An appraisal management company is a business that oversees the appraisal process for a client. This can include choosing an appraiser to review the final report and ensuring it meets all requirements. Appraisal management companies are becoming increasingly popular, as they can help streamline the process and ensure that everything goes smoothly.
How An AMC Works
An Appraisal Management Company is a third-party service provider that contracts with lenders and appraisal management services to provide appraisals for home buyers and refinancing homeowners. When you contact your lender to begin the mortgage process, they will order an appraisal on the property through the company.
The selected appraiser will visit the property, take photos, measure the square footage, and inspect the home’s condition. They will also research recent sales of similar homes in the area to determine the fair market value of your property. Once their report is complete, they will send it back to the lender for review.
If you’re considering using this type of company for your next home purchase or refinance, it is essential to understand how they work and pay. Most of them are paid a flat fee per appraisal, regardless of the property’s value. This fee is typically passed on to the consumer in a higher appraisal fee. The company may also receive a percentage of the loan amount as payment for their services in some cases.
It’s important to remember that an appraisal management company is a for-profit business whose goal is to make money. As such, they have little incentive to provide accurate appraisals that could potentially lower the property’s value and reduce their profits. If you’re concerned about getting an accurate appraisal, you may want to request that your lender use a different appraiser outside of its system.
Can A Lender Use An Appraisal Management Company?
Yes, a lender may use an AMC to manage the appraisal process. The lender typically hires the company and provides specific instructions for the appraiser. It can help ensure that the appraisal is completed timely and in accordance with the lender’s requirements.
It is also beneficial because it can provide a quality control check on the appraisal. In addition, it can help to ensure that all appropriate parties receive a copy of the appraisal report. Lastly, the company can liaise between the borrower, lender, and appraiser if any questions or concerns arise during or after the appraisal process.
Who Regulates Appraisal Management Companies?
The Dodd-Frank Wall Street Reform and Consumer Protection Act established the Appraisal Subcommittee (ASC) of the Federal Financial Institutions Examination Council (FFIEC) to oversee the appraisal process for federally related transactions.
The ASC is charged with protecting consumers and promoting uniformity in appraisals by setting minimum requirements for state registration and certification of appraisers and accrediting appraisal management companies.
Appraisal management companies must be registered with the ASC to perform federally related transactions. To register, they must:
- Be owned by one or more natural persons who are US citizens or resident aliens;
- Have a net worth of not less than $250,000;
- Have no material financial interest, direct or indirect, in any appraiser who performs appraisals for the company;
- Be affiliated with a depository institution, credit union, or state-regulated consumer finance lender subject to examination by a federal banking agency or the National Credit Union Administration; and
- Comply with other requirements as set forth by the ASC.
The Dodd-Frank Wall Street Reform and Consumer Protection Act also requires appraisal management companies to have a written agreement with each appraiser they retain, which sets forth the terms and conditions under which the appraiser will perform services for the company. In addition, they must maintain a list of all appraisers from whom it receives services, as well as copies of all written appraisals prepared by those appraisers.
The Federal Trade Commission (FTC) has also issued guidance on the use of appraisal management companies. The FTC’s “Guidance for Industry: Appraisal Management Companies” provides an overview of the role of Appraisal management companies in the appraisal process and offers best practices for how they should conduct their business.
What Role Does An AMC Play In The Appraisal Process?
It is essentially a go-between for the lender and the appraiser. They manage the appraisal process by contracting with appraisers, collecting and reviewing appraisal reports, and providing feedback to both parties. Essentially, they act as a quality control measure to ensure that everyone is on the same page and that all deadlines are met.
They can also help lenders stay up to date on market trends and changes in values. By doing so, they can make more informed decisions about what properties to invest in. Additionally, they can help keep costs down by negotiating lower fees with appraisers.
How Does An Appraisal Management Company Qualify Appraisers?
To qualify an appraiser, the company must first ensure that they meet the requirements set forth by the Appraisal Foundation. These include being licensed or certified in the state where the property is located and qualified as an appraiser by meeting certain experience or education requirements. All of the appraisers must also be registered with Fannie Mae or Freddie Mac.
It will typically have a panel of pre-approved appraisers that it draws from when ordering an appraisal. However, if an appraisal is needed for a property located in a state where they don’t have any appraisers, they will still be able to order one as long as they meet the requirements set forth by the Appraisal Foundation.
It must also ensure that the appraiser they select is qualified to appraise the specific type of property being appraised. For example, an AMC would not want to use an appraiser specializing in residential properties to value a commercial building. In addition, if an appraisal is for a complex or high-value property, it may choose to use an appraiser who is more experienced or has greater knowledge of that type of property.
The main reason why Appraisal management companies are so particular about which appraisers they use is because their reputation is on the line. An appraisal management company that orders an appraisal from an unqualified appraiser or one who does a poor job could end up getting sued by the borrower, the lender, or even the government. So, it is in their best interest to only use qualified and experienced appraisers.
You may be wondering why there are so many different requirements for becoming an appraiser. The reason for this is that the role of an appraiser is very important. They are responsible for providing an unbiased estimate of a property’s value, which can significantly impact things like mortgage rates and loan approvals. Therefore, it is essential that anyone who performs this task be qualified and professional.
What Is an AMC Fee?
An appraisal management company fee is a charge assessed by the company for its services. This fee is typically a percentage of the total appraised value of the property and is paid by the lender to the appraisal company.
The use of appraisal management companies has become increasingly popular in recent years, as they provide a cost-effective way for lenders to outsource the appraisal process. While Appraisal management companies can save lenders money, they also can increase costs for borrowers. Borrowers should be aware of these fees when shopping for a loan, as they can add hundreds or even thousands of dollars to the cost of a mortgage.
Learn More About An Appraisal Management Company (AMC)
An appraisal management company offers various services such as appraiser selection, appraisal ordering, and quality control. Using an AMC, you can ensure that your appraisal process will be smooth and efficient.
If you’re in the market for a new home or are refinancing your current one, it’s essential to know about appraisals. Call ExcelAppraise at 1-801-882-2292 or request a free quote today!