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.
Respect is a critical component in today's market as AMCs and appraisers have a somewhat forced interdependent association. While there is always room for improvement, AMCs and appraisers have seemingly cracked the code when it comes to working with one another. Consequently this has resulted in a healthier and much smoother appraisal process. While the relationship has come a long way, there is still some unnecessary tension that must be eliminated in order for both parties to collectively reap the most benefit. In effort to continue to improve the working relationship between AMCs and appraisers, we must seek to understand one another's key roles and responsibilities.
Working from both sides of the coin, I am in a unique position to have personally experienced some of the struggles and concerns that surface from both the part of the appraiser and the part of the AMC. The root of all tension in this business is misunderstanding. When appraisers and AMCs fully appreciate one another's importance to the overall appraisal process, a more harmonious working relationship ensues.
Think about this analogy: appraisers are to AMCs what reporters are to editors. Appraisers are in the trenches, taking pictures and collecting all the facts needed to make an accurate valuation. AMCs must review, proof and edit the hard work of the appraisers, ensuring a thorough appraisal has been produced to reduce errors and avoid timely requests and corrections from the underwriter, who in this scenario would be the publisher. Quality AMCs are in business to enhance appraisers' income with less hassle by streamlining the appraisal process and giving the client an acceptable final product in terms of high quality and limited conditions. Appraisers should understand that any revision requests coming from an AMC are client-driven and are not requests from a QC reviewer or an excuse for a power play.
One misunderstood aspect of the AMC/appraiser working model is fee sharing. Appraisers rightfully feel a sense of ownership of their appraisals. After all, it is their hard work; they did the heavy lifting when it comes to producing an accurate valuation. Therefore, they feel they should be compensated in full for their work and do not understand why they have to share fees with an AMC. What many appraisers do not understand is that AMCs have to pay several thousands of dollars in compliance fees in order to keep their business running and provide qualified and compliant information in response to increased lender rules and regulations. AMCs are fulfilling an industry need that has been mandated by legislation, and they too experience heavy cost burdens brought on by today's environment.
Sadly, another cause of tension is that some unprofessional AMCs neglect to pay their hard-working appraisers on time. AMCs must always give the appraiser or lender a specific timeline of when to expect payment. Professional AMCs pay appraisers within 30 days of the completion of the report. Anything beyond 45 days is simply unacceptable.
The AMC needs to respect the appraiser's position and treat them as the professional experts that they are. 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.
Both appraisers and AMCs have specific jobs to do, and when one of us fails to do the job, the other has to scramble around to compensate. If everyone fulfills their responsibilities as expected, the process goes smoothly for all involved. AMCs provide appraisers with tools designed to make their jobs easier, but it is up to the appraiser to take that step and utilize these resources. For instance, AMCs have developed proprietary integration hubs that link their mortgage lending and servicing clients with local appraisers to speed up the process of delivering appraisals and to improve quality control so that fewer reports need to be returned for corrections.
It is a highly symbiotic business relationship. Appraisers are a reflection of the AMC, and vice versa. Appraisers are crucial to a good customer experience in any housing transaction as they are one of the few people that the point of contact meets when a full appraisal is performed. Therefore, the appraiser is not only representing himself/herself when they meet the point of contact, but also is representing the AMC and the lender; understanding this is very important to all parties involved. We all want to leave a good impression.
I am happy to see progress being made in terms of AMCs and appraisers working together. Both parties should continue to cultivate, enrich and protect the mutual respect and appreciation for each other.
Scott Pickell is vice president and chief appraiser at LRES, a national provider of residential and commercial valuations and asset management for the mortgage, banking, credit union and real estate industries. For more information, visit http://www.lres.com.
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