There may be nothing more important on a baseball team that the pitcher. Of course the team is made up of many other players, but the pitcher is the one that controls the tempo, the pace and style of the game. The entire strategy of a game can pivot on who the pitcher is and what his preferences are. Does he throw fastballs, curve balls or is he a knuckleballer?
We can equate the same thing to the vendor manager at a bank or an AMCs. These are the individuals that set the tone for the organization, they control the preferences of speed, quality and price just like the pitcher does the type of pitch he throws.
The vendor manager that prefers quick turnaround and cheap price will inevitably end up with poor quality appraisals and ultimately more work for himself in the review of the appraisal. So at the end of the process is it really that cheap or quick?
A vendor manager that has a solid approach to managing the panel, a strategy for quality, turnaround and price, is the one that will win the game.
The plan for vendor management must start with a competent individual managing the process. Someone who is knowledgeable of the appraisal business, has an operations mind set and an eye for analytics and data. They must be well versed in developing strategic plans and be able to look at things in a holistic manner. A piecemeal approach to vendor management will not work!
Developing a plan that includes all phases of the vendor process is the first step. Things like:
1. Attracting new appraisers. Where do you find new appraisers, online, at ASC.gov, the association web sites, advertising, local appraisal coalitions, references, word of mouth? The answer is yes! But, take the time to develop a coordinated strategy that is efficient and effective.
2. Boarding new appraisers. What does the appraiser application look like? Does it ask the right questions and gather the correct information? Are you capturing appraiser fees to aid with establishing customary and reasonable fees? Do you know where the appraiser has worked in the past to aid in assessing geographic competency? Does the appraiser have access to the right data sources to be knowledgeable in his market? Are the sample appraisals being reviewed to determine if the end product is what is desired?
3. Validating the appraisers credentials. So the appraiser is licensed, is that enough? In this new regulatory environment the vendor manager better have a program in place to ensure the appraiser's previous work history is acceptable. Analyze any previous disciplinary actions and make a determination of acceptability. A background check is critical if you care about whom you engage to enter your clients’ homes.
4. Competency exams. Knowing your appraiser understands what the appropriate attire is for an appraisal inspection is a good start. Does the appraiser know the difference between a hypothetical assumption and an extraordinary assumption? Do they understand Fannie Mae and Freddie Mac guidelines....I mean really understand them. Testing you appraisers is something every bank and AMC should be doing!
5. Scoring your appraisers. Once you've invested all of the above into placing the appraiser on your panel, you better have a very robust and objective way to score them against their peers. Not just speed of delivery or how low their fee is. Measure their quality using weighted rules and scores, number of revisions requested, apply a rating when reviewing the appraisal. I know defining quality is difficult, but it has to start somewhere!
6. Selecting the appraiser. The vendor manager should be focusing on many things here, not just price and turnaround. This concept is supported in the Interagency Appraisal and Evaluation Guidelines. Competency, proximity, qualifications, experience, designations, none of these are price or turnaround time. Banks and AMCs force appraisers to complete appraisals in seven days or less. Have we ever stopped and asked why the industry needs the appraisal done that quickly at the expense of quality? Has anyone ever signed a purchase agreement and closed in less than 30 days?
7. Working with the appraiser. Does the appraiser make the appointment quickly, do they communicate appropriately and do they message and respond when called or emailed. Customer service is starting to creep its way into defining what a good appraiser is today!
8. Reviewing the appraiser. Are you scoring the appraisals based on objective, systemic rules and criteria? Are the results of the review being incorporated into the selection of the appraiser?
9. Surveys on the appraiser. Did the appraiser show up on time, dressed appropriately, was he courteous, and believe it or not, was it the same appraiser you assigned to perform the appraisal?
10. Maintaining the profiles. The vendor manager should be regularly updating the appraisers profile, asking for additional information, annual E & O policies, license updates, and pinging databases to ensure licensing status.
11. Mandatory reporting. There are those times when an appraiser doesn't perform as expected by regulation. Banks and AMCs have an obligation to refer these appraisers to the state regulatory officials. This process needs to be held to high standards that comply with state and federal regulations. But in the end, the bad appraisers, those who lie or misrepresent, commit fraud, etc., need to be reported to ensure a quality vendor panel.
12. Continuous improvement process. The most important aspect of the vendor manager might just be this… continuously repeating the steps above searching for better, more competent appraisers. This process never ends. As appraisers "score" themselves out of the opportunity to receive appraisal orders, new appraisers need to be allowed to enter the rotation. The good appraisers get more work and the bad appraisers don't. Pretty simple!
As you can see, the vendor manager is a key to a bank's or AMCs success. Any efforts to scrimp, pinch or cut corners will only make more work for the bank or AMC and ultimately it will cost more in the end of the process.
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