Time to Bring Back Common Sense
Appraiser No More, Think I’ll be a Lawyer: it takes less time to get a law degree than to get an appraisal license.
I heard from an old friend today that worked as an appraiser in Raleigh, NC for at least a dozen years. Shortly after 2009 and the HVCC, he (like so many others) started looking for career options. After appraisal reports kept requiring more and more pages, had more and more restrictions (far too many that were totally useless and had nothing to do with the home’s value), and his fees kept going down instead of up, he discovered that it would take him less time to get a law degree than it did to get his appraisal license. And, that he would get paid for his time and education. When you think of a doctor or an attorney, does a real estate appraiser cast an equal shadow for skill, knowledge, pay?
At a time when more and more demands are being made on the appraisal profession, the most highly qualified are being lost to other industries. Today’s appraisals seem to be geared towards “statistics,” like there is a magical “statistics fairy” that provides high quality real estate information and can offer a quality home valuation without considering the human element, which is mandatory in the real estate valuation process. Circumstances often play a key role in real estate values and no computer system, no statistics can ever replace the skill of a local, experienced appraiser. Most automated valuation systems value typical cul-de-sac lots the same. There are on the same street so they must be equal in value, right? There is no consideration that one side of the street may face the golf course, one side may face a lake (part in the middle, part at the damn, and part in the muck), one lot at the end of the street may have a view of a 20 acre horse farm with manicured pastures, paddocks, and a half a million dollar barn. All these lots are in close “proximity,” and in the world of statistics, they would be considered equal. In the real world, a professional real estate agent or appraiser would understand the difference in the value of these properties. They would also understand the difference between a 2,000 sqft house built on a slab that sold for $63.00 per-square-foot, verses the 2,000 sqft house with a full basement, green construction, custom granite and marble, coffered ceilings, and sold for $250.00 per-square-foot. On paper (the statistics), the homes may look very similar – built in 2005 both with apx. 2,000 sqft. Apples to apples comparisons are only available by a real, living, breathing, real estate professional.
Until the public recognizes the true value of the appraisal industry and their role in consumer protection, more and more qualified appraisers will be leaving the industry, replaced by form-fillers and volume appraisers. The definition of “Quality” has been misrepresented by big banking and appraisal management companies. The true appraisal artists, that are so very necessary to protect consumers, are finding new ways to earn a living. If this trend is not corrected soon, it could take 20-30 years to get even close to the level of skill available within the appraisal ranks today. Appraisers have been yelling at the top of their lungs since 2009, but no one seems to be listening. Interestingly, the easy money loans went away and home prices started to get realistic again. The availability of money drives home prices and after being out of control for several years, they had to adjust back to reality. We have just about finished those necessary adjustments and it’s time to bring common sense back to the home buying process. For now, make way for the new breed of appraisers, who use statistics to perform valuations, and turn them out faster and cheaper than at any time in history. Like much of life, when a product sounds too good to be true… Well, you get the idea.