Solidifi, Kirchmeyer Combine, Creating Third Largest AMC
In a deal that will make it the third largest provider of residential appraisals in the United States, Solidifi’s U.S.-based operation is merging with Kirchmeyer & Associates to create an appraisal management company that will serve 50% of the top 50 lenders in the country.
Last year, Real Matters, the Canadian-based parent of Solidifi (which has operations on both sides of the border), raised C$22 million ($22.3 million) in financing.
Those funds are being used for Solidifi’s growth strategy and the company continues to be in growth mode, even after the Kirchmeyer deal, said Andrew Bough, chief valuation officer.
Both companies already were already active in all 50 states. But the deal “takes two very large AMCs and adds to their appraiser network,” said James Kirchmeyer, CEO of Kirchmeyer & Associates. Kirchmeyer has 8,000 appraisers, while Solidifi has 18,000. Accounting for people who are on both panels, the combination will have over 23,000 appraisers.
Kirchmeyer added that the two companies do not have any overlapping lender clients. “We really never competed against each other, so [we were] able to blend these two client lists together and grow substantially in size.
The reason the transaction makes sense is that it takes Solidifi’s $25 million technology platform and adds to that Kirchmeyer’s reputation for high quality control and customer service, “and we blend the best of both worlds together and we really feel we’re well positioned to even capture more of the market,” Kirchmeyer said.
Bough added the two firms are compatible in terms of the focus on quality and customer service “and our desire to continue to help raise the bar within the industry, to drive professionalism within the appraiser ranks, to provide our lender clients with top-notch service and obviously look to innovate and enhance the industry as we go forward.”
There have been complaints from the ranks that the number of appraisers has been shrinking and there are few, if any, new people taking up the profession.
Bough said this is something Solidifi needs to be conscious of and has to be involved in the opportunities to bring new talent—“and I emphasize talent”—into the profession.
In giving out assignments, Solidifi does not just want “a warm body and a pulse, and we want to raise the bar and that includes bringing in the right talent to the industry,” he continued.
Kirchmeyer said technology (particularly Solidifi’s) has a lot with helping appraisers become more productive, noting he started in the industry when practitioners still used Polaroid picture and glued them to the report.
Bough said the differentiation between Solidifi and Kirchmeyer versus other AMCs is that it enters into “meaningful partnerships with our appraisers.” Rather than pack the panels with a lot of bodies, the companies want to provide them with the tools and the technology for them to be successful, which in turns lets the AMCs provide clients with “a product that is noticeably better than what our competitors are producing,” he said.
And Solidifi’s technology was one of the important points in convincing Kirchmeyer into entering into the alliance, which he called “amazing.”
Bough added the technology has been the cornerstone of its success.
But both men added that the new regulatory/compliance burden for AMCs, which came into being as part of Dodd-Frank, was not a consideration for combining. But the combination does strengthen the compliance function for appraisers and lenders.
Solidifi’s Canadian unit is a separate entity and still will do work there. Kirchmeyer, which was headquartered in the border city of Buffalo, N.Y., does not have a Canadian business.
“We believe we provide a viable alternative to the other sizable AMCs in the marketplace. We are an appraisal company; we do not sell bundled services. We specialize in and are only focused on traditional appraisals. That is what we do, that is what we do well,” Bough said.