IDEAS home Printed from https://ideas.repec.org/p/hfa/wpaper/18-01.html
   My bibliography  Save this paper

Are Appraisal Management Companies Value-Adding? – Stylized Facts from AMC and Non-AMC Appraisals

Author

Listed:
  • Jessica Shui

    (Federal Housing Finance Agency)

  • Shriya Murthy

    (Federal Housing Finance Agency)

Abstract

In this paper, we study whether there are any systematic quality differences between appraisals associated and unassociated with appraisal management companies (AMCs). We find that compared to non-AMC appraisals, AMC appraisals on average share a similar degree of overvaluation despite being more prone to contract price confirmation and super-overvaluation. AMC appraisals also share a similar propensity for mistakes, despite employing a greater number of comparable properties. Our evaluation employs relatively simple statistical comparisons, but the results indicate no clear evidence of any systematic quality differences between appraisals associated and unassociated with AMCs.

Suggested Citation

  • Jessica Shui & Shriya Murthy, 2018. "Are Appraisal Management Companies Value-Adding? – Stylized Facts from AMC and Non-AMC Appraisals," FHFA Staff Working Papers 18-01, Federal Housing Finance Agency.
    • Handle: RePEc:hfa:wpaper:18-01
    as

    Download full text from publisher

    File URL: https://www.fhfa.gov/PolicyProgramsResearch/Research/PaperDocuments/wp18-01.pdf
    Download Restriction: no
    File URL: https://www.fhfa.gov/PolicyProgramsResearch/Research/Pages/wp1801.aspx
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Marcos Lins & Luiz Novaes & Luiz Legey, 2005. "Real Estate Appraisal: A Double Perspective Data Envelopment Analysis Approach," Annals of Operations Research, Springer, vol. 138(1), pages 79-96, September.
    2. Lei Ding & Leonard Nakamura, 2016. "The Impact of the Home Valuation Code of Conduct on Appraisal and Mortgage Outcomes," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 44(3), pages 658-690, July.
    3. D.H. Jenkins & O.M. Lewis & N. Almond & S.A. Gronow & J.A. Ware, 1999. "Towards an intelligent residential appraisal model," Journal of Property Research, Taylor & Francis Journals, vol. 16(1), pages 67-90, January.
    4. Jessica Shui & Shriya Murthy, 2017. "Under What Circumstances do First-time Homebuyers Overpay? – An Empirical Analysis Using Mortgage and Appraisal Data," FHFA Staff Working Papers 17-03, Federal Housing Finance Agency.
    5. Barry A. Diskin & Dean H. Gatzlaff, 1994. "An Examination of the Earnings of Real Estate Appraisers," Journal of Real Estate Research, American Real Estate Society, vol. 9(4), pages 507-524.
    6. Marvin L. Wolverton & Paul Gallimore, 1999. "Client Feedback and the Role of the Appraiser," Journal of Real Estate Research, American Real Estate Society, vol. 18(3), pages 415-432.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Eriksen, Michael D. & Fout, Hamilton B. & Palim, Mark & Rosenblatt, Eric, 2019. "The influence of contract prices and relationships on appraisal bias," Journal of Urban Economics, Elsevier, vol. 111(C), pages 132-143.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jessica Shui & Shriya Murthy, 2017. "Under What Circumstances do First-time Homebuyers Overpay? – An Empirical Analysis Using Mortgage and Appraisal Data," FHFA Staff Working Papers 17-03, Federal Housing Finance Agency.
    2. Paul Calem & Jeanna Kenney & Lauren Lambie‐Hanson & Leonard Nakamura, 2021. "Appraising home purchase appraisals," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 49(S1), pages 134-168, March.
    3. Narula, Subhash C. & Wellington, John F. & Lewis, Stephen A., 2012. "Valuating residential real estate using parametric programming," European Journal of Operational Research, Elsevier, vol. 217(1), pages 120-128.
    4. Marvin L. Wolverton & Donald Epley, 1999. "Structural Analysis of U.S. Appraiser Income," Journal of Real Estate Research, American Real Estate Society, vol. 18(2), pages 377-393.
