Appraisal Management Companies, or “AMCs” for short, are neutral entities that stand between appraisers & those with financial interest in the transaction (e.g. Realtors, Loan Officers, Buyers/Sellers) to keep property valuations fair & unbiased.
It’s widely accepted that lender & Realtor influence on appraisers at the local level was one of the three primary causes of the 2008 financial crisis. This influence eventually led to inflated appraisal values and not-so-neutral relationships between appraisers and those who stood to gain from their “unbiased” opinions.
As a result of the legislation passed in 2009, AMCs stepped in as the de facto way to fix the problem- ensuring qualified appraisers do business in their area of expertise without having to interact with interested parties.
Procedurally, it the appraisal process looks like this:
Lender orders the appraisal.
Once payment is made, that order is automatically submitted to an AMC.
AMC essentially posts the order to an internal job board thing.
Vetted and approved appraisers—who partner with these AMCs for business—pick up orders on this pseudo job board.
If multiple appraisers are interested in a job, they can compete to offer better terms (lower cost, quicker turnaround, etc).
Appraiser selected, appraisal scheduled, appraisal conducted.
Appraiser completes report within a few business days and turns it in to the AMC.
AMC reviews, then passes it to the lender’s internal appraisal department for “quality control”.
If AMC or lender request clarifications or revisions (occurs more than half the time), those get handled.
Once the report and any revisions have been completed, the appraisal is “cleared” by the bank and we move on.
In all the above steps, correspondence goes through the AMC. The only exception to this rule is when the appraiser needs to coordinate with a Realtor or homeowner to gain access to the property.