In reading through the comments on this post about Congresswoman Biggert’s (R-ILL) promotion of appraisal independence, it is clear that appraisers have a lot of problems with Appraisal Management Companies (AMC’s).
Coincidentally, yesterday I was reading though a 2006 NAR Survey of Appraisers that asked several questions about the appraisal profession. One of the questions had to deal specifically with whether there should be regulation of Appraisal Management Companies:
Seventy-three percent (73%) of respondents believe there should be Federal or State regulation of Appraisal Management Companies. Eleven percent (11%) believe this regulation should not exist and sixteen percent (16%) are not sure.
Seventy-three percent is a fairly high number. And I suspect that if the survey were offered now in 2008, that number would be even higher.
Which poses the obvious question without an obvious answer? How do you regulate AMC’s?
-Do you ban them completely? (Seems pretty heavy handed.)
-Do you place them under the federal regulations that oversee appraisers? (Due to the lack of state funding, that does not seem to be a very effective solution.)
-Do you enact new legislation or regulations governing how AMC’s operate? (Politically Difficult)
There doesn’t seem to be an obvious answer. And ultimately, I think that the marketplace could handle this problem. Appraisers need to demand better from their clients. Because if AMC’s just put a greater emphasis on the quality of the appraisal, and in turn, paid more for that quality appraisal, I suspect that a lot of the complaints about AMC’s would fade away.
Now I recognize that demanding better is easier said than done. And in a down market, when you’re trying to put food on the table, any little bit of money is useful. But when the US pulls out of this economic downturn, (and we will), it would be good for appraisers to start demanding better of themselves and better from their clients. Don’t accept comp checks. If you can’t produce a quality accurate appraisal for $180, then don’t accept the assignment. If your client or AMC starts pressuring you to reach a predetermined value, then report that client, and stop working for them. Ultimately, I think appraisers could solve a lot of their problems with AMC’s, if they simply demanded that the AMC pay more for a better appraisal.
Anyway, those are my thoughts. But maybe I’m missing the real issue. What do you think? How would you improve the AMC structure?
Manager of Appraisal Specialties