Striking a Balance: AMCs vs. Non-Lender Work

Monday, August 11, 2014

Non-lender work is growing in popularity, as appraisers have grown weary of outrageous AMC demands and competing for low-ball fees. But the grass isn’t always greener on the other side: non-lender work has its cons, and AMC work has its pros.

Don’t believe us? We’ve laid out some of the pros and cons of both types of appraisal work.


AMC Advantages

●     When working with AMCs, all of the marketing and networking legwork is handled for you. This is a great option if putting yourself out there also puts you too far out of your comfort zone.

●     Due to regulatory circumstances, lender work is generally not accessible unless you go through an AMC. So by working with these companies, you open the door to the work available from lenders.

●     When business is slow, filling AMC orders and being paid, albeit less than your standard full fee, might be better than watching your bank account trickle down to nothing.

●     All lender communications are run through AMCs, which can be a good thing if you don’t like dealing with phone calls from mortgage brokers and underwriters.

●     You’ll deal with only a few companies, depending on the number of AMCs you work with, instead of balancing many different clients.

AMC Disadvantages

●     AMCs have earned a bad rap for pressuring appraisers to meet high --standards and fast turnaround times in exchange for low fees.

●     Despite their rush order demand, AMCs can be slow to pay, sometimes taking up to a few months to make good on invoices. If an AMC files bankruptcy, you may never recover the fees owed to you, especially if it files under Chapter 7.

●     Winning appraisal orders has practically become a national sport, where the lowest bidder wins – and there will always be someone who will do it cheaper.

●     If you don’t meticulously fill out lender forms based on their strict requirements, you risk being blacklisted and denied assignments from any lender an AMC works with, not just the one who placed you on its own “do not use” list.

●     You’ll likely need to purchase software for electronically submitting your appraisal reports, and if you work with multiple AMCs, you may need to purchase multiple programs. In addition to incurring this extra cost, each program will have its own learning curve, and time is money for appraisers.

●     Background checks are often required annually, and fees for running them will come out of your pocket.

●     While no lender communication can be a good thing, it also means you have to go through the AMC when you do need to communicate with your clients.

●     Mortgage rates fluctuate, creating slumps in home buying, and in turn, decreasing the need for appraisal orders.

Non-Lender Advantages

●     When you perform non-lender work, you can retain your full fee since  middle management won’t be skimming off the top.

●     Blacklists only exist for lenders, so you won’t need to worry about being denied work from Fannie Mae or another government-sponsored enterprise (GSE).

●     Because you’ll need to pound the pavement more, you’ll also have more interactions (and build better relationships) with your local real estate cohort.

●     There is far less competition for assignments, and there is always plenty to go around. Plus, when you work for private parties instead of GSEs, you’ll have more opportunities for referrals and repeat business.

●     New ways to generate business and interesting assignments pop up often, which adds a good deal of diversity to your workload. Consider speaking engagements at realtor meetings, expert witness testimonies, relocation appraisals for homeowners, property investment consultation, and much more.

Non-Lender AMC Disadvantages

●     Marketing your services and making connections is crucial for drumming up business. If you don’t enjoy these activities, you’ll find sticking to them a struggle.

●     Expenses for promoting your services can add up quickly, and they require time and effort on your part. Long gone are the days of the yellow pages, so investing in a website, creating a blog, and establishing a social media presence are some of the ways you can be found by and attract non-lender clients.

●     Appraisers are comfortable working independently. However, networking is an important way to get non-lender professionals to know, like and trust you.

●     Steady business is all about the hustle. Even when business is good, you’ll need to be consistent in your marketing and networking efforts so you’ll continue to have clients when work slows down.

Now It’s Your Turn

While our list is not exhaustive, each type of appraisal work certainly has its plusses and minuses. As appraisers, how can you balance the two and have a regular stream of work? Share your tips and strategies with the community in the comments below

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