Following the Great Recession, the reputations of banks and appraisers suffered tremendously. The result has been increased scrutiny followed by more regulations and oversight. Whenever that is the case, the inevitable consequence is increased costs.
The largest financial institutions can absorb those costs, but the vast majority of small to mid-size banks cannot. At least not while remaining acceptably profitable.
Enter outsourcing.
There are plenty of options out there for banks to consider when outsourcing their appraisal process management, but as with anything else, not all options are created equal.
Here are what we believe are the key traits in an appraisal management company, as well as some things to ask your prospective – or current – appraisal management company to be certain they are the right partner for you:
Expertise
When you bring in a partner to manage your appraisal process, you need more than someone to simply sign off on the final product. Appraisals are an integral part of the loan process, not just fodder for the loan file. Below are some suggested questions to be certain they have the expertise you need:
- How many reviewers does your firm have?
- How many of them hold the MAI designation?
- How much actual appraisal experience do they have?
- What are their areas of expertise?
Service
What good is a company that has plenty of experts, but is impossible to reach, keeps you in the dark about the status of projects, or doesn’t allow you to easily access your reports? To be sure this kind of bad service doesn’t happen to you, here are some questions to ask:
- Who at the firm will be responsible for keeping us updated on projects, and how will they do it?
- Can we initiate an appraisal request online? If so, is it only during certain times of day or days of the week?
- Once an appraisal and review is complete, do you store the documents so we can access them if we need copies? If so, how long are they available?
Independence
It goes without saying that the firm you choose must be independent of the lending function, but there is more to it than that. You have to be able to trust that your third party partner has no vested in interest in the outcome of the appraisal, and that the appraisal review they provide will satisfy your regulators. Again, here are some suggested questions to ask:
- Is your company in any way related to a real estate broker?
- Will your firm continue to bid on our appraisal projects if we partner on the appraisal management function?
- Do your reviews ensure that we are 100% compliant with our regulators?
We believe that if you take the time to ask these questions, and really listen to the answers, you will find the right partner to manage your appraisal process. When that happens, you can get back to focusing on growing your bank instead of dealing with unhappy regulators.