Average AMC Appraiser Travels 13 Miles or Less
Pittsburgh-The average appraiser in most metro markets travels 13 miles or less to value a property, according to a new survey by the Title Appraisal Vendor Management Association here.
The group is using the results to counter an argument made by the opponents of the Home Valuation Code of Conduct that appraisal management companies are assigning work to appraisers who have to travel long distances and are not familiar with the neighborhood.
"We polled our AMC members in light of unsubstantiated statements that AMCs send out-of-market appraisers great distances to value properties," said Jeff Schurman, executive director of TAVMA.
"Based on what our members are reporting to us that's simply not the case."
One of the reasons AMCs are getting a bad rap is because the whole mortgage industry is changing and more work is going through them, which means there can be pushback from some appraisers and mortgage brokers that may not like how business is done, he said.
The way mortgages are being ordered and placed in the last 20 years has been evolving. In the last few years, AMCs have been used by an increased amount of mortgage lenders because they are lending from a centralized platform.
"If you look at the top 20 lenders, they do about 70% of the mortgage originations in the marketplace today. Typically, today they are outsourcing to appraisal management companies because they have the facilities, the people and the information technology to place large numbers of orders all around the country."
AMCs typically use one of three methods for controlling how far appraisers travel: geocoding, ZIP-code-to-ZIP-code mapping, and/or order-form instructions not to exceed defined distance parameters.
That an appraiser services a particular area, how often and how recently are three critical selection criteria that AMCs use in selecting the most appropriate appraiser for an assignment.
"Does this mean that in Montana or Wyoming, some appraisers aren't driving further than 13 miles? Of course not. The United States has over 3.5 million square miles of land area and about 60,000 residential appraisers, a land-to-appraiser ratio of 59-to-1," said Steve Haslam, CEO of StreetLinks National Appraisal Services.
"The nature of the business is that appraisers sometimes travel outside of their own neighborhood but that doesn't mean outside of their sphere of professional expertise."
It is important to remember, according to Mr. Haslam, that as licensed and certified appraisers, the appraisers who work with AMCs are required under their industry standards, known as USPAP, to refuse assignments where they are unfamiliar with the markets.
AMCs currently provide approximately 60% of all residential appraisals used in the mortgage industry, and TAVMA's 40 AMC members together account for more than 80% of this volume.
Although some AMCs employ in-house appraisers, most assign orders to local independent appraisers.
"When you consider a 2007 national survey reporting that 63% of the appraisers in the country work with AMCs, it stands to reason that AMCs will have a deep pool of appraisers from which to choose.
"Plus, the economics of the industry give neither the AMCs nor the appraiser an incentive to go great distances to conduct an appraisal," Mr. Schurman added.
One false narrative, he says, is that AMCs will send the appraiser 50 to 100 miles away.
"Let's take 100 miles as an example. That's at least two hours of driving time each direction. So, if an appraiser can do one appraisal a day and they are sent 100 miles, that's half a day they are in the car. Add to that an hour at the subject property and visiting the comparable sales," he said.
"That's five hours right there. It doesn't make economic sense to do that. What makes more economic sense is to keep your appraisers in a tight geographic area. If the average distance is 13 miles that's 20 minutes in the car vs. two hours."