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Coester AMC Out of Business, Appraisers Unpaid
By Isaac Peck, Editor
Coester VMS (Coester), one of the largest appraisal management companies nationwide, has gone out of business. The company’s Google Maps listing shows it as permanently closed, its website has been taken down and HousingWire even posted a screenshot from Facebook showing the office furniture being sold off as part of an “office relocation.”
The company’s demise was swift. Its financial difficulties began in Fall 2018, with appraisers reporting that they had not been paid for their appraisals performed in the early summer. Then in November 2018, a letter began circulating that FVC Bank, one of Coester’s creditors, had frozen the company’s $700,000 line of credit. The barely legible letter posted around social media also suggests that FVC Bank had a contractual right to Coester’s accounts receivables, which would mean that even if the bank paid Coester for the appraisals being performed, appraisers who continued working for Coester would not be first in line to get paid.
From statements made by Brian Coester, the company’s founder and Chief Executive Officer in an interview with HousingWire in late November, FVC Bank appears to have sent this letter to all of the company’s clients, notifying them of the Bank’s claim on Coester’s accounts receivables as well as to Coester’s frozen line of credit, a move which Coester indicated was “a disaster” and which cut the AMC’s business by two-thirds almost immediately.
Directly after the letter from FVC Bank became public, Coester issued the following statement: “Due to financial difficulties all payments on orders completed prior to 11/15/2018 cannot be paid at this time, our BK [bankruptcy] attorneys will be in contact with all creditors. Coester can guarantee payment next day on all orders completed on or after 11/16/2018. We apologize for any inconvenience.”
In the days that followed, Dave Towne, an appraiser from Washington, asked his readers the following via his email newsletter: “Does it make any logical sense to continue to do business with a company who cannot pay prior appraisal fees but promises to pay current fees the ‘next day?’”
During this time, Coester kept in close contact with the press, attempting to put a positive spin on his company’s troubles, telling HousingWire: “We are not out of business” and “we’re getting back to normal,” while also telling Valuation Review, “It’s business as usual here” and “you can work with us with confidence” as recently as early December 2018.
Contrary to these positive statements, things did not get better for Coester. Many appraisers on social media and online forums reported refusing to work for the company, and with Coester having lost two-thirds of its clients overnight due to FVC Bank contacting them, the writing was on the wall.
Appraisers who had worked for Coester quickly turned to filing claims against the AMC’s state surety bonds, desperate to get paid after waiting months. Thankfully for appraisers, many states now require AMCs to carry a surety bond as a condition of licensing, to pay appraiser creditors in the event of insolvency. This is a result of several AMCs going bankrupt in previous years with millions in unpaid appraisal fees due. Coester held such bonds in several states, but the bonds were quickly exhausted. In general, such bonds work on a first-come, first-serve basis, meaning that the appraisers who file first are the ones to be paid.
Coester was a controversial figure in the appraisal industry, drawing ire and criticism from appraisers for, among other things, suing the Virginia Appraisal Board and for tweeting in 2013: “We pay the least and get the least qualified appraisers.”
Coester also was involved in a variety of other lawsuits in recent years, with Robert Scheer suing him for tortuous interference after Coester attempted to uphold an allegedly non-existent non-compete agreement with Scheer- when Scheer left Coester VMS and sought employment with a competitor AMC. Within the various briefs filed between Scheer and Coester was the allegation that Coester provided “fraudulent profit and loss statements to banks and lenders, committed fraud with regard to his personal taxes, and misused corporate funds.” Included in Scheer’s lawsuit against Coester was an allegation that Coester had set up an account called “BC OWES” that kept track of money Coester owed to Coester VMS, the corporate entity, in an amount exceeding $400,000. Mr. Coester denied these allegations
One type of behavior seen in past AMC bankruptcies is the executive management taking high salaries even as the AMC tips into bankruptcy and appraisers go unpaid. This was seen first with AppraisalLoft, a now defunct AMC from San Diego that left over $3 million in unpaid appraisal fees, and Evaluation Solutions/ES Appraisal Services, a large AMC that serviced Chase Bank before going bankrupt with over $11 million in unpaid appraisal, BPO and evaluation fees. In each of these highly publicized cases, the owners were taking salaries of $200,000, $250,000, $400,000, or more leading up to the AMCs’ bankruptcies.
While there is currently no public information regarding how many appraisers were left unpaid by Coester, nor the total dollar amount of unpaid appraiser fees being left behind, dozens of appraisers have taken to social media to report being out thousands of dollars. Some appraisers are posting on GlassDoor.com, a job listing and review site, with one indicating that they are owed $1,800 in appraisal fees.
As far as collecting unpaid fees, by now some appraisers are experts at it. The easiest way to collect an unpaid appraisal fee is to file a claim against an AMC’s surety bond in civil court, if the AMC has a surety bond in your state. With that option exhausted, many appraisers have found success going directly to the lender and explaining that the AMC was an agent of the lender, and consequently, the lender is still responsible for paying the appraiser under federal law (in many cases). Some appraisers have taken unresponsive lenders to small claims court and won. Still other appraisers have filed liens on properties they have appraised where their appraisal fees went unpaid. Much depends on the state laws of the appraiser in question, and how diligently the appraiser wants to pursue the lender and/or homeowner with lawsuits, liens, and regulatory complaints.
About the Author
Isaac Peck is the Editor of Working RE magazine and the Director of Marketing at OREP, a leading provider of E&O insurance for home inspectors, appraisers, and other real estate professionals in all 50 states and D.C. He received his master’s degree in accounting at San Diego State University. He can be contacted at firstname.lastname@example.org or (888) 347-5273.
Richard Hagar, SRA, is an educator, author and owner of a busy appraisal office in the state of Washington. Hagar now offers his legendary adjustments course for CE credit in over
40 states through OREPEducation.org. The new 7-hour online CE course Identifying and Correcting Persistent Appraisal Failures shows appraisers how to avoid CU’s red flags, minimize callbacks, save time, and earn more! Learn how to improve the quality of your reports and build defensible reports! OREP insureds save on this approved coursework. Sign up today at
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