Today a large percentage of residential real estate valuations are coordinated by appraisal management companies. For appraisers, working with AMCs is almost a necessity. If you are new to the profession or currently working to become a home appraiser, you’ll want to know how to establish good working relationships with AMCs.
Let’s look at how appraisal management companies work, how to get started with AMCs, the pros and cons, and—perhaps most importantly—how to choose the right AMCs to partner with.
Additionally, we’re sharing insights from appraisers who answered our survey question, “What’s your best tip for working with AMCs?”
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How do appraisal management companies work?
An appraisal management company (AMC) is essentially a middleman between appraisers and mortgage lenders. AMCs are independent companies hired by lenders to manage the appraisal process. They handle administrative and operational functions, including appraiser selection and quality control.
Here’s how it works: A lender orders a home appraisal from an AMC. The AMC then selects a state-licensed or certified appraiser to complete the assignment. Next, the appraiser performs the property valuation and delivers the appraisal report by a certain deadline. Then AMC staff review the appraisal report for quality and USPAP compliance. They may send it back to the appraiser for revisions before submitting the final product to the lender. Finally, the AMC collects payment from the client and pays an agreed-upon fee to the appraiser.
How to get started with AMCs
To start working with a particular AMC, you’ll need to reach out to the company and request or apply to be added to their vendor list. The terminology varies among AMCs, but often you can explore their website and submit an online form to join their “vendor network” or “panel of appraisers.” The vetting process, at minimum, will include verifying your appraisal license and credentials with the state governing board. They may also request an interview.
Once you’ve been added to the AMC’s appraiser panel or list of approved vendors, you can begin accepting appraisal assignments from that company.
Your status will be that of a vendor or contractor. You are not a full-time or part-time employee of the AMC, but rather an independent contractor or “fee appraiser.” You will be paid a fee for each assignment upon completion.
You don’t have to work for just one AMC at a time. You can be on the vendor lists and accept assignments from multiple appraisal management companies. Working for multiple companies is recommended so that you don’t have all your eggs in one basket.
Before you go out and start getting on those AMC vendor lists, keep reading to review the potential pros and cons and learn how to identify the best AMCs to work with.
Pros and cons of working with appraisal management companies
There are several benefits of working with AMCs, but there are downsides as well. In fact, according to NAR Research Group’s 2023 Appraisal Survey, 54% of surveyed appraisers cited AMCs as one of the biggest challenges in their business. Here’s an overview of common upsides and downsides for appraisers:
- Pros of working with AMCs:
- Good source of work – AMCs handle the volume of appraisals for many national lenders, so they can provide you with a steady stream of business.
- More time to focus on the valuation – AMCs handle administrative and operational tasks, allowing appraisers to focus on the valuation itself.
- Access to resources and tools – Appraisers may enjoy access to specialized tools, continuing education, mobile solutions, and other innovations that AMCs invest in to improve efficiency.
- Cons of working with AMCs:
- Lower fees – Less money goes to the appraiser because AMCs take a cut of the appraisal fee in exchange for their management services.
- Fast turnaround times – Appraisers may be asked to complete assignments in a relatively short time (e.g., 3 days).
- Lack of direct relationship with lenders – Typically, you won’t have any direct contact with the lender who ordered the appraisal, so you can’t ask questions, discuss problems, or develop any relationship or rapport with lender clients.
How to choose the right AMCs
To prevent challenges and ensure smooth operations, it’s crucial to select the right AMCs. We recommend taking the time upfront to find a few good AMCs that value your appraisal expertise, then building relationships with that smaller group.
Use the following steps to choose the best AMC partners for your appraisal business.
Step 1: Find AMC candidates
Start by developing a list of appraisal management companies you could potentially work for. You can find AMCs by:
- Checking state websites
- Checking AMC directories (e.g., the Allterra Group AMC Directory)
- Checking appraiser forums and blogs
- Talking with other appraisers
Step 2: Investigate each appraisal management company
Next, you’ll need to dig deeper into individual appraisal management companies. Is the AMC a quality company with an excellent reputation? Does it pay fairly based on assignment conditions? Does it have convenient payment schedules? Does it treat appraisers professionally? Does it expect a well-done, credible, USPAP compliant appraisal in return? All of these are signs of a good AMC.
