An appraisal management company (AMC) plays many key roles in the home appraisal process. Its appraisal management services involve many moving parts. But most importantly, it ensures accuracy, fairness, compliance, and a better experience.
Read on to learn why it is important to work with an appraisal management company and the benefits it provides to all parties involved.
Why Is an AMC Important?
Lending regulations restrict the borrower, mortgage broker, and lender from choosing which appraiser conducts the home inspection. They also prevent direct communication between these parties. This is where an AMC comes in: as an independent party to facilitate the process between the real estate appraiser, borrower, and mortgage lender.
AMCs select certified appraisers, manage communication between all parties, and deliver the completed appraisal report to lenders. The appraisal management company also ensures that the appraiser follows all procedures and regulations.
Before the 2007–2008 housing crisis, lenders hired appraisers directly for home valuation services. However, there was concern that lenders could influence appraisers to inflate home values so that their home purchase loans would go through. That is one of the issues thought to have contributed to the housing crisis.
Since then, 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 appraiser independence found in the Dodd-Frank Wall Street Reform and Consumer Protection Act and in the Truth in Lending Act.
These laws require lenders to use independent appraisers, and it is the AMC that connects the two. Now a mortgage lender works through the AMC. The AMC then assigns the appraiser and ensures that they complete the appraisal report accurately, on time, and at a reasonable fee.
AMCs provide borrower education to expedite the home appraisal process.
At Kairos, we understand that many borrowers have never experienced the appraisal process before. So it is our job to equip them with the knowledge they need to help it go smoothly. We believe that educating the borrower from the beginning saves them time and money—and benefits the appraiser and loan officer as well.
When the borrower knows about the process and what to expect, it sets the stage for when the appraiser arrives at the property. They are able to do their job more efficiently, avoid potential delays and added costs, and turn around the appraisal report in a timely manner.
When borrowers are unprepared or uninformed, it delays the appraiser. It can lead to multiple trips to the property, unnecessary questions or complaints, and other delays in completing the valuation. That’s why Kairos ensures that the borrower knows exactly what’s needed from them, right from the start.
AMCs provide a better borrower experience.
AMCs provide valuable customer service. And at Kairos, we are committed to creating a better experience for all parties so the home sale can close quickly and smoothly.
We communicate with our clients at every step of the appraisal process and offer access to our pre-appraisal tools. That gives them a realistic home value based on comparable sales—the sale price of similar homes recently sold in the same area—just like an appraiser would use to determine their valuation using the sales comparison approach.
Kairos Appraisal will also provide an expected turn time and a guaranteed appraisal fee while the mortgage team is gathering documents, before disclosure. A guaranteed appraisal fee prevents the loan from being held captive by increased fees, virtually eliminates delays, and makes the appraisal fee disclosure portion on the Loan Estimate 100% reliable, competitive, and accurate.
These tools all promote a better borrower experience, which in turn helps the loan officer set realistic expectations for their clients. AMCs help loan officers help their customers, and happy customers leave positive reviews, which help loan officers attract more business.
AMCs manage the appraisal process and all communication.
Kairos is one of the few AMCs that takes pride in always answering the phone, and we quickly respond to emails as well. Communication is essential, and we provide all parties with real-time updates. Our team touches each appraisal file multiple times to ensure that it’s progressing as it should, providing communication and support as needed.
Our average 4.9-star Google rating and customer reviews speak to the outstanding service we provide.
AMCs handle the ROV process.
The borrower or lender may believe that the value on the appraisal report is inaccurate. This is when they can request a reconsideration of value (ROV). The AMC handles this entire process.
With some AMCs, however, it can be challenging to get a thorough ROV. These AMCs may want to avoid the hassle of providing additional data, especially since they do not get paid for an ROV.
At Kairos, we welcome the extra effort. That’s because we are committed to our clients getting the most complete and accurate appraisal possible. And we are proud to report that our ROV success rate is much higher than the industry average.
We have a valuation specialist who reviews every ROV request and looks at the purchase price of other comparable properties that may bracket the values differently. Then our chief appraiser completes a final review, and we present the unbiased information to the appraiser.
Kairos has technology that improves the appraisal process.
As a leading appraisal management company, we leverage the latest technology and tools to modernize the appraisal process and make it more efficient. Using analytics and machine learning, we have reduced inaccuracies, turn times, and the need for ROVs while improving the experience for all parties involved. Here’s how:
- Over 50% of our appraisal inspections are scheduled within one hour of assigning the appraiser.
- Our data analytics allow us to pick the most qualified licensed appraiser for each assignment, considering rotation compliance, appraiser experience, proximity to the property, and more. With these tools, we can provide the appraiser with accurate information on the subject property before their assignment and home inspection.
- Our Pocket Comps Tool can help all parties have an accurate home value expectation from the start. It provides a realistic property value expectation in less than five minutes, based on real property comps provided by real appraisers.
- For the actual appraisal, we use data sources and AI tools that inform adjustment methodologies to ensure that the appraiser applies the most consistent and defensible adjustments. Backed by reliable data and Kairos’ in-house quality control team, our technology eliminates potential biases and provides the highest accuracy for each valuation.
Kairos passes the best cost on to the borrower with guaranteed fees.
No borrower wants to be surprised by a higher appraisal cost right before the report is due. Unfortunately, this is a common occurrence when the appraiser wasn’t aware of some of the complexities of the assignment before accepting it.
Kairos’ pre-appraisal tools gather as much information on the subject property as is available. And we present all this data to the appraiser before they start the assignment. This lets us quote the borrower with a guaranteed home appraisal cost that won’t increase later.
Kairos takes excellent care of its appraisers.
Our reporting software tracks each appraiser’s performance metrics. It then leverages average rates based on location, experience, turn times, and more to make sure that appraisers are compensated fairly and are qualified for each assignment.
Kairos covers all technology and platform fees for our appraisers, which range from $12 to over $60, depending on the lender, platform, and location. Plus, we are one of the few AMCs that reward appraisers with performance bonuses. We show appreciation for our appraisers, and this allows us to attract the best talent in the industry.
For questions regarding our appraisal management services, call us at 425-967-3794.To learn more about the home appraisal process, click here to read additional articles.