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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
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    References listed on IDEAS

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    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.
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    4. Jessica Shui & Shriya Murthy, 2019. "Under What Circumstances do First-time Homebuyers Overpay? — An Empirical Analysis Using Mortgage and Appraisal Data," Journal of Real Estate Research, Taylor & Francis Journals, vol. 41(1), pages 107-146, January.
    5. 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.
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    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.

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    Keywords

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    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

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