Two additional appraisers criticized the report and said it was inaccurate. The lender also planned to never use the company again based on how poorly the appraisal was written.
Bill Murray, the incoming board president of the Atlanta Realtors Association, agrees that AMCs sometimes lack essential local knowledge.
“One of the issues we have had is that sometimes the appraisal management companies are not as adept at certain neighborhoods or certain characteristics in certain parts of town,” Murray says.
He thinks the addition of AMCs is one of the strongest impacts from regulations established in the past few years. Before AMCs, lenders were pretty much instructing the appraisers on how to evaluate the property, he says.
However, because he can no longer talk to lenders directly, Murray thinks the policy is too extreme. “We need to get some equilibrium,” he says. “This happens a lot —something isn’t working right and instead of bringing it back to the middle, corrections take it all the way to the other side, which isn’t necessarily the best solution.”
Murray does not think that appraisal management companies are the perfect option, but he says that incorporating AMCs is better than lenders controlling the appraisers too much.
Local knowledge needed by appraisers
Outgoing board president of the Atlanta Realtors Association, Bill Rawlings, also highlights the importance of knowing the market as an appraiser.
“The appraiser’s job is to evaluate that it is a fair market. But in many cases, the AMC really lives in a different location without intimate knowledge of the market, like not knowing about a particular elementary school or economic boom,” Rawlings says. “It can be frustrating if the appraisal is significantly different from the market in the area.”
In addition, Rawlings calls attention to the shortage of appraisers in the marketplace and the major impact that can have on the quality of appraisals in the area.
“They’re overworked and the compensation they get is not very good,” he says. “Adding a middleman takes the money away from the appraiser at the end of the day and creates a negative trickle-down effect.”
Rawlings is also critical of other regulations from the past few years, such as the three-day period of disclosure and changes in types of loans. The three-day wait is confusing to the consumer and delays closings, he says.
“There was also a change in regard to loan types, which caused issues with underwriting and not closing on time,” Rawlings says. “It’s like the pendulum was way to the right before and way to the left now.”