How Appraisal Management Companies Aid the Appraisal Process

The home appraisal is a key part of any home sale transaction, assuring the lender that they are not issuing a mortgage for more than a property is worth. Lending regulations restrict the borrower, mortgage broker, or lender from choosing which appraiser conducts their home inspection and prevent direct communication between these parties. Appraisal management companies (AMC) play a vital role in the residential appraisal process. Read on to learn how appraisal management services benefit borrowers, lenders, and appraisers in real estate sales.

What Is an AMC?

An appraisal management company is an independent party that works with real estate appraisers, borrowers, and mortgage lenders. AMCs select qualified appraisers, manage communication throughout the home appraisal process, and deliver appraisal reports to lenders. They ensure that all procedures and regulations are followed.

The best AMCs also ensure that the projected value is realistic, the appraiser’s professionalism is impressive, due dates are met, and all expectations are exceeded. 

What Roles Do AMCs Play with Lenders and the Appraisal Process?

AMCs have been around since the 1970s but were limited until the housing crisis of 2007–08. Before then, lenders hired appraisers directly to get home value estimations. 

However, that introduced the risk that lenders could influence appraisers to provide inflated property values to ensure that mortgage transactions would go through. This was one of the issues believed to have contributed to the housing crisis. Since then, the U.S. government has developed guidelines to restrict lenders’ influence on appraisers.

The New York attorney general, Freddie Mac and Fannie Mae, and the Federal Housing Finance Agency (FHFA) established the Home Valuation Code of Conduct appraisal guidelines. This laid the foundation for the appraiser independence found in the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Truth in Lending Act. These laws require lenders to use independent appraisers, which led to the rise of appraisal management companies.

Appraisal management companies manage a pool of licensed appraisers. Today, lenders work directly with the AMC, which then assigns the appraiser and ensures that a quality report is completed for a reasonable fee and in a timely manner.

Here’s the role an AMC plays in the appraisal process:

  1. The mortgage lender submits an appraisal request to the AMC.
  2. The AMC finds a competent appraiser to conduct the appraisal.
  3. The appraiser conducts the inspection and provides the AMC the appraisal report, based on the Uniform Standards of Professional Appraisal Practice guidelines.
  4. The AMC performs quality assurance to confirm that proper practices were followed, that lender requirements were met, and that the report’s data is accurate.
  5. If any issues are found with the appraisal report, the AMC resolves them directly with the appraiser, including the reconsideration of value (ROV) process. 
  6. Once the report meets the AMC’s standards, it sends the report to the lender, borrower, or the Uniform Collateral Data Portal®, depending on client and loan protocols. 

How Do AMCs Benefit Borrowers?

AMCs reduce the potential for fraud in the appraisal process by serving as the go-between for the mortgage lender and the appraiser. They benefit the borrower, too, by preventing them from overpaying for a property.

Working with an appraisal management company comes with many additional benefits for borrowers.

AMCs provide valuable customer service.

While we can’t speak for all AMCs, at Kairos we communicate with our clients at every step of the appraisal process. Our mission is to create a better experience for all parties so our customers can close their real estate deals as quickly and easily as possible.

Kairos is one of the few companies that reliably answers the phone and quickly responds to emails, and our average 4.9-star Google rating speaks for itself. We also offer Guaranteed Fees, so there are no surprises after fee disclosure and intent to proceed has been confirmed.

AMCs expedite the appraisal process.

AMCs have traditionally been responsible for managing the entire appraisal process. At Kairos, we use technology to manage the entire pre-appraisal, appraisal, and post-appraisal processes, ensuring faster delivery with better service than any other AMC. 

Our team touches each appraisal file multiple times to ensure that everything is progressing as it should, communication is transparent, and help is available whenever needed. Ultimately, our job is to do everything possible to deliver an accurate appraisal report within the specified timeframe.

AMCs communicate with all parties.

Communication is an essential component of the appraisal process, and that’s why at Kairos we give regular updates to all parties. Our clients never have to wonder what’s happening with their appraisal, because we provide proactive communication throughout the entire process.

AMCs offer education.

We know what the appraisal process feels like on the borrower’s end. By educating and preparing borrowers, we create a positive appraisal experience that makes the process smoother and less stressful for all parties. 

AMCs provide quality control.

The AMC ensures that the appraiser providing the valuation is qualified, follows regulations, and has extensive knowledge and experience in the area where the property is located.

Kairos is now licensed in more than 40 states, and we use analytics to identify the best appraisers in every market. The most qualified appraiser is assigned, based on factors like the appraiser’s local experience, education, license level, expected timeline, fee, and capacity.

The AMC is also responsible for thoroughly reviewing each appraisal report. If any questions arise or corrections are needed, they will follow up with the appraiser and handle any disputes.

AMCs ensure an accurate home valuation.

AMCs help prevent borrowers from overpaying by ensuring that the home’s appraised value is accurate and unbiased.

Kairos gives borrowers access to pre-appraisal tools offered on Pocket Appraisal. This innovative website provides useful information for borrowers and mortgage professionals. Borrowers can use our interactive Pocket Comps tool to generate a realistic home value based on local comparable sales—similar to the way an appraiser determines value.

In addition to appraisal hints and tips, Pocket Appraisal displays estimated appraisal fees and expected turnaround times. It also offers a guaranteed appraisal fee request button to use before the appraisal is even ordered.

AMCs help with the ROV process.

Sometimes, after the appraisal report is submitted, a borrower or lender may believe that the property’s value is incorrect. This is when a reconsideration of value (ROV) can be requested.

When a value comes in “low,” a borrower might have to pay more toward the down payment, or ask the seller to lower their sale price. A low value can ruin deals and relationships. Having an AMC that approaches the ROV process carefully is essential. 

With some AMCs, it can be difficult to get a thorough ROV, because the AMC doesn’t want to go through the hassle of providing additional data. At Kairos, we don’t mind the extra effort—we value all opinions and want to make sure that our clients get the most accurate and complete appraisal possible. 

We have a valuation specialist who reviews every ROV request, researches other comparable properties that may bracket the values differently, and has a conversation with the appraiser if needed. Our chief appraiser is also heavily involved in the ROV process. As a certified instructor and curriculum developer, he is eager to educate appraisers in the process of improving our products and services. 

Our unique approach to the ROV process means our ROV success rate is much higher than the industry average. We have yet to hear of an AMC with a better track record. As we enter a declining market, the ROV process is more important than ever and adds even more value to Kairos Appraisal Service’s already sterling reputation. 

How Do AMCs Benefit Appraisers?

AMCs can make an appraiser’s profession easier and more lucrative. They do this by matching appraisers with assignments that fit their qualifications, managing communication and administrative tasks, and increasing market share for the best-performing appraisers. 

At Kairos, we use analytics to identify top appraisers. We then target our sales in the coverage areas for those appraisers to ensure that quality appraisers are rewarded for their hard work. That means our clients get the best appraisers in an area, and our customer service reviews continue to flood in at rates higher than any other AMC.

Why Is Kairos Appraisal a Top AMC?

Kairos is focused on providing the best borrower experience and unmatched communication. We do this by using the latest tech to create tools that bring the appraisal process up to speed with the mortgage process. This means borrowers get the quickest turn times, the most reasonable fees, the most qualified appraisers, and top-rated customer service. For more information about the home appraisal process, click here to read additional articles.

Posted in

Alex Todak