How to Choose the Best AMC for Your Financial Institution

 

Take a second to consider your shopping habits, especially for large purchases. If you’re anything like us, you might spend countless hours Googling reviews and searching for the best prices. You might create a pros and cons list, writing down every possible positive or negative to making your decision. Maybe you rely on Consumer Reports to help guide you to your choice. Some of us might even create spreadsheets full of rows and columns of information (raises hand). Whatever you do, chances are you’ve developed a large purchase process. You’ve done the research, you’ve price-checked, and you’ve made the most confident and educated decision you can. No buyer’s remorse around here because you’ve done your due diligence.

Shopping for an Appraisal Management Company shouldn’t be any different than making any other large purchase. We can’t imagine you would purchase a new home or vehicle on a whim, so why make a snap decision about your AMC? Instead, spend some time researching your options and knowing exactly what you’re getting yourself into. We’ve got a few no-fail solutions for helping you find the right AMC. From questions to ask to understand standard services, we’re here with your go-to guide for choosing the right AMC.

GET YOUR QUESTIONS ANSWERED.

When choosing your Appraisal Management Company, be prepared with questions you need answers to. If you’re seeking an AMC for commercial purposes, ask the potential candidate questions like “What percentage of your volume is commercial? What percentage of your full-time appraisal staff (not contractors) are commercial appraisers?” All AMCs should be able to answer questions like, “Do you charge a flat fee, or will my review fees vary based on assignment? How do you help me manage my appraiser panel? How many banks or credit unions do you serve? These questions will help you determine if a specific AMC is a good fit for you.

Pro tip: If your current or potential AMC can’t answer these questions confidently, it’s a red flag to look elsewhere (Read on for even more red flags).

KNOW STANDARD SERVICES THAT ARE OFFERED.

For residential purposes, you should be on the lookout for seven to ten day turn times, automated or online ordering, and appraisal reviews that are performed by certified residential appraisers. Be especially cautious of this and make sure that appraisals aren’t conducted by state licensed appraisers; there is a difference, and it’s important to know that the appraisers you’ll be working with are actually certified appraisers. For commercial, your appraisers should be able to promise you a twenty-day turn time, automated or online ordering, and flat fees regardless of the complexity of the appraisal. Flat fees ensure that you know the cost up front and there are no surprises; avoid fees that are based on a percentage of the appraised value.

Pro tip: Ask your AMC for a sample of their appraisers’ resumes to ensure you’re working with certified and educated appraisers.

UNDERSTAND WHERE TO LOCATE AN AMC.

We get it. Like the appraisal process itself, shopping for an Appraisal Management Company can be tedious and daunting, but it doesn’t have to be. During your search, you might find other options like local firms, residential firms, or even software vendors, but none of these really specialize in serving banks in commercial real estate. Instead, use resources that are available to you. One option is the Risk Management Association. Simply post on the message board that you’re in the market for an AMC and see what sort of responses you get. Another option is to ask peers in your industry. Other banks and credit unions have potentially already partnered with AMCs, and word of mouth is a great way to find your own AMC.

Pro tip: If you reach out to us, MountainSeed can provide references for financial institutions by state for you, no strings attached.

LOOK FOR RED FLAGS AND AVOID THEM.

As you shop around, you should be on the lookout for a few industry red flags, and knowing what these are up front will save you a lot of headache in the long run. As you conduct research, make notes about each company you come across.

1. Pay attention to whether they really are a management company with a full staff of support, or if they’re really just a software company.
2. During your search, if you come across an AMC that seems to be 100% a residential AMC , yet they say they can do commercial, run the other way. Without true commercial knowledge, you’re likely finding yourself at the hands of an inexperienced AMC.
3. Try to determine if they pay your appraisers directly or if a lender continues to pay the appraisers. Unfortunately, there have been many cases when a bank pays the AMC their fee and the appraiser’s fee, but the AMC was supposed to pay the appraiser, and you guessed it, never did. For banks and credit unions like you, this is a huge risk and a liability. Avoid it even being an issue by avoiding AMCs that conduct payments this way.

Choosing an AMC is all about making an educated decision. It’s about crossing your t’s, dotting your i’s, and knowing that you’ve made a confident, dependable choice. By knowing the questions to ask, the services offered, and even the red flags to avoid, you’re well on your way to getting the right AMC for your financial institution. Ready get the partnership you need?