Editor’s Note: Here, one appraiser explains why he is better off after HVCC and shares the names of a few AMCs he says are worth working for. The individual profiled here has been appraising 21 years in a large metro area in Texas and wishes to remain anonymous.
Diary of a Happy (AMC) Appraiser
I’m not sure why so many other appraisers are having such a hard time with life after HVCC and I am not.
In 2000 I left a mid-size appraisal office and began working as a solo independent appraiser out of my home. Although there were only a few AMCs at the time, I knew that this was the way of the future for me. I have always seen the AMC model as a way for the fee-splitting appraiser could break free of the office environment. My experience of over ten years working in fee-split appraisal offices was mixed at best.
I was making really good money for several years at the office, however, the value pressure from local clients trickled down to become value pressure from the owner of the company. The owner assigned the work and could turn it on and off like a faucet, just like the local mortgage brokers who could use our company or not use our company for whatever reason. The idea of not having to drive to an office that reeked of burnt coffee, having to put up with constant phone ringing, overhearing conversations from the next cubicle, having to make small talk or teaching appraisal 101 to the newbies and trainees, having to split fees or putting up with anyone’s BS with respect to my opinion of value, seemed like a far off dream. And it was.
Breaking Free
I left that office and got my own local clients. The volume was less but I didn’t have to split the fee so I broke even on the money. The pressure to make value and difficulties collecting were still issues. In 2001-2002 I started seeing more activity from the AMCs. I signed up to get on every list I could and little by little the ratio of AMC work to local work began to change. I worked with numerous AMCs. Most of them are probably not in business anymore. Some of the big lenders like Wells Fargo and Bank of America started using their own management companies. These were primarily for convenience and management purposes and did not actually serve the purpose of separating loan officers from appraisers but they paid well and on time. There was little relief from the pressure to make value but the big advantage was that getting work no longer depended on taking donuts and coffee to a lender’s office or treating them all to lunch.
One day, my biggest client, a local Chase branch, called me in for a conference and announced that they were being forced to turn over all of their work to a third party management company. They were good enough to submit my name as one of their primary appraisal providers but they said they no longer had any control over how much work I got. Suddenly, nearly all of my work volume was coming from AMCs. I realized that my earlier dream of being autonomous was getting closer to becoming a reality.
AMCs, Fees & Turn Times
As a solo appraiser working out of my home I do not need that much work to keep me busy. Also, as the years go by, I spend more and more time with each appraisal. More time on market research and analysis, more time on extracting appropriate adjustments from the market, more time on the Cost Approach, more time on trying to pin down land value, etc. Admittedly, I don’t make the kind of money I used to but that is mostly by choice. If I want to cut corners and become a “form filler,” I could probably get back up there again. But if an appraiser pays attention to USPAP, Fannie guidelines, FHA rules, etc., he or she will find that appraising a house takes some time. Now, it can be done very quickly by just filling out a form but appraising at a professional level takes a while.
For this reason my volume has to be lower, so I don’t need more than two or three AMCs to keep me busy. I turn down a lot of work, sometimes because I can’t get to it as soon as they need it and sometimes because of fees. The AMCs that I accept work from pay nearly full fee as far as I’m concerned: in the low $300s is near full fee in my area. They all say they want the report in two to three days but I just update them with status via email everyday and they get it when they get it. I pay very little attention to their turn time requirements but I do take the initiative to update them with status regularly. If an AMC is willing to pay $325 and does not hassle me about value, then we will get along just fine. The minute I get a whiff of value pressure from any AMC I will no longer deal with them.
I’ve seen fee lists for certain AMCs with 1004 appraisals paying $225 or $240 or $280. Appraisers need to understand that they can negotiate higher fees. Just talk to them and tell them you’d love to work for them but your fee is $325 or $350 or whatever it should be in your area. If they don’t agree to it then just move on to the next AMC.
Fee Splitters and AMCs
If an appraiser is making a 70 percent split (which is a very good split in my area) and the fee for an appraisal is $350, then the appraiser gets $245. If that appraiser signs up with a bunch of management companies and starts working at home he or she can do better even if they accept the low fee assignments from some of the AMCs. I mean $275 from an AMC is better than a $245 fee split, right? No more driving to the office, no more burnt coffee, no more being subject to the whims and moods of the owner or reviewer who assigns work. Some appraisers complain about the guy who’s out there working for these low fees. Well, if they are making more than they used to, how can they be blamed?