    5. Eriksen, Michael D. & Fout, Hamilton B. & Palim, Mark & Rosenblatt, Eric, 2019. "The influence of contract prices and relationships on appraisal bias," Journal of Urban Economics, Elsevier, vol. 111(C), pages 132-143.
    6. Wolff, François-Charles, 2014. "Lift ticket prices and quality in French ski resorts: Insights from a non-parametric analysis," European Journal of Operational Research, Elsevier, vol. 237(3), pages 1155-1164.
    7. François-Charles Wolff, 2014. "Lift ticket prices and quality in French ski resorts: Insights from a non-parametric analysis," Working Papers hal-00952999, HAL.
    8. James N. Conklin & N. Edward Coulson & Moussa Diop, 2023. "Distressed comps," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 51(1), pages 170-195, January.
    9. Sonia Gilbukh & Andrew Haughwout & Rebecca J. Landau & Joseph Tracy, 2023. "The price‐to‐rent ratio: A macroprudential application," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 51(2), pages 503-532, March.
    10. Ben Lakhdar, Christian & Leleu, Hervé & Vaillant, Nicolas Gérard & Wolff, François-Charles, 2013. "Efficiency of purchasing and selling agents in markets with quality uncertainty: The case of illicit drug transactions," European Journal of Operational Research, Elsevier, vol. 226(3), pages 646-657.
    11. Irene Cheloti & Manya Mooya, 2021. "Valuation Problems in Developing Countries: A New Perspective," Land, MDPI, vol. 10(12), pages 1-20, December.
    12. Majid Zerafat Angiz Langroudi & Ali Emrouznejad & Adli Mustafa & Joshua Ignatius, 2013. "Type-2 TOPSIS: A Group Decision Problem When Ideal Values are not Extreme Endpoints," Group Decision and Negotiation, Springer, vol. 22(5), pages 851-866, September.
    13. Christian Weistroffer & Steffen Sebastian, 2015. "The German Open-End Fund Crisis – A Valuation Problem?," The Journal of Real Estate Finance and Economics, Springer, vol. 50(4), pages 517-548, May.
    14. Mei-Hsing Lee & Chien-Wen Peng & Hsueh-Fei Liao, 2020. "An Analysis of Objectivity in the Real Estate Appraisal Process," International Real Estate Review, Global Social Science Institute, vol. 23(4), pages 483-504.
    15. G. Stacy Sirmans & Philip G. Swicegood, 1997. "Determinants of Real Estate Licensee Income," Journal of Real Estate Research, American Real Estate Society, vol. 14(2), pages 137-154.
    16. Tom Kauko, 2004. "A Comparative Perspective on Urban Spatial Housing Market Structure: Some More Evidence of Local Sub-markets Based on a Neural Network Classification of Amsterdam," Urban Studies, Urban Studies Journal Limited, vol. 41(13), pages 2555-2579, December.
    17. R. Kelley Pace & Raffaella Calabrese, 2022. "Ignoring Spatial and Spatiotemporal Dependence in the Disturbances Can Make Black Swans Appear Grey," The Journal of Real Estate Finance and Economics, Springer, vol. 65(1), pages 1-21, July.
    18. Ruben Chumpitaz & Kristiaan Kerstens & Nicholas Paparoidamis & Matthias Staat, 2010. "Hedonic price function estimation in economics and marketing: revisiting Lancaster’s issue of “noncombinable” goods," Annals of Operations Research, Springer, vol. 173(1), pages 145-161, January.
    19. Mark T. Spenc & James A. Thorson, 1998. "The Effect of Expertise on the Quality of Appraisal Services," Journal of Real Estate Research, American Real Estate Society, vol. 15(2), pages 205-215.
    20. Alm, James & Buschman, Robert D. & Sjoquist, David L., 2011. "Rethinking local government reliance on the property tax," Regional Science and Urban Economics, Elsevier, vol. 41(4), pages 320-331, July.

    More about this item

    Keywords

    appraisal management company; appraisal; appraiser; quality; Home Valuation Code of Conduct;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hfa:wpaper:18-01. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: William Doerner (email available below). General contact details of provider: https://edirc.repec.org/data/fhfaaus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.