ES Appraisal Services/ Solutions AMC in bankruptcy and is outclosed fighting over dollars of business

Another AMC closes its doors. I have been predicting AMCs going out of business for a long time. Why? The cost of starting a national AMC is in the millions. To handle cash flow problems, such as losing a main client (ES and JVI are examples) millions more are needed in cash reserves. There are over 400 AMCs now since HVCC in 5/09. I don’t know how many have lots of cash reserves. I suspect that many don’t. It is very similar to an appraisal business being dependent on one client and then losing the client. Nothing new.

ES is in bankruptcy. Employees and back payroll taxes must paid first. Vendors/suppliers typically don’t get much.

What is surprising to me is how many appraisers keep accepting orders, even though there are many Internet postings about them, often for many months.

A few months ago, in the September 2012 issue of my paid newsletter, I wrote about how to collect from AMCs. It is not that hard. It is not that hard. I will be setting up a special AMC Watch List for my paid subscribers. To subscribe to the newsletter, click the banner below.

I have always known which AMCs were in trouble long before they went out of business. Real estate agents have been complaining for 2007 about BPO payment problems. Appraisers started speaking up in early January, 2012.

In the January, 2013 issue I have a profile of a mid-size AMC including how I evaluated their financial strength and ability to handle a downturn.

Sorry, I can’t give it all away as I spend a lot of time on the research and writing ;>

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  1. Thanks for another fantastic post. The place else could anybody get
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  2. Baloney! There is NO government conspiracy outside of your imagination. Anyone who believes that is wasting their time.

    Get with it. This AMC thing would be history tomorrow if we got together anf fought it. The only thing we can coolectively think of that is bad about AMCs is what they do with our fees. And nobody cares. After all, we enabled the growth of AMCs with our whining about mortgage brokers and claims we couldn’t operate independently of influence. Everybody has us figured out. We just complain and keep working. Why would anyone listen?

    The problem on the secondary mortgage market side of what we do is that there are too many of us who will work for pennies. Maybe there are just too many of us period.

    As appraisers choose to drop out rather than get educated the profession will benefit. It is unfortunate that some choose to be purged while they blame someone else. But the government isn’t our problem.

  3. well I.m one of those appraisers holding the bag for the tune of $7,000 & yes I should have known. I should have known many things & the first & biggest thing I should have realized is that government got involved. For more than 20 years I cultivated relationships with lenders only to see those relationship desolved with the stroke of a pen when government got invloved. like everthing else government gets involved with it get screwed up. Government could have protected the appraiser but was so inept it did not or would not do it.

    The government & AMC’s are the problem. Government over reacted because of a few bad appraisers but the real estate market was ruined not by appraisers but by idiots that allowed the rules to purchase change. Like purchase a property with no money down & no proof of income & that payments could continue for the duration of the loan. Idiots.

    And my state, calif, would like to make real estate appraising a profession by requiring appraisers to hav e a college degree. They have to be kidding. Who in their right mind wants to work for $300/day (if they can get It), take all the CE courses & pay over $400 for a license every 2 years.

    I say again, the problem is government. They pass their stupid lame rules & protect the wrong people. We are so small a group government pays no attention & wont now or in the future.


  4. The reason appraisers don’t check on their AMC clients is that they are too busy auto-responding to that $200 48 hour order before the next guy snags it. Be ready to “certify” the roof, the repairs, etc. as well. Too many appraisers, too many AMCs, everyone wants to be a business person – work up a supply of lenders, fish out some underemployed appraisers and you are on your way to riches!

  5. Annemieka,
    As you indicate the secondary mortgage market lenders aren’t willing to do much of anything for us. Indeed, the majority clearly don’t want us at all. Why else would the problems persist? But Annemieka, I was speaking of the law not of the banks. Real different enchilada.

    There is no doubt in my mind that the banks know the law and they knew the law when they let the quants on Wall Street lead the country into an extremely dangerous and stubborn recession, yet another indication that the banks could care less about us or the law. Their concern is short time gain, period. Oh, they like to avoid responsibility as well.

    And Merry Christmas to you and Greg.

    Ann O’Rourke (that would be RowArk in Time To Die) is surprised that appraisers don’t keep themselves up to date, but doesn’t that fit right in with repeatedly working under onerous AMC conditions and complaining that somebody should do something about it?

    And Roy D. S. hit the nail on the head. When we work cheap every paycheck is cfritical. Why let AMCs be in charge of what we get and when? AMCs are in business because we let them be. As long as we don’t change the rules we will live with what we get. End of story.

    Incidentally, we are not yet ready to do what we need to do. I refuse work from low pay/slow pay/quickie turn/harassing AMCs, which is about all of them, but by golly they just go down the road and get somebody else. And forget engagement letters. It is pretty much their way or the highway. As long as we accept assignments from AMCs that shop everybody to find somebody that will do what they say we will not make progress. As it stands appraisers are competing to get crappy work and as long as that happens and we use review for gotcha you can bet we are in trouble.

    Unfortunately it seems attrition in our ranks is still needed to bring about a cure. Constant blogging about our poblems with our clients and doing gotcha reviews are pretty good signs there are still way too many of us. When will we blog about solving challenging appraisal problems and use review for instruction and improvement?

  6. I’ve followed ES for many months, as they owed me money as well (which I collected after initiating an uncomfortably brutal harassment campaign). Since the slow pay and no pay behavior lasted for many months prior to this bankruptcy event, I suspect at least part of the reason they lost their “large client” is because many appraisers complained directly to that client about not getting paid. As mentioned in a previous post, good riddance to ES.

  7. ES always struck me as rather unprofessional and fly-by-night. Their CSR’s generally spoke so fast I couldn’t understand what they said, their entire system was subpar for the industry, and they seemed to have a knack for hiding critical factors in assignments until after assigned. Have to agree; good riddance.

  8. Sadly, Edd, many appraisers don’t keep up-to-date on what goes on in our industry. They don’t read industry articles, websites or forums.

    As far as the Lender being responsible for the appraisal fee: good luck with that. The general position those lender take is that they already paid the AMC so as far as they are concerned they are in the clear.

    Doesn’t it make you feel all warm and fuzzy that our backs are covered? 🙂

    Happy New Year to you and Julie!

  9. We Appraisers need to do something to try & change the 30-45 days payment period stated by some AMCs.
    By the time you get your check its more like 56 to 60 days. During this long wait they are holding a lot of money for you. If the payment period was more like 7 or 14 days then Appraisers won’t so much money when an AMC goes out of business.

  10. I hear that legal opinions have a consensus that the lender is still responsible for the appraisal fee even though the order may have been “laundered” through an AMC.

    Undoubtedly it is better business not to wait until bankruptcy to get your collections done, but if you got caught holding the bag it may be some consolation that the lender still owes you.

    The question begged is why any bank would use a shakey AMC and if they did why would an appraiser want to work ever again for that bank?

    Of course the question on my mind as usual is why, since we are touted as being honest, any of us still work in the secondary market. Den of theives offering crumbs for your overnight best efforts.

    Sorry for those of you impacted, but good ridance ES!

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