The Decline of Appraisers
- Fee Transparency, Pivotal Point for Appraisers - October 23, 2019
- AQB Proposes Alternative to College Degree Requirement - May 19, 2016
- The Decline of Appraisers - February 22, 2016
The Decline of Appraisers
by Isaac Peck, Editor
Every year, for the past eight years, the number of active real estate appraisers has declined. The Appraisal Institute (AI) estimates that the number of appraisal professionals is currently shrinking at three percent a year Over 95% declineand warns that sharper declines may be on the horizon as appraisers begin retiring en masse.
A decline in the number of appraisers threatens the integrity of lending and undermines the stability of the real estate marketAnd the problem is not simply that too many appraisers are retiring. Very few appraisers are entering the profession. In Illinois, the drop in real estate appraiser trainee applications went from 1,231 in 2005 to only 55 in 2015. That’s an over 95 percent decline. This drastic reduction in new entrants is being seen in states across the country.
Many appraisers welcome the shortage, which has already driven up fees in many areas. But many believe the celebration is