Appraisal management company bonds (also called AMC bonds) are legally binding agreements between three parties: real estate appraisers, the government agency responsible for regulating local real estate appraisal activity, and a surety company.
The government agency is the Obligee and establishes the obligations that the appraiser (the Principal) must follow. The surety (also called bonding company) issues the bond guaranteeing the performance of the appraiser.
Appraisal management company bonds are required as part of the licensing process for real estate appraisers. When the surety company issues the bond, they provide the government agency a guarantee that the lenders who take part in a real estate transaction with the licensed appraiser will receive payment for financial losses resulting from a violation of the statutes and regulations set forth by the appraiser’s license.
If the appraiser fails to meet the obligations set out by the government agency, the surety will pay out any damages up to the bond amount. The appraiser is liable for the losses and is legally required to reimburse the surety company for any damages paid under the bond.
Appraisal management company surety bond costs vary depending on the total bond amount and the premium rate. The state agency sets the required bond amount and the surety company determines your premium rate, which is the percentage of the total bond amount you pay as the premium.
Premium rates for appraisal management company bonds usually cost between 0.75% and 3% of the total bond amount. It is common for principals in good financial standing to receive a 1% premium rate. Most appraisal management company bonds do not require a credit check but the surety company ultimately decides how to underwrite the bond.
During the application process, the surety company may evaluate your credit score, financial strength, and industry experience. Applicants with good credit generally receive the lowest rates, however, bad credit will not prevent you from securing an appraisal management company bond. EZ Surety still offers competitive rates to individuals with low credit scores or other financial issues.
Below are the lowest premiums EZ Surety has issued for appraisal management company bonds in popular states.