Reader Comment on AMC’s

I just thought I would highlight this particularly well written comment from

Howard Ginsburg:

An appraiser gets paid $350 – $450 for a 1004 no matter what the loan amount is or the value of the property. The broker, lender or agents make their money on a percentage or the amount of the loan. It’s they who make the big bucks dependent on the loan amount or the sales price. What does it matter to the appraiser? Not a hell of a lot since the appraiser gets his $350 – $450 no matter what the value is. Who has pressured the appraiser? The broker, lender or agent is to blame for ‘pushing value’.

If Fannie and Freddie want a firewall between the appraiser and the one ordering the appraisal shouldn’t the fees be paid by the broker, lender or agent for the AMC since they are the ones who have been influencing the appraiser?! I don’t understand why the appraiser should pay for this service. It just does not make any sense. The broker, lender or agent has a lot more interest in the value amount then the appraiser. Appraisers need to start addressing this issue and suggest that the fees be paid by the other party involved not the appraiser. The AMC fee should not be the appraiser’s responsibility!

This comment explains quite nicely why appraisers are so upset with Appraisal Management Companies.

  1. B. Clery

    The client/user pays the appraiser to estimate the collateral’s market value. The client/user of the appraisal is the lender who unfortunately has limited interest in the validity of the appraisal because they only desire the loan points and fees before bundling it with other mortgages to sell into the secondary market.
    Appraisal Management Companies (AMC) are mere surrogates for the lenders to manage the outsourced appraisal function. Most of these AMC parasites have cut the typical appraisal fee to $200 – $300, yet lie to the borrower that the appraisal fee is still $350 – $450. Litigation has commenced against some AMCs for these deceptive practices. And many appraisers are refusing to do the work and assume the liability for fees approaching minimum wage.
    Brokers and Agents will do almost anything to close a deal and collect their commission, so they should never be considered the appraiser’s client, responsible for payment of the appraisal report.

  2. Justin Morton

    B. Clery,
    I think you and Howard are actually both making the same point, you’re just coming at it from different positions.
    The key point seems to be that AMC’s shouldn’t be taking their operating fees from the appraiser, but instead from the lender/broker.

  3. Dan Wilson

    As per FHA guideline the appraisal fee is to be fair for the market. It seems that an easy fix is that the Appraiser be paid the fair market value for the appraisal and the AMC get the fee that they can get out of their client for what is fair market for their job. Now in saying this, that could mean the borrower could be charged even more. But the Client should have to pay for the appraisal who ever that is which on most home loans it is the lender, not the borrower. With all the new rules that are being discussed it is time for the Appraisers to get involved. Start talking to the people on the hill to get some real down to earth, ethical and simple rules that are easy to follow and to uphold. It seems that we make laws and then do not enforce them.

  4. Anonymous

    Re: The original letter.
    In theory you have a good point. You are applying your logic with the assumption that there is justice in the world however.
    Try viewing it this way and it will give you a better understanding of what just happened to appraisers. Picture banks and AMCs as 15,000 lb elephants and appraisers as nothing than gnats flying around them. At best we little more than an annoyance in their eyes and ears. Even if we were to band together (an impossible task) we would never accomplish anything lasting. Come to think of it gnats do seem to be capable of banding together; something that appraisers are incapable of doing.
    Remember the petetion that went around a year or two ago complaining about pressure from lenders? The elephant used that petition against us to create HVCC. The elephant is intelligent beyond belief and has resources (money), contacts (politicians), and organization (American Bankers Association, etc). The knats have one thing; fierce independence. If they weighed 15,000 lbs that could possibly be enough to give the impression of justice.
    Can you blame them? The elephant saw that the gnat had a very lucrative income and no chance of defending themselves. With very little effort they called in a few favors and created HVCC…thus forcing the gnats to hand over 1/2 of their income.
    If it’s justice you’re after, raise a few billion dollars and make friends with every politician in Washington. Maybe you’ll have a chance and finding it then.

  5. Francesca Gaul

    I have been appraising in the Florida Keys for 10 Years. It is a specialized area where million dollar homes share the same street as trailers. I have spent 10 years learning this market to have management companies hire Miami appraisers for 200.00 an appraisal. Appraisals were 350.00 in this area when I started. I am now working twice as hard for half the money. I have no problem with AMC’s except that they take 1/2 my earnings. As I see it – Appraisers are the most important part of any Real Estate transaction (we also have most of the liability) and yet we are the lowest paid. Having an AMC tell you they want an appraisal 24 hrs after inspection and USPAP compliant makes me think they have never taken a USPAP course. Underwriters should be required to take USPAP course and understand them.