Using an Appraisal Management Company Vs. Self Managed Software

National Appraisal Company Vs. Self Managed Appraisal Software

Set-up Cost

AMC:
Typically Free Set-up, No Monthly Cost or overhead expenses. Only cost typically would be cost of integration(if even needed). Most appraisal management companies are already integrated with key tech companies like Real EC and FNC so it essentially becomes a plug and play.

Self Managed:
Initial Set-up can go from free to $10,000 or as high as $200,000 depending on size of business. Overhead is an issue as costs don’t fluctuate with volume.
Vendors Typically national appraisal firms will have an extensive list of “paneled” appraisers they use frequently. Some may have staff appraisers that work just for the company or contract appraisers that have been working with them for years. Adding or removing appraisers is relatively easy however if they are on staff fit could oppose a problem

If you are just getting started and don’t have a list of quality vendors this can be very time consuming and frustrating experience. If attempting manage a national fee panel it can take several years until relationships are established in all key markets. A benefit is that if you only cover a very small area and only have a few appraisers you can easily manage the panel. Adding or removing appraisers is easy.

Appraisal Cost :

AMC:
Usually the same as what a normal appraiser would charge. Sometimes fees can be higher to cover the cost of paying the appraiser as the company does need to make some money off of the appraisal. Depending on volume fees can often be negotiated to a “flat fee” nationally or at least by property type. This can be greatly beneficial when quoting appraisal fees to borrowers.

Self:
Appraisal fees are what the vendor wants as it is going directly to them. Given that typically your orders will represent only a small percentage of the appraisers business and thus fees can sometimes be a little tough to negotiate. This can be challenging when trying to quote fees in multiple states.

Turnaround:

AMC:

Competitive turnaround, sometimes can be delayed a few hours or a day due to internal review’s and QC Controls. The benefit of having the appraisal reviewed by a staff appraiser before it gets to the underwriter is a value added benefit. Most AMC’s will have a licensed appraiser on staff which can easily cost 100k or more a year.

Self

Usually standard for the industry the only negative is if you panel gets busy you might be stuck waiting longer to get appraisals done and adding more “new” appraisers can be a shot in the dark. Unless a staff appraiser is there to review the appraisals the underwriter sees the appraisal first and will responsible for QC Control as well as panel management due to them being the only person who is qualified to appropriately review the appraisal.

Quality:

AMC:

Appraisal quality can vary from company to company and appraiser to appraiser. A good appraisal management company will ensure the appraisal is done properly and the value of the property is reflective of the subject’s market area and marketability. If there is a problem with the quality of the appraisal the appraisal management company will very often have access to the MLS the appraisers use as well as the ability to review the appraisal from an expert standpoint and communicate potential issues. Most AMC’s will order a second appraisal free of charge if the appraisal is poorly done.

Self:

Quality will be very similar with hit or miss appraisals. Unless a review appraiser is on staff going back to the appraiser to get something changed can be challenging as your not speaking the appraisers language. If there is a second appraisal that needs to be ordered this would be at a direct cost to the company and can become a big expenses on top of the overhead.

Scalability:

AMC:

Most appraisal management companies companies can handle upwards of 5,000 appraisals per month and new vendors can always be added. With technology portals like Real EC and FNC rotating 5 or 6 vendors can be easily done and the scalability is essentially limitless.

Self

This can be as small or as large as needed. The more orders obvious the more staff. If significant volume is done (100 or more). Staff must be added as things get more busy a full office with 30 – 50 people may be necessary which is a direct expense of the company.

How quickly you can switch:

AMC:

Depending on the set-up or service level agreements in place. Switching can take a day or until the contract expires. Either way it can be done relatively easily and with all of the appraisal companies competing for your business you can have the pick of litter.

Self:

This can be overnight but then your stuck with nothing. If volume decreases to the point where layoffs occur and then picks back up your staff may be overloaded and overall quality will suffer. If trying to switch to a third party vendor there can be some lag time and overall frustration with the switch as well as a moral shift since layoffs are occurring.

Coverage

AMC:

Most Appraisal management companies cover the entire united states if the companies is only regional multiple companies can be approved to ensure full coverage.

Self:

To have a panel the covers the entire united states will take a relatively large staff. Unless your volume is over 1,000 per month its not practical to have staff on board to have legitimate full coverage.

Service Level

AMC:

Since you can approve multiple appraisal companies. You can have them compete against each other for work and for quality. Matrix’s can be in place to see who gets the most orders and can cause heavy competition among vendors and thus better service.

Self:

Since this would be your operation the service level would be directly reflective of what type of time and money you invest in the service.

Practicality:

AMC:

For most companies choosing a nationwide appraisal company is the most practical solution. It is relatively easy to implement and can easily be changed or custom fit to meet your companies needs.

Self:

Not practical for must companies as it is a big expenses and doesn’t add much value to the overall operation and workflow process. For smaller companies with only a few appraisers and lower volume it can be very easy to manage and maintain.

Logistics:

AMC:

With technology this is one of the easiest things to do and can very easily be implemented often within 24 hours or even less. For larger operations it could take as long as a month or more but once in full motion will be easy to maintain.

Self:

Setting the entire operation up will be time consuming since you are essentially creating a new company. it can be successfully done however is not going to be something that can be done overnight or even in a few weeks.