Like Uber or Airbnb, appraisal management companies promote themselves as a new way forward—less infrastructure leading to greater savings for consumers. But in reality, appraisal management companies hire or contract appraisers to conduct valuation work at steeply discounted rates while collecting a significant portion of the appraisal fee—as much as 25 to 30 percent.1 As prominent New York-based appraiser Jonathan Miller says: “there is no shortage of appraisers. There is a shortage of appraisers willing to work for half the market rate.”2
By alienating trusted appraisers and drying up the talent pool, appraisal management companies have created a traffic jam for home sales: delaying closing dates, jeopardizing prospective homeowner’s favorable lock rates, and potentially forcing prospective homeowners to pay for an additional month’s rent.3 Ironically, rush fees become the new normal in this chaotic environment, with homeowners taking a big hit in the pocketbook. Rush fees can add up to a thousand dollars or more above the initial appraisal quote.4
Contrary to the image of an impartial link between lenders and appraisers, appraisal management companies are often owned in part by large banks such as JP Morgan Chase, Citigroup, and Wells Fargo.5 The result is an immediate conflict of interest, with risk falling onto the shoulders of homeowners depending on a comprehensive, unbiased valuation in a scenario where fast and cheap rules the day. Appraiser Joe Sabella offers a harsh diagnosis of the appraisal management company phenomenon: “Banks make money by lending money. The fact that they have an interest in AMCs is unbelievable. It should be illegal.”6
There is no reason to roll the dice on an appraisal management company when trusted names like Lamb Hanson Lamb have been providing consistent quality on appraisal and valuation services for decades. Contact us today for a free consultation!