Here’s where things may be going wrong. Suppose Jenny, a 65 percent fee-split field appraiser for a local appraisal shop, leaves and starts working on her own for various AMCs. She’s offered assignments that pay $275, which she accepts because it’s more than she’s used to getting. The AMCs then view that market as $275 and start sending work at that rate. The field appraisers at fee-split offices now have to split the $275. So some appraisers leave the split fee environment to start working on their own to make more money and the appraisers who stay in the fee split offices start making less.
Another thing is that certain appraisal companies have spent years “building profitable relationships” with high volume local clients. I can assure you that some have spent many thousands of dollars paying kickbacks in one form or another so they can continue to get the lion’s share of that office’s origination production. For them, HVCC is a threat. But for me, I am happy with the two, sometimes three, AMCs that keep me busy. I’ll never make $100,000 a year again because I had to cut corners in order to do that and I just won’t do it anymore. Today, I am a much different and much better appraiser.
AMCs and Pressure
One thing that I really like about AMCs, the good ones at least, is their policy on undue influence and restricted communication. For example, one AMC that I use actually has a separate department with its own phone number called the Undue Influence Department. Now how bad do things have to be before a company has to set up an entire department to deal with undue influence on appraisers? Anyway, I’ll admit I’ve had to call that number a few times. When Chase transitioned to third-party appraisal management, some of the loan officers and processors didn’t get the concept right away. When they would call and want to discuss value, which is strictly prohibited by the AMC, I would tell them to send me an email about their concerns. I would just forward the email to the Undue Influence Department and they would counsel the loan officer or processor. I had to do this on a few occasions with certain brokers, that I was use to dealing with on a daily basis before the change over, until they got the picture that I was not going to put up with their pressure tactics any longer.
One of the top producing loan officers tried to get me taken off their list as a result but that didn’t work. Then she tried to get my status changed to “inactive.” Nice try. For some of them it was a rough transition. They were used to having total control over appraisers. It really took a couple of years before they started to understand that I was not theirs to push around anymore. One AMC that I’m working with now has the following verbiage in each appraisal engagement letter:
“Attention Appraisers – Warning and Reminder.” USPAP and HVCC severely restricts appraiser communication. The only communication allowed is the scheduling and completion of inspections with a borrower. Do not communicate with the Loan Officer on any issue regarding the assignment and do not communicate with the borrower for any reason other than the inspection. Additionally, your violation of this warning is a breach of your agreement with (XYZ Appraisal Management) and will result in your removal from our approved appraiser panel and may be referred to the proper authorities.
I like this verbiage a lot. I am prohibited from arguing about the appraisal with a homeowner, lender, processor, agent or anyone. By contrast, local mortgage brokers and lenders used to insist that we go over the comps with the agents involved before coming in below sales price. Also, when local clients used to order appraisals for refinance they would always put the homeowner’s “estimate of value” on the order. Amazingly, the owner’s value estimate usually worked out to be exactly the loan amount divided by 80%. These days I never see a loan amount, value estimate or target value anywhere on a refinance assignment. This makes me happy.
Summary
In conclusion, my experience is probably different because I had already been working with AMCs for some time. I prefer them for the reasons stated above. For me HVCC is not a momentous change. It actually opens up more potential clients for me. If I can work out of my house with complete autonomy and make $70,000 per year, well, what’s not to like?
Sure I have complaints about the “profession” and the fees could be higher but I’m not blaming everything on HVCC. The only thing about HVCC that really worries me is the possibility of loopholes. I am afraid the HVCC as written is not going far enough to protect the autonomy of fee appraisers. I am afraid that they will water it down so much that it will be back to business as usual. That’s not the same as complaining about the concept of severing the appraiser/loan officer/mortgage broker relationship. As far as I’m concerned, that systemic conflict of interest had to be dealt with and it should have been done decades ago.
It may seem like I am promoting, supporting or otherwise trying to “sell” the HVCC but I am not. What I am advocating and supporting is putting an end to the systemic conflict of interest that has all but ruined what could have been a true and respectable profession. Obviously, the HVCC is not a panacea but most of the complaints I’ve been hearing from appraisers should be directed toward unscrupulous AMCs and unprofessional appraisers rather than toward HVCC itself.
Here are just a few of the satisfactory AMCs that I have worked for, in alphabetical order: Alliance AMC, Amerisave, eAppraiseIT, HomeFocus, JVI, NationStar Mortgage, Primary Residential Mortgage, ProValUSA, and Quantrix Valuation.
Sidebar
For survey results from over 3,700 appraisers on working with AMCs, pressure, fees and more, see HVCC Survey Results: Appraisers Still Feel Pressure.