For each company you decide to investigate, it’s a good idea to do the following:
- Ask for information: Check with your state board to see if they are properly registered, and ask about previous complaints.
- Check their website for info on:
- Policies and procedures – Including indemnification clauses
- Payment policies – 15 days, 30 days, ACH payment?
- Appraiser program benefits – Auto-assignment, fewer emails and calls, faster payment?
- Appraisal independent hotline – Can they be reached if there is a problem?
- Appraiser bulletins and announcements – Do they help keep you informed with industry changes?
- Industry reference materials – Are they a source for information and guidance?
- Training materials – Do they help you do the right thing?
- Appraisal helpline – Do they offer assistance before submitting the assignment?
- Ask for a copy of a typical engagement letter – Determine your scope of work.
- Ask for the fee schedule in your area – Complex properties, trip fees, etc.
Step 3: Narrow your list to select the best AMC partners
Finally, you’ll want to narrow your list down to just a handful of AMCs. Select five or six so that you can spread your work out. It’s better to get one to two appraisal orders per week from five or six clients vs. ten orders per week from just one AMC. Why? That way, if the AMC loses a client or bank customer and their work in your area dries up, you will still have other clients to rely on for business.
Best tips for working with AMCs
How can you navigate potential challenges and work smarter with your AMC partners? We asked our community of real estate appraisers, “What’s your best tip for working with AMCs?” In a nutshell, our survey respondents recommended that you should:
- Prioritize communication
- Ensure timely delivery
- Be friendly and polite
- Get to know the AMCs and their practices
- Don’t sell yourself short
Here are several helpful comments we received from appraisers regarding the best tips for working with appraisal management companies:
“Communication. Timely delivery.”
“Communication! Knowing the full requirements of each of their lenders. Keeping them up to date on the status of the assignment.”
“Have clear communication with the AMC about the client’s requirements and expectations for the report.”
“Lots of communication throughout the order.”
“Respond as soon as possible, keep them updated and informed.”
“Always remember to update them regularly!”
“Keep the AMC updated about attempts to set up appointments, scheduled appointments, completed inspection and any delays that come up during the process, and any unexpected surprises that come up during the inspection.”
“Keep them updated every single step of the way or they will send you thousands of emails and texts.”
“Be courteous, friendly and polite.”
“No matter who you’re working with, give each assignment your best effort, and always be friendly with whomever you are in communication with.”
“Be aware of the 7-day calendar, become familiar with all expectations and their review practices, as some will send multiple revision requests, each with only a single item.”
“Quick response when they request quotes.”
“When responding with your fee and turn time, give them a deadline to accept your response.”
“Get fee schedule up front in writing.”
“Use templates.”
“Read the Engagement Letter and the appraisal requirements thoroughly. There are always lots of little ‘extras’ such as include aerial, include comments and/or photos of CO2 and Smoke Alarms, include listing comparables as well as solds, etc.”
“Keep in control of your business. Your fee is your fee, not theirs. When it comes to bidding on a job, don’t sell yourself short. Experience and quality come at a price. Your price (fee).”
“Only work with an AMC associated with a lender (such as Red Sky/US Bank) and don’t respond to email blasts looking for the lowest fee and highest turn time. The AMCs with the email blasts don’t care about the quality. Also don’t accept orders with low fees where the AMC is taking a large cut of the fee.”
“AMCs that are led by Appraisers usually know what the best practices are. They will understand and even be an appraiser’s advocate when working with lenders. It is best to use the appraisers who are geographically competent, experienced in the type of property, etc. Some AMCs will use whoever is the lowest cost first. That is often not the best choice. If you can work with an AMC who uses the cost-plus scenario of payments, that is best too. Not gouging appraisers on fees will get you the best people for the job. A good Review process is important too. Be open to their input if they go back for more info or clarification. A good AMC will be there for the appraiser as much as for the lender.”
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Watch Beyond the Numbers below to learn more about AMCs and if it’s right for you!
