Appraisal Management Companies: Friend or Foe?

When you buy a real estate property, it is easy to feel like you must jump through an endless series of hoops before you can close on the sale.  You know that closing almost always ends up costing more than you expected, so you set aside some extra money for the purpose, even if it means using buy now pay later (BNPL) for your groceries during the weeks when your real estate agent assures you that closing is just around the corner.  Once you get to closing, you sit in a conference room in a law office, and lawyers read you a list of fees that you must pay.  The total is always more than you expected, and depending on how much audacity and how much patience you have, you might be able to talk your way into a lower price.  It is too much information at the end of a long slog when you are tired and eager to move into your new house.  You invariably come away wondering if you could have gotten through closing for an even lower price, if the seller and all the middlemen were just capitalizing on your desperation.  For help getting through real estate closing with as few last-minute fees as possible, contact a Washington, D.C. real estate lawyer.

Do Third Party Appraisal Management Companies Provide Quality Control?

If you have the presence of mind to read the fine print on the statements at closing, you might notice that one of the items is for a fee paid to an appraisal management company.  It doesn’t surprise you that an appraisal was part of the sale process; it was a prerequisite to getting the final approval on your mortgage loan.  Ever since the housing market crisis of 2008, lenders have been hiring third-party appraisal management companies (AMCs) to match appraisers to lenders and to perform quality control on the appraisals.  This is because, before the housing market prices, lenders tended to use in-house appraisers, and there was little transparency about the appraisal process.  Even though the fee might seem like a lot, only about $100 goes into the pocket of the AMC; it pays the rest to the appraiser.

Are Appraisal Management Companies Just Another Source of Junk Fees at Closing?

Of course, AMCs do not always disclose to buyers how much they paid to appraisers.  Sometimes AMCs quote the lender a price and then go looking for the cheapest appraisal company they can find, so the AMC can get a bigger cut of the amount that the lender paid.  The Consumer Financial Protection Bureau (CFPB) has denounced AMC fees as just another junk fee.  At worst, a sloppy appraisal can lead to the buyer quickly becoming underwater on the mortgage.

Contact Tobin O’Connor Ewing About Your Upcoming Real Estate Purchase

A Washington, D.C. real estate attorney can help you avoid excessive AMC fees and other unnecessary expenses when closing on a real estate purchase.  Contact Tobin, O’Connor, and Ewing in Washington, D.C. or call 202-362-5900.

Source:

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