Portland Area Real Estate Appraisal Discussion

Due to the shortage of appraisers in Portland, Oregon (and other places around the country), appraisers are bombarded with requests from Appraisal Management Companies (AMCs) requesting that they fill out mountains of forms; provide copies of identification, licenses, and insurance; submit to background checks, provide examples of work; and apply to be on the AMC’s roster of appraisers.  So how do appraisers know if the AMC will be a trusted client?  How do appraisers know if the AMC will treat them fairly?  Will appraisers be confident that private information will be safe?  The AMCs vet appraisers, but do appraisers screen AMCs?  Perhaps appraisers need to scrutinize AMCs just as diligently before doing business with them.  Here is a list of seventeen things appraisers could do before signing up on that next AMC roster. 

1. Most states require that AMCs obtain licenses. In Oregon, appraisers can go to the AMC Database put out by the Appraiser Certification and Licensure Board (ACLB) to see if the AMC has a license in good standing. Appraisers can also call the appropriate state AMC regulator for information that might not be available online. You worked too hard for your license to work for someone who is not licensed.
2. Ask the AMC if they have ever been investigated by any state AMC regulators or if they have been involved in any lawsuits related to appraisal management. If so, ask them to explain the outcome of the investigation.
3. Obtain the AMC’s list of base or minimum fees paid for common appraisal products in your area. If starting fees are not acceptable, then you do not need to waste your time moving forward with the AMC screening process.
4. Inquire how many days before appraisers can expect to be paid following completion of the appraisal report. Remember money in 15 days is much more valuable than money in 90 days, especially in terms of business operation. Don’t work for AMCs that fund their growth on loans from independent appraisers unless you are compensated appropriately for risk and interest on credit.
5. Request copies of the AMC’s liability insurance and find out what that insurance covers. Would it cover a vendor appraiser who accidentally caused property damage at a subject property?
6. Determine if there are any fees associated with delivery of appraisals to the AMC’s online portal. Many AMCs offset the cost of their technology through delivery fees to appraisers. If the AMC has a “technology fee” don’t worry, you can add this to the price of your appraisal along with the appropriate third-party outsourcing markup.
7. Google the AMC’s name and see what comes up. This might seem obvious, but some AMCs have been in the news for lawsuits related to unfavorable treatment of appraisers. You do not want to waste your time vetting an AMC that has a bad reputation. Even if no lawsuits come up, a quick Google search could result in a feel for the company and let you know if this is a company you want to work for. Remember that homeowners might think you work for this AMC when you show up to do the appraisal. Is this a company that you are okay with if homeowners get confused and think you work for them?
8. Go to national online appraiser Forums like 100% Real Estate Appraisers or I am a Real Estate Appraiser or a local appraiser forum like Portland’s NW Appraiser Forum and search the group for threads about that AMC. If you don’t find a thread, put one out there like, “Anyone ever worked with AnytownAMC? Was it a good experience? Did they pay you fairly and quickly?” You might be surprised how much you find out.
9. Ask for references from other appraisers who have worked with the AMC recently. You can interview those appraisers and ask if they have been treated well. Just remember that the appraisers on the reference list are more likely to speak positively about the AMC.
10. Request that the AMC obtains a business credit report through your favorite business credit reporting company. Reports cost between $30 and $100, but you can ask the AMC to pay for this expense in exchange for your consideration with being on their roster of appraisers. Doing business with an AMC that has poor credit could cost you big. Several years ago, I had to send several threatening letters to one AMC and book flights to visit them before getting paid. Soon after I was paid, the AMC went out of business. I found out through social media that other appraisers had been stiffed by that same company.
11. Obtain temporary access to the AMC’s online appraisal delivery portal. If the AMC has a poor online ordering system, then working for them might be a headache.
12. Review the AMC’s policy on appraiser performance scoring. Suppose that you only accepted more complex assignments (those that tend to raise more quality control red flags and take longer to complete) but you always complete the project on time. Will your performance score look inferior to another appraiser who only accepts easy assignments?
13. Determine if the AMC (not Fannie Mae, we already know what they do with appraisal data) is collecting data from the appraisals they manage and if so, will that data ever be sold?
14. Inquire about AMC’s quality control staff. Questions might include how many quality control staff members are licensed appraisers and if their performance is in any way judged by or linked to how many revisions are obtained from appraisers. Often the best AMCs to work with have a well-trained quality control staff who can act as a firewall between appraiser and the lender. (Lenders don’t always recognize a well-supported and reasonable appraisal that was produced despite limited data. An experienced AMC review department can be an ally.)
15. Ask for a copies of the AMC standard engagement and independent contractor agreements. The appraiser can skim the contracts for non-customary appraisal requirements such as, required interior closet photos on all appraisals. Ask your attorney to review the agreements. It is likely that the AMC engagement agreement moves too much liability from the AMC to the appraiser (you would do the same if your lawyer wrote the contract), so it is important for appraisers and their attorneys to amend the AMC engagement agreement to bring the liability back into balance or avoid working with some AMCs. Amending these long engagements can be costly, but do not forget that such costs will be billed back to the AMC in the form of higher fees.
16. Review documentation concerning the AMC’s request for value reconsideration process. It is likely that if you appraise for an AMC long enough, someone will dispute your value opinion. It is important to know in advance if the AMC has a fair process for value reconsideration, or one that puts undue burden on the appraiser.
17. Check the AMC’s data protection policy and ask what steps have been taken to keep your private information safe. Also ask if the AMC has ever had any data breaches and if so, determine what systems have been put into place to ensure that data breaches do not happen again. Does the AMC have a policy that requires them to alert appraisers if they believe a data breach was possible?

