A significant issue not quelled by the Code is that it allows if not encourages lenders to outsource the selection to appraisal management companies or AMC’s who will charge the appraisal firm anywhere from 30%-40% of the fee for administration, overhead and, pardon the sarcasm, quality control. Exacerbating the problem is that lenders can own stakes in AMC’s. Thus, the conflict of interest is ever present.
Reports are prevalent that AMC’s shop around for the lowest appraisal fees that frequently end up on the desks of appraisers who are geographically distant from the subject property’s market, are not fully familiar with the local market and thus present sales that are not directly relevant.
(emphasis is mine)
Sunday, June 14, 2009
If you're not reading Jonathan Millers MATRIX, we suggest adding it to your regular reading list. Even if you fail to add it as a daily read, please surf on over and take a look at today's Guest Post by Martin Tessler, CRE. He comments on a June 9, 2009 Wall Street Journal article, Appraisals Roil Real Estate Deals.
It's not a long post, but it includes these gems: