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Top Four Components Originators Should Look for in a Valuations Partner

September 7, 2023

The real estate industry is in a constant state of flux. Therefore, one of the most important decisions a lender can make is choosing a trustworthy valuations partner. Appraisal management companies (AMCs) can be crucial in facilitating real estate transactions, and lenders must be sure they are working with an AMC that has the resources, expertise and relationships to complete the process quickly and accurately. Below, we have listed four criteria that can put an AMC ahead of the pack.

1. Dedicated customer support

These days, plenty of AMCs are struggling just to stay in business and adapt to changes in the real estate market and regulatory environment. As a result, resources are often scarce, and many AMCs respond to this scarcity by putting all of their lenders in a general client pool and cut corners to stay profitable. This system offers limited support, accountability and personal care and increases the risk for the lender. In contrast, a desirable valuations partner provides personalized service with designated contact points for each client and consistent processes.

In real estate, unexpected complications crop up in nearly every transaction, but a deal should never fall through because an AMC representative is taking a sick day. It’s crucial to have a support system in place that ensures that someone is always available to troubleshoot and find solutions. More importantly, that “someone” needs to not only be familiar with the individual account, but also doesn’t need to be brought up to speed in order to effectively handle the problem. An AMC built around customer support will enable its representatives to help lenders package more loans, more quickly.

2. Adequate financial backing

Throughout the country, AMCs are experiencing an industry-wide restructuring. Some smaller AMCs are trying to be acquired, while others may simply shut their doors. When an AMC goes out of business, it often leaves appraisers unpaid. Inevitably, those justifiably disgruntled appraisers then seek compensation, and the lenders who partnered with the now-defunct AMC are usually liable.

To avoid having to compensate appraisers in the event of a closure, lenders must be sure they are working with a financially sound AMC. Small or inefficient valuations partners are often just one slow quarter away from insolvency, which is a risk lenders shouldn’t take.

3. Strong appraiser relationships

Due to the fragile AMC ecosystem mentioned above, appraisers are reluctant to work with AMCs that have a reputation for nonpayment or late payment. As such, a good valuations partner must not only compensate appraisers fairly, but cultivate good relationships with them. In this spirit, Springhouse, a full-service valuation solutions and appraisal management company, has developed appraiser recognition programs and preferred panels to highlight and reward the work of high-performing appraisers.

Part of maintaining a network of strong appraiser relationships comes down to size. AMCs with a high volume of valuations in a particular market can have consistent fair rates with appraisers and see less price increases or spikes in turn-times. Appraisers prioritize calls from AMCs that they have a consistent working relationship with, over other assignments, because they know it isn’t a one-off transaction and that completing the work quickly will keep the relationship strong. Appraisers, AMCs and lenders benefit from this positive relationship, because an appraiser who is familiar with an AMC’s process can work far more quickly and with far less oversight.

4. Active AMC-lender partnerships

An AMC that doesn’t have a close working relationship with a lender’s team can feel like a superfluous middleman. A worthy AMC, on the other hand, incorporates itself into a lender’s day-to-day operations, and is always ready to share knowledge, advice and training. For lenders who don’t have an appraiser on staff, it’s invaluable to have a resource at an AMC who can explain the reasoning behind a valuation, and determine whether it merits further consideration.

When working properly, an AMC isn’t merely a legal buffer between lenders and appraisers, but is also an expert on managing risk, increasing efficiency and navigating changes in legal requirements. Lenders need an AMC representative who they can call to ask about changes in the de minimis rule, for example, as well as any other regulatory changes in the pipeline that can alter how banks do business. In addition, the ability to leverage the AMC’s own synergies—such as the fact that Springhouse is part of Altisource, which provides the ability to leverage other Altisource products—can drastically improve efficiency and allow lenders to compete more effectively.

For lenders, there is a world of difference between an AMC that provides end-to-end appraisal solutions and one that merely checks a box. An AMC that wants to be a true partner must be a trusted partner to its appraisers, a committed advocate for its lenders and a knowledgeable and well-structured business unit in its own right.