AMCs, an unhealthy relationship?

Most fee appraisers loathe AMCs (appraisal management companies). Many feel they’re unprofessional, unknowledgeable with wildly inconsistent reviews and antiquated platforms phrenetical pinging for status updates. To be fair, there are a select few that are professional and have good quality reviewers but that list is uber short like LRES.  

Fee appraisers view them as middlemen taking a piece of the appraisal pie. Some chief appraisers think they’re an option for handling their overflow work or (erroneously) think they can outsource all the liability to a third party. Do you want your bank to be the RECIPIENT of appraisals prepared by appraisers that abhor their AMC “client?” 

Residential appraisers have a particular acrimonious AMC relationship. For those smaller AMCs that mostly do residential that put their foot in the commercial water, the typical outcome is no bueno. For select AMCs that focus on commercial work, the report card is better but issues remain. The following challenges still follow the AMC model. 

Top 5 AMC Red Flags 

  1. No relationship 
  1. Incorrect scope of work 
  1. Assume licensed = competent 
  1. Untrained or over-worked reviewers 
  1. Singularly focused low fee/quick delivery model 

I think most of the stuff boils down to No. 1, no relationship. You REALLY are a number. Most engagement letters don’t even specify a name, “Dear client.” This is exacerbated that many AMC reviewers have high volume goals. Some AMC’s pay older “retired” appraisers $60,000 a year and expect 60 commercial reviews per month. This equates to 2+ reviews per day. That’s a bit much for low-ish pay, especially if there are ANY issues. 

“The bitterness of poor quality remains long after the sweetness of meeting the schedule has been forgotten.”

What liability? 

Some chief appraisers think that the best communication when it comes to an internal audit is to have 100% internal reviewers. That way it’s easier to answer the FDIC audit question of, “How did you get there?” Internal reviewers can help the issue of disparate quality appraisals.  

That said, how’s the AMC model playing out in 2021? Many chief appraisers know you can’t just outsource review responsibility. The thinking was to outsource the complex reviews and handle the easier stuff internally. Interestingly, current trends show reviews are being brought back internally due to inconsistent review quality but more importantly, a lack of COMMUNICATION.  

An entrepreneurial alternative 

Ernie Lopez, MAI, AI-GRS, MBA, Chief Appraiser at East West Bank suggests an alternative, be entrepreneurial. Handle ALL your reviews internally. Hire a great team to turn your appraisal department from a cost center to a profitable department. Significantly improve communication in your bank while providing transparency with lending. 

Have a relationship with our platform 

Take control of your appraisal workflow. Instantly know what stage every appraisal is at in your department. Automate the way you work with full control and visibility in a platform built by valuation experts. YouConnect will allow you to handle all of your reviews whether you decide to outsource or to handle internally. After all, it’s YOUR appraisal department. Talk to our client success folks. They’re ready to have a great relationship with you. Kisses!