something.  Who knew something I accomplish for virtually free was so difficult for other people.  Marketing is perhaps the least expensive cost for a competent appraiser.  It used to be a lot easier before amc consolidation, much much easier.

    • Avatar Robert says:

      I wished we could trade places for a week , perspective can truly be much different. I am actually leaving the Amc to end my last two years to Appraise full time . Hope you achieve your own goals and find joy in your current profession. I was pretty much saying the blame and additional fee is direct result of lenders requiring so much more of the Amc’s. Working with the status quo while trying to achieve your own ideals of the industry would be better than aggressive complaining in my opinion. Anyway good luck I wish you the best in your endeavors ..

      • OK, you got me. I don’t think your initials are B.C. afterall. I apologize. Robert, the post really was pretty pollyanna like though. I’ve done work for AMCs and I advise one (almost always free of charge, because it is owned by appraiser friends), but there ARE inherently evil aspect s of AMCs as a concept.

        On one hand they Can save everyone money (including appraisers) IF they operate openly, honestly, and for a fair fee. In practice, most don’t do that. Most are worthy of all the abuse and criticism that we collectively heap on them. They earned it by their own underhanded actions.

        Good luck in your remaining years as an independent.

  6. Avatar John Pratt says:

    Mark    I agree with you 100%.  Amcs add requirements that no lender requires and they are not even the user or intended user of the report and they refuse to forward the completed report to the lender until you meet the AMC requirements. I still receive requests with a fee of $ 300.  I got paid more than that 15 years ago. AMCs have done nothing good for the appraiser or the appraisal industry.

    • baggins baggins says:

      Reasons to only subscribe to basic software packages. I’m not volunteering to play the cat and mouse game where alamode on one hand sells review software via plugins to clients, then on the other hand gives me an internal eo review tool with sometimes different review peramiters. My software cost is less and client set naturally less critical. If it passes my internal eo review without hardstops, that’s good enough. I get a lot of false warnings, ‘answered no but line contains info’. Presume a no answer naturally should come with no confirmation data? Every line gets filled with something specific regardless of checkbox answer. My typical internal warning count is 10-14 and that seems to fly quite easily, as long as I don’t deal with plug ins and automatic review gates.

  7. Outstanding article TJ. Nicely done.

    At a minimum it shows once again that AMCs are arrogant AND that they don’t bother to take the time to make sure their edicts make sense.

    Any bets they never bothered to ask their clients if this was an acceptable condition for them to impose on behalf of the clients?

    • baggins baggins says:

      It’s becoming clear to me the tech guys are driving the course of this industry in the interest of maximum monetization for them. It’s very difficult to appraise without following the edicts of the tech staff these days.

  8. Avatar Tom says:

    AMC’s are a third party. Guess I can’t use them. Sad.

  9. Baggins Baggins says:

    The appraiser will always be the original third party. More regulations might not be the best solution.

  10. Avatar Wayne Courtney says:

    Gee, If an appraiser does not work with an AMC how in the world would they ever know when their certification was about to expire? Of course without an AMC to hold our hand and wipe our butt we could never figure out when our E&O expires. I suppose that is part of the reason they take 30+% of the fee. I know it gets old having to remind my doctor, lawyer, dentist, plumber, etc. to renew their licenses.

    I do not work with AMCs but I appreciate the five different AMCs who wished me a happy Thanksgiving so far today! By the way, Happy Thanksgiving to all of my fellow appraisers!

    • Baggins Baggins says:

      Oh yeah, what would you do if you did not get a long sequence of updates from every single company you’ve ever worked with, reminding you about your own business credentials.  The only thing they’re missing is the ability to bill like the actual service provider.  Tech wizardry, create a measurement point, write a simple program to read the measurement without human assistance, generate emails to show everyone it’s working.  See, that’s a new tech job created out of thin air.  In this industry we call it gaining operational efficiency through automation.  In reality, it’s pointless counter productive waste of time promoted by non appraisers who seek to rewrite the coding of this entire industry to their advantage. They’re all so busy adding value to their tech, they might have forgotten to give a hoot about the value of the appraiser.  We’re all customers now.



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Prohibition is Back!

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