I hope that you find this list helpful even though it is written partly in jest.  My goal is to elicit thought and discussion about the imbalance of power and liability in our industry as it relates to appraisals done for AMCs and lenders.  Remember that if an AMC fails in parts of your vetting process, the appraiser could charge a complex client fee to account for the shortcomings.  If you missed my interview with The Appraiser Coach Dustin Harris, about my blog and how our business focuses on non-lender (non-AMC) type appraisal work, Click Here.

Did I leave anything out or do you want to join in the conversation?  Let me know in the comments below.

If you find this information interesting or useful, please subscribe to this blog and like A Quality Appraisal, LLC on Facebook.  Also, please support us by making Portland real estate appraisal related comments on our blogs and YouTube videos.  If you need Portland, Oregon area residential real estate appraisal services for any reason, please request appraisal fee quote or book us to speak at your next event.  We will do everything possible to assist you.

Thanks for reading,

Gary F. Kristensen, SRA, IFA, AGA

Great stuff, Gary. I love #10. While this would never happen in the real world, I think this falls under "jest" as you mentioned. It is very wise to consider whether someone can and/or will pay. This reminds me of some AMCs asking appraisers to pay for background checks. Being that state licensing agencies mandate background checks, this extra step is not necessary. I have never jumped through that hoop and I would not do so either as it doesn't make logical sense and it's mostly the sign of a bad client since the bad ones tend to ask for absurd things. Great job Gary.

Ryan, you narrowed in on my favorite one on the list and that was exactly where I was going with it. I too have never paid for a background check beyond my licensing background check.

Gary, you may have written this in jest but you provide a good template for vetting AMC's. For too long appraisers have came to the AMC's like little lost puppies begging for a scrap of food but we now have an opportunity to flip the script and make sure that the AMC's that we do work for are indeed reputable and stable. It would be interesting to see the AMC's reaction to being asked these questions by more and more appraisers.

Tom, thank you for the comment. I love the way you described appraisers being like puppies. It is nice to see the tables turn, even if it could be short lived. We have been waiting.

I have had similar issues with getting paid by a troubled AMC. Glad you got paid before they went out of business!

Kevin, thank you for your story. I know that many appraisers have been hurt when AMCs go out of business. It is scary when that happens.