The Future for Appraisers and Real Estate
I had a robust conversation with a long time appraiser about the future for the appraisers in the real estate industry. The appraiser has been appraising for many years and plans to continue another dozen years or so. He serves on the state appraisal board. He loves what he does. He sees the industry nearing a crissi level.
There is a current trend where appraisers are declining assignments and picking and choosing what work they will do. That is leaving a big void where some appraisals are being declined and ignored. The appraisals opportunities are so plentiful because of the good real estate market that the appraisers can decide which assignments they want.
I am experiencing this first-hand on many of my sales where it is taking 3 to 4 weeks to get an appraisal back to the lender. I can see that it will get worse. Ultimately, this is hurting the consumers both buyers and sellers.
The appraiser identified several reasons that the future is muddled and that the industry needs to change. I think these reasons are valid and if free enterprise is not allowed to reign, then we will see even more serious consequences in the coming years.
- Appraisers are aging and retiring creating fewer doing the work.
- There are not as many entering the business as in years past.
- It takes a college degree to enter into the business. This means that the field is competing with many other fields but without the advantage of a corporate benefits package behind it.
- Many are graduating college with huge education debt and they need a high paying job to help to make the student loan payments.
- An appraiser has to apprentice for 2 years before they can go out on their own. Experience appraisers that are training the newbies cannot pay but a limited amount for this inexperienced help. Paying $10-15 an hour is all they think the service of this apprentice is worth at this stage of the game. It is hard for a newbie to live on this.
- Some experienced appraisers do not want to spend their time training a new recruit. It bogs them down.
- After a trainee completes the 2 years of apprenticeship, they still have years ahead trying to establish a client base and earn a reputation to be able to make a good living.
- Meantime, professional fees, operating expenses, continuing education all have to be invested in.
- Management companies are taking a percentage of the appraisers fees because of the arms length separation from lenders.
- FHA and VA appraisal fees are fixed. They have not increased in response to demand in the marketplace.
- Conventional and commercial appraisal work allows the appraiser to bid on the project. This creates a realistic fee based on supply and demand.
What does the future hold for the appraisal industry? I think it will sort itself out but in the meantime we will see some shortages especially if the real estate market stays vibrant. Now if if should go into decline, then the pressure is off and the appraisers will have less work and be glad to get as much of it as they can. It will forestall the crisis of the lack of new appraisers coming into the business but it is not a long term solution.
The Future for Appraisers and the Real Estate Industry. Are We Nearing a Crisis Level?
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