It's All Going To Work Out - AMC and AVM Debate

On many Internet forums, it’s common to see appraisers posting about . . .

• AMCs forcing us to take lower fees
• Brokers pressuring us to “make values”
• Lenders side-stepping us by using AVM providers
• Underwriters making ridiculous demands for more comps

Is it REALLY as bad as we are making it out to be? Ken Verrett of Acorn Appraisal Associates, Houston, TX doesn’t think so.

Here’s what Ken had to say yesterday on the WinTOTAL Users Group forum about AMC's [Appraisal Management Company] , AAVMs [Appraisal Assisted Valuation Model] and Mortgage Brokers: Can we agree that the vast majority of folks are honest and try to do the right thing? Study after study concludes that is so. My disturbingly average experience tells me it is so. Your experience should tell you the same thing. I know you hate to say I'm right, but I'm right, right? So can't we assume that the vast majority of AMC employees, AAVM models and employees and yes, even mortgage brokers mirror the rest of the population? And can't we assume that those same populations are profit motivated, just as you and I? If we make those assumptions, isn't it reasonable to conclude that the employees, firms, and products they provide are generally legal, even ethical, and meet the needs of the market? And isn't it reasonable to assume that the purchases of the services of those AMC's, AAVMs, and even mortgage brokers, are in business to make a profit, and that profit is only assured if the loans they make are good decisions and secured by the proper amount of collateral commensurate with the risk the loans represent? Shouldn't we respect the right of those lenders to make their business decisions in the best long run interests of their stockholders? It's the American Way. The AMC's, AAVMs, and mortgage brokers are providing a service to the lender market. They are permanent players in the market. A provider of appraisal services to that market has to recognize that and accept the rules of the market. Appraisers who want to participate in that market must find a way to provide services to that market at a profit or leave the market. Fees have not increased in my market since I entered the business over twenty years ago. They have even decreased in some products. Yet my firm makes more profit today than it ever has. We serve a wide spectrum of the lending market, including significant AMC's and mortgage brokers. We have achieved that increased profit margin by learning be more productive. Our rate of productivity increase has been greater than the combined effects of fee decreases and inflation over those twenty years. We work constantly to achieve that result. We are not alone in that experience. The vast majority of businesses; local, national, and international, have done the same. Increases in productivity have fueled the growth of the national and world economies over the last twenty years. The vast majority of appraisers have done the same. [Snip] When dealing with an AMC, the price and turnaround are the key factors. Quality is assumed, even guaranteed, as it should be. The AMC has created a near perfect auction market, something all business folks should admire. It is an auction market for a generic product. The job goes to the most efficient producer. Appraisers [need to] accept the rules of that market or move on to another market. But they shouldn't waste time and energy resisting the evolution. [Snip] Relax. The world is peopled by mostly honest and ethical folks. It's all gonna work out.

Ken Verrett Acorn Appraisal Associates is a 20 year old firm offering a wide range of quality appraisal services to the Financial and Business Communities. Our market includes the greater Houston SMSA, including Harris, Montgomery, Fort Bend, Brazoria and Waller Counties.