How effective is your appraisal ordering & review process?

Famed business management consultant and author Peter Drucker once said, “Efficiency is doing things right. Effectiveness is doing the right things.” While Drucker is onto something, as most business leaders will tell you, drilling down to efficiency and effectiveness can be easier said than done. However, with careful self-evaluation, you can determine the effectiveness of your own processes. One of the most important areas to reflect on is your appraisal ordering and review process. Since this is the foundation of your appraisals, having a grasp on the effectiveness of that particular process will certainly set you up for success.

When you start digging into your appraisal ordering and appraisal review process, ask yourself a simple question, “Am I confident that my team is staying on top of everything?” Before you answer with a simple “yes” or “no,” really do some soul-searching. If you were to be honest, you might find that the reality is this: you just can’t be sure. Having quality control in place is the first step to double-checking your efficiency. If you have an internal team, consider that there still might be things slipping through the cracks, and if that’s the case, you don’t want the first time an issue is discovered to be when your regulator pays you a visit. Instead, consider implementing a Q&A process for monitoring your staff. Here are a few of the questions we recommend including:

HOW DO YOU MANAGE YOUR APPRAISAL PROCESS?

Are you handling your appraisal process in-house or externally? If you do have an internal process, can you answer that integral question from above? Additionally, have you taken time to review your department’s appraisal independence and other regulations? Don’t forget to evaluate your automation, too. While it might seem more intuitive to run an in-house review process, you might find a clunky system that’s causing more harm than good. Remember, even with automation, to track everything which means setting-up an accurate software system.

HOW MANY PEOPLE ARE ON YOUR STAFF?

Take an in-depth look at your production volume. How many appraisal reviews can your team complete in a day? The number of appraisers you have as well as the type of appraisers you have (residential or commercial) should mimic that number. More reviews means more people, and fewer reviews means fewer people should be on staff. While residential appraisals can be done quicker than commercial ones, taking a good hard look at volume will help you evaluate productivity and in turn, efficiency.

WHAT’S YOUR STAFF’S SALARY RANGE?

Hiring a full-time appraiser can cost anywhere from $50k to nearly $94k. If you have enough deal volume coming through your doors, it might be time to add more staff. However, the bottom line is this: does the cost of hiring another full-time appraiser outweigh the cost of hiring an AMC? At MountainSeed, we work with retired or moonlighting appraisers who might be more cost-effective and more experienced. Plus, since you can’t always predict the ebb and flow of the real estate market, working with an AMC might leave you feeling more confident in your spending. AMCs like MountainSeed are hired at a fixed rate which means no budget surprises for your financial institution.

WOULD AN AMC MAKE YOUR APPRAISAL PROCESS MORE EFFECTIVE?

After answering each of the above questions, we’re saving the doozy for last. An internal team might be able to quickly move through appraisals reviews, but some banks or credit unions might be too small to devote an entire team to the task. In other cases, you might have reached a point where your appraisal review process is more than you can handle (or want to handle). Your success depends on having a staff that can support your volume, monitor your production, and be up to date on regulations. Whatever reasoning you have, an AMC can either supplement your staff or be hired to take it off your hands entirely. We’re happy to discuss whether an AMC is right for you.

Ready to take a more comprehensive look at your appraisal department? Find out if your appraisal department is stretched too thin and how you can fix it in our eBook. Download it for free today.