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The chair and co-chair of NAR’s Real Property Valuation Committee made a few remarks on video about NAR’s appraiser independence policy last week during the 2018 REALTORS® Legislative Meetings in Washington. What sparked the remarks was a recent working paper on appraisal quality by two researchers with the Federal Housing Finance Agency.
In the paper, the researchers say appraisals ordered by appraisal management companies are not overvalued at a higher rate than other types of appraisals. There were some differences, though. First, when AMC appraisals come in overvalued, they tend to come in overvalued by a higher amount that other appraisals. Second, AMC appraisals tend to use more comparables.
Rebecca Jones, chair of NAR’s Real Property Valuation Committee, says she’s not surprised by the findings. “A lot of us boots-on-the-ground appraisers have known this sort of thing for a long time,” she says.
The committee’s vice chair, David Griffith, said AMCs are just one way the industry can promote appraiser independence. “We support the use of AMCs as an option to help with appraiser independence,” he said. “We also support the alternatives to AMCs.”
Griffith said the paper also acknowledged that the turn time with AMC appraisals tends to be longer, and that’s something to be considered. “Instead of going directly through the lender, you’re having to go through a third party, and this can cause delays in your turn time from when that appraiser goes out ands does the appraisal to when the lender actually gets the appraisal,” he said.