An Evolving Symbiotic Relationship Between AMCs and Appraisers ????
Monday, August 11, 2014, posted on Appraisal Buzz
Scott Pickell – vice president and chief appraiser at LRES
A few quotes:
“As a former appraiser with nearly 30 years of experience and now an executive working at an AMC, I have observed a true evolution in the way appraisers and AMCs work together. The relationship between AMCs and appraisers started off unsteadily but has improved over the years. It has now reached a point of mutual respect.“
“When working as an appraiser, I recall some AMCs treated me as though I was a rookie in the industry despite my 20 years in the field at the time. There was no reason for that. When AMCs treat appraisers with the respect they deserve, appraisers will return that respect and produce better work.“
My comments: Maybe Pickell’s AMC respects appraisers but the way appraisers are treated by most AMCs does not indicate any respect.
Appraising in the U.S. started during the Great Depression when lenders needed appraisals for foreclosures. Until the 1990s, when mortgage brokers took over, lenders somehow managed their appraisals without armies of telephone calls for updates, 10+ page engagement letters, sending broadcast emails trying to get the lowest fees, etc. etc.
Somehow, since HVCC, appraisers are managed as if they were children, who have to be prodded incessantly and corrected to do their appraisals “right” to ever increasing requirements.
Appraisers are seen as barely competent and unreliable, who have to be heavily managed. But, all of this costs a lot of money, as compared with the old lender management of appraisers. Of course, mortgage broker management cost very little, if anything. Who pays for it today? Appraisers and borrowers.
The same “barely competent” appraisers are increasing required to provide lots of time consuming information and analyses which often do not contribute to the accuracy or reliability of their opinions of value.
Residential appraisers are often required to “support” all their adjustments. That’s fine if you are doing a conforming tract home. If not, it all goes downhill fast. What’s my answer? Turn down as much as possible anything not a conforming tract home. Or, change your geographic area to one that has a lot of tract homes. Working for AMCs with less hassle can help, but scope creep seems to be affecting all lenders.
Few residential appraisers are willing to do non-lender work. Learn how to do it, including marketing. I have special reports that can tell you about how it differs from non-lender work, and how to get work. This will reduce some of your lender dependency. See my ad above.
FYI, I have a Certified General license. I do a lot of 5+ unit apartment properties. They are easier than 2-4 units and I get much, much higher fees. There are few appraisers who do them in my area. Cert residential are not licensed for it and local commercial appraisers don’t like to do them as they prefer commercial and industrial properties.
Very interesting comment posted on an appraiser chat group by Charles Baker, SRA: (editor addition: A more appropriate comment by Pickell would be) “It’s my job to maximize profits for the company. If you wish to participate as a contractor that’s your choice. But make no mistake, our job is to service the client, reduce costs, boost our bottom line and reward our principals and shareholders. You may wish to participate in those profits by contacting our investor relations department, but don’t expect to get rich as an appraiser. Thank you very much.” I really like this comment as it says what a corporate manager would view the situation.
Link to the full article. http://appraisalbuzz.com/buzz/features/an-evolving-symbiotic-relationship-between-amcs-and-appraisers#sthash.QH5TBFby.dpuf
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I’ve been an appraiser for 39 years. I can certainly agree about some of the problems faced by appraisers working for AMCs. But I can also tell you that I ran a small AMC type of operation about 10 years ago and I had so much trouble with other appraisers that I finally gave it up. I did not use newbies, only experienced people. I paid them well and on time, gave them professional courtesy & respect, stood up for them in disputes, did not bother them unless I had to, etc. etc. etc. But the majority of them on my roster failed to keep appointments, argued with me over stupid things, did not return my calls promptly, were often rude & uncooperative, and some acted like spoiled prima donnas with egos the size of Nebraska. I had small number of excellent appraisers & the rest I could barely stand to work with. Only the 3 best would ever bother to update my simple web system so I constantly fielded status calls. One of the worst would, without authorization, collect the appraisal fee at the door without telling me and pocket the entire amount. It was common to have my clients call me and repeat some horror story they heard from angry refi homeowners who had a bad experience with one of my appraisers. I usually could not replace them because no one else wanted the work and were often rude or just hung up on me. It was also not unusual to contact appraisers at their work # and have a child (even a toddler!) answer the phone. So I can sympathize with the difficulties that AMCs experience with us too. Having been on the other side I have a feel for how difficult some of are to work with.
“Residential Appraisers are often required to “support” all of their adjustments”
Seriously? Yes, you better be prepared to show support for your adjustments in some way. Paired Sales analysis is not the only way to support adjustments but even that method can be used more often than you think. If you don’t have support for your adjustment how are you making one? I’m sure there are others but McKissock has a great course on deriving and supporting adjustments.
I’ve been an appraiser since 1974. I got my SRA in 1982 (Quit my membership in AI about 10 years ago) and at the time my experience was being reviewed the key issue for designation requirements was how often your appraisals were either above or below the contract price. If all of your appraisals were the same or higher than the contract price, the review went no further. I quit doing residential appraisals when I could no longer report a property’s true value. Many (most) of the people remaining in the mortgage appraisal business are people who do not have a problem with supplying appraisals that “hit the number”. There are still some old diehards who are fighting against the system but they are slowly losing the war. Others have found venues to ply their trade with individuals or organizations that do want “real numbers”. But those are becoming harder to find. Even in my current government job, the pressure to “get the numbers” where they can settle parcels has become overbearing. The appraisal business has lost its professional status. Interestingly, I have seen the same thing in accounting, but no one talks about it. It seems that the accountants are a lot more accepting of the situation. Don’t forget that when all the banks were failing, accountants were supposed to be auditing those entities and the failures should not have happened. I also see this in business valuation, where the accountants pay no attention to market data and value businesses based on cash flows and unrealistic rates to come up with the values their clients want. Professionalism is slowly dissipating from our society…and don’t even let me get started on the medical profession.
Jim, Im fairly new at appraising. Started about 24 years ago. Have done mortgage financing valuation the whole time. For the past 5 years, I have not been pressured to “hit the number” and I am not a diehard who is “fighting against the system”.
You work for the government now. Its possible that you are out of the loop.
You’re probably right. But I keep hearing that the banks are starting to loosen up on their credit requirements to be able to produce more loans and with that will come the push to market those loans. It won’t be long before we’ll be right back to where we were 6 years ago. There aren’t any bankers in jail, so why not expect the same thing.
I’ve been an appraiser since 1986. I now work in the county Assessor’s office and could not be happier. All this emphasis on conformity & coding of form reports is simply to allow the data-mining of those reports, creating a national property database which will be married with public records and eventually allow lenders to use AVM’s exclusively – eliminating the obstacle appraisers represent from the process. This will not end well …
Bologna. They have been saying that since the ’70s.
Baloney: Foolish, deceptive talk; Bologna: Sausage. ??