Some time has past since my last post on the subject of the HVCC and Appraisal Management Companies (AMC's). Since then, the rest of the mortgage industry and home owners have experienced many negative aspects from it. The most common complaint I've seen from the consumer is that appraisers that are unfamiliar with a neighborhood are given appraisal assignments in that neighborhood, resulting in inaccurate appraised values. What hasn't come to light is how these uninformed appraisers got the assignment in the first place.
Most AMC's are announcing appraisal work by broadcast email to all their roster appraisers in the general area. The assignment comes out with a suggested due date and appraisal fee - fixed fees being applied to variable situations. The first appraiser to respond to the assignment at the suggested fee and due date gets the job. An appraiser is allowed to ask for a higher fee or extend the due date, but if he responds that way, the assignment is not finalized until the AMC approves the request. In the meantime, all the other appraisers have an opportunity to finalize the assignment if they agreee to the AMC's terms. Some may try to argue that this is how the going rate is determined. Not when you have appraisers that are not fully informed and therefore cannot quote a fee that will allow them to make a healthy profit margin.
Appraisers who are not experienced or desparate for money typically accept the terms dictated to them without knowing anything about the property, location or the complex issues that will have to be dealt with. "Secure the job first, ask questions later". It is only after they begin to work on the assignment when they realize that there is a lot more work involed than initially thought and when all expenses are factored in, they will make the equivalent of a 0-2% profit margin when finished. So they try and cut corners. Or, they simply don't have the knowledge or know how to deal with the issues.
I have seen some improvement by some AMC's in assigning work and recognizing that you can't apply fixed numbers to a varialbe enviornment and expect to get the job done right. What bothers me most is the posts I've read by veteran appraisers who say that all the AMC practices are fair (most of these appraisers are affliated with the management or ownership of an AMC). To them I say, "man up"! Aren't you in business to make a profit? The AMC's are! Are you willing to let AMC's dictate your worth, experience and knowledge becaue they give you consistant work at a 1-3% profit margin! While they are easily making 5-10 times more than that! Raise your head from that appraisal report and learn a little more about what it takes to run a healthy business!