Call for AMC Regulation
Call for AMC Regulation
by Francois (Frank) K. Gregoire IFA RAA
The Florida Legislature passed a record low number of bills this past session. Like many states, their time was consumed with trying to balance a budget in tough economic times. The bill to regulate appraisal management companies (AMCs) was not considered. However, the team of appraisers, professional associations and the Florida Real Estate Appraisal Board is lining up support and legislators for the 2010 Legislative session.
Unlike some of my appraisal brethren, I believe AMCs provide a service and are legitimate businesses. AMCs existed long before the federally-mandated licensing, certification and regulation of real estate appraisers. Quite a few lenders opted to utilize the services of AMCs and a couple of AMCs offered quite a bit of assistance to get appraisers and appraisal firms up to speed with appraisal software and office management.
My own firm, Gregoire & Gregoire, Inc., received complimentary appraisal forms software from one of the early AMCs. Although my firm was already using computers for appraisal reporting and some analysis, the software enabled us to move from a mini-computer to personal computers and enabled us to update and revise forms more quickly. Gregoire & Gregoire, Inc. enjoyed a mutually beneficial relationship with that AMC for over a decade.
Souring Relationship
Unfortunately, that relationship started to sour with fee pressure, turnaround pressure and what appeared to be the AMC's accounts payable department taking advantage of the "float" in their payment procedures, policies and responsiveness. We arrived at the realization that it cost the firm just one dollar ($1) less to send an appraisal report out the door than the fee received from the AMC. The seven appraisers, including the principals, were extremely busy but there was no profit. Instead, we had a flurry of activity and paper and constant phone calls for status and appointments. Our requests for modest fee adjustments were refused. Gregoire & Gregoire, Inc. decided to reduce our volume, enhance our quality and concentrate on the segment of the market more interested in quality than cost and speed.
Recently, a national AMC made a request for my expert services. Apparently, the company had an assignment in my market area that required appraisal review services and testimony from an expert witness. Although the company has dozens of appraisers on their panel active in my service area (Pinellas County, Fla.) they sought me out first. In telephone conversations, I was assured that I would set my fees, determine the time required for each phase of the assignment and would not have to endure constant requests for status and updates. All they asked was for me to review the engagement contract, sign and return it to them.
When the "package" arrived, it was the standard AMC agreement, compelling me to agree to 48 hour turn time, status updates, a fee schedule and other assorted items contrary to their verbal assurances. When their attention was directed to the conflict between their written terms and their verbal assertions, I was instructed to modify the agreement to my liking and return it. Although the assignment had the potential to be worth my time, I decided to let it pass. If the AMC's right hand does not know what the left hand is doing up front, the potential for conflict in the future outweighed any perceived benefit to me and my firm.
The Florida Real Estate Appraisal Board was interested in the regulation of AMCs long before there was a Home Valuation Code of Conduct (HVCC). After reviewing hundreds of workfiles and reading the written and email requests from AMCs to appraisers, the problems were clear. Many, not all, AMCs were making representations to their clients that could not be met and appraisers were pressured to make miracles happen; often to the detriment of the public and appraisers' professional license and certification...
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