What is an Appraisal Management Company (AMC)?
An Appraisal Management Company (AMC) is a third‑party firm that handles the administrative side of residential real‑estate valuation work for mortgage lenders. The AMC orders and manages the appraisal, assigns a licensed appraiser to inspect the property, and delivers the completed appraisal report to the lender. The individual appraiser performs the valuation and must follow professional standards.
Key concepts and definitions
– Appraiser independence: Rules and practices that separate appraisers from parties with a financial stake in the loan (lenders, brokers, or sellers) to reduce pressure to inflate values. Federal reforms after the 2007–2008 housing crisis strengthened these protections.
– HVCC (Home Valuation Code of Conduct): A 2009 set of appraisal‑independence guidelines that helped shape later federal and industry rules (not currently in force but historically important).
– USPAP (Uniform Standards of Professional Appraisal Practice): The professional standards that an appraiser’s work must meet in the U.S.
– AMC role: Administrative coordinator — selects an appraiser from its roster, submits the order, receives the appraisal, and forwards it to the lender. AMCs typically maintain a pool of state‑licensed or state‑certified appraisers to meet orders.
Why AMCs exist (brief history)
Use of AMCs expanded after the 2007–2008 financial crisis when regulators and government‑sponsored entities pushed for stronger appraiser independence. Laws and guidance sought to prevent lenders or brokers from influencing appraisers to overstate values. AMCs became a common way for lenders to outsource appraisal ordering while preserving that independence.
How the AMC process typically works (step‑by‑step)
1. Lender places an order with the AMC for an appraisal on a specific property.
2. AMC reviews the order and selects an appraiser from its roster who has local market knowledge and the appropriate license/credentials.
3. Appraiser receives the assignment (without improper influence), inspects the property, researches comparable sales, and prepares an appraisal report that complies with USPAP.
4. Appraiser returns the report to the AMC.
5. AMC reviews for administrative completeness and forwards the report to the lender. If issues arise (formatting, missing data, obvious errors), the AMC coordinates corrections or clarification with the appraiser.
Practical checklist: what each party should expect
– For borrowers/homebuyers:
– Expect that you will not pick the appraiser if the loan goes through an AMC.
– Ask your lender which AMC will handle the appraisal and what fees/timelines apply.
– Keep copies of receipts and the final appraisal report for your records.
– For lenders/loan officers:
– Verify the AMC’s appraiser vetting, credential checks, and quality‑review policies.
– Confirm the AMC’s turnaround times and dispute‑resolution process.
– Maintain separation of communications so appraisal independence is preserved.
– For appraisers:
– Confirm licensing/qualification requirements for the state and assignment type.
– Expect to receive standard assignment details (scope, intended use, client) from the AMC, not from the borrower/lender directly.
– Follow USPAP and document any unusual conditions or restrictions.
Small worked numeric example (illustrative)
Assumptions:
– Appraiser’s direct fee: $450
– AMC administrative markup (or fee) added by AMC: 15%
– Appraisal turnaround: 5 business days
Calculation:
– AMC markup = 15% of $450 = $67.50
– Total charge passed along by AMC = $450 + $67.50 = $517.50
Interpretation:
– The borrower (through the lender) would pay $517.50 in this example. The appraiser receives $450; the AMC retains $67.50 for administration and compliance services. Actual fees, markups, and who pays vary by lender, state law, and contract.
Important compliance points and limitations
– Appraisers must meet USPAP standards and be state‑licensed/certified where required.
– Federal and state rules require steps to preserve appraiser independence; lenders, brokers, or sellers should not pressure appraisers about values.
– AMC practices and allowable markups are regulated differently across states; check applicable state law for consumer protections and fee rules.
Sources for further reading
– Investopedia — Appraisal Management Company (AMC): https
Investopedia — Appraisal Management Company (AMC): https://www.investopedia.com/terms/a/appraisal-management-company-amc.asp
Consumer Financial Protection Bureau (CFPB) — Appraisals and appraisals process: https://www.consumerfinance.gov/ask-cfpb/what-is-an-appraisal-en-139/
The Appraisal Foundation — USPAP and appraisal standards: https://www.appraisalfoundation.org/
Appraisal Subcommittee (ASC) of the Federal Financial Institutions Examination Council — oversight and state appraiser agencies: https://www.asc.gov/
U.S. Department of Housing and Urban Development (HUD) — appraisal requirements for FHA programs: https://www.hud.gov/program_offices/housing
Practical checklist for borrowers dealing with an AMC-managed appraisal
1) Confirm who orders and pays
– Ask your lender: did they or an AMC order the appraisal? Who is listed as the client on the appraisal report?
– Ask whether you will be charged directly by the AMC or whether the fee appears in your closing costs.
2) Get cost transparency
– Request an itemized fee statement showing the appraiser’s fee and the AMC administration/markup, if available.
– Example calculation: appraiser fee $400; AMC markup 15% → AMC retains $60; borrower/lender pays $460 total.
3) Verify appraiser qualifications and independence
– Ask for the appraiser’s name and license/certification number.
– Confirm the appraiser is licensed/certified in your state (state appraiser board or ASC site).
– Watch for signs of pressure on value (requests to hit a target price). Federal rules require appraiser independence.
4) Review the appraisal promptly
– Obtain a copy of the appraisal report as soon as it’s available (lenders must provide it when you request or after they deliver an adverse action).
– Check: property description, comparable sales (comps), adjustments, date of inspection, and any factual errors (square footage, number of bedrooms, condition).
5) If you disagree with the value, start a formal process
– First, raise factual errors with the lender and request correction.
– If issues remain, request a Reconsideration of Value (ROV) or a second appraisal per your lender’s procedures.
– Prepare supportive evidence: recent comparable sales, photos showing condition, proof of renovations, and corrected factual data.
6) Escalation and regulators
– If you suspect appraisal independence violations or unfair practices, contact:
– Your state appraiser licensing board (for licensing or conduct complaints).
– The Consumer Financial Protection Bureau (CFPB) for federal consumer issues.
– The Appraisal Subcommittee (ASC) for systemic issues across states.
How to prepare supportive evidence (step-by-step)
1) Gather documents: MLS printouts for comparable sales, closing statements for recent nearby sales, permits or invoices for renovations, and dated photos.
2) Create a short cover note: state the specific factual errors or reasons you believe the appraiser’s comps are inappropriate.
3) Submit to your lender (not to the appraiser) and request an ROV or second appraisal per lender policy.
4) Keep a record of all communications (dates, names, content).
When an AMC mark-up is reasonable vs. a red flag
– Reasonable: modest administration fee for ordering, quality control, and secure report delivery; transparent disclosure to the client/borrower.
– Possible red flags: large undisclosed markups, refusal to identify the appraiser, pressure to obtain a specific value, or patterns of low appraiser pay that may impair quality.
Limitations and assumptions
– State laws differ on allowable AMC practices and disclosure. Always check state statutes or your state appraiser board.
– Lenders’ policies determine whether a borrower can request a second appraisal and who pays.
– This guidance is educational and not legal advice.
Educational disclaimer
This information is educational only and does not constitute personalized financial, legal, or investment advice. For decisions affecting your mortgage or property transaction, consult your lender, a licensed appraiser, or an attorney as appropriate.