By Joseph Palumbo, SRA, ASA, CTA
A 2025 article in Valuation magazine critiques the potential inclusion of appraisal management companies (AMCs) in the Department of Veterans Affairs (VA) appraisal process, arguing they would undermine independence, lower fees, and reduce appraisal quality while contrasting them with the VA’s existing “gold standard” fee panel system. This article offers a rebuttal, presenting the views of another Appraisal Institute–designated appraiser regarding AMCs.
Executive Summary
Appraisal management companies (AMCs) are often discussed through two recurring criticisms: that they function as unnecessary ‘middlemen,’ and that they contribute to ‘undisclosed’ or ‘hidden’ fees. Those narratives persist because the valuation process is complex, disclosures are not always intuitive to consumers, and the profession’s roles can be misunderstood. In practice, AMCs exist to support appraisal independence, panel qualification, quality control, documentation, and compliance at scale—work that many lenders can no longer perform efficiently in-house. When AMCs are led by credentialed valuation professionals, including Appraisal Institute members, they can elevate competency standards, improve communication, and strengthen public trust. The goal is not to defend any one business model; it is to clarify what is true, what is debated, and what best practices look like.
Start With the Real Issue: Confusing Disclosures Create Easy Assumptions
Much of the controversy around ‘undisclosed fees’ is less about whether a fee exists and more about how the appraisal charge is presented and understood. Industry discussions have highlighted that consumers may see a single ‘appraisal fee’ on disclosures while different parties (such as the appraiser and the AMC)perform distinct services in the process. Some argue that bundling can blur the consumer’s understanding of what portion reflects the appraiser’s professional work versus process management and compliance functions. That debate is real, and it is healthy. But it is different from the claim that fees are inherently “hidden” or that AMCs exist only to extract value. A more accurate question is: what services are being performed, by whom, and how can the profession explain that clearly? The Appraisal Institute continues to support and advocate for full disclosure of AMC fees to consumers.
The ”Middleman” Label Misses What Modern Lending Requires
Calling AMCs ‘middlemen’ implies they stand between lender and appraiser without adding substance. In today’s lending environment, however, substance is the point. Appraisal independence rules require separation from loan production, and lenders must demonstrate process integrity to investors, auditors, and regulators. AMCs provide the infrastructure to do this consistently by managing assignment protocols, communication pathways, documentation, and quality checks. In other words, the AMC role is closer to a compliance-and-operations function in financial services, more like a third‑party administrator or independent control layer than a passive broker.
What a Quality AMC Actually Does (and Why It’s Not Optional at Scale)
A high-performing AMC earns its place through measurable discipline. At minimum, that looks like:
- Appraiser qualification and panel management (licensing, geographic competency, property-type expertise, performance tracking)
• Independence-safe communication and escalation pathways
• Quality control review focused on completeness, consistency, and guideline compliance—not dictating value
• Audit trails and documentation that protect appraisers, lenders, and consumers
• Turn-time management and issue resolution when complexity, access, or revisions arise
Increasingly, lenders may access some of these functions through appraisal “portals” or technology platforms—tools that can streamline ordering, routing, status tracking, and documentation at scale. But whether delivered by a traditional AMC, a portal-enabled model, or a hybrid approach, the underlying disciplines above still must be performed, governed, and documented to manage risk and protect independence. These functions are operationally expensive to replicate lender-by-lender, especially when volume fluctuates, which is why a widespread return to fully in-house valuation departments is unlikely in many segments of lending.
Fees, Transparency, and the Misconception of “Skimming”
A common shorthand critique is that an AMC “takes part of the appraiser’s fee.” The more precise description is that the borrower-facing appraisal charge may include multiple components: the appraiser’s professional fee and separate costs associated with process management, compliance oversight, technology, and quality review. In the current environment, some stakeholders believe those components should be clearly itemized; others point to disclosure conventions and lender responsibility for how fees appear to the consumer. Either way, transparency improves trust. The practical path forward is not slogans—it is setting expectations upfront, documenting scope and complexity adjustments in writing, and building consistent fee policies that reflect market reality and assignment difficulty.
