Regulation of Appraisal Management Industry Hurts Small Business and Consumers While Big Business Gets Bigger.
- Small business will be priced out of the market by $5,000 registration fees, a $2,500 annual fee and numerous compliance costs.
- Consumers will suffer as taxes and fees are ultimately passed along to them.
- There are 10 small business Appraisal Management Companies (AMCs) for every 1 large AMC.
SUMMARY: Senate Bill 829 would assess annual fees of $2,500, along with a registration fee of $5,000, on all existing and newly-formed Appraisal Management Companies (AMCs) beginning on January 1, 2012. These fees would be some of the highest of any state in the nation. Big business will undoubtedly support the legislation as the bill will decrease competition by pricing small businesses out of the market. SB 829 will harm consumers because a lower supply of appraisers to choose from drives up price, and the cost of paying the new fees would be passed along to customers.
The growing appraisal management industry would otherwise attract independent small business
- Local knowledge of the real estate market being an important part of any appraisal, small and local entrepreneurs are a natural fit for entry into the industry
- Barriers to entry created by the substantial registration and annual fees contained in SB829 would make market entry impossible for many local entrepreneurs
Large companies will get richer at the expense of the little guy
- Economies of scale ensure big businesses will be able to afford the fees while small businesses will be priced out of the market
- Large firms will increase their profit margins as the number of competitors in the market drops
Consumers lose, especially low-income homebuyers
- The new fees would be passed along to customers, raising the price for appraisal services.
- A limited supply of appraisers means less competition for customers, which means higher prices.
- North Carolina’s low-income homebuyers will be hardest hit by the more expensive appraisals
Compliance costs will also impose burden
- Companies must designate a compliance manager diverting an employee from productive work
- These compliance costs will be more easily absorbed by larger AMCs, creating a competitive edge for them over smaller AMCs
- This would serve to further accelerate the concentration of North Carolina’s AMC industry into the hands of a few large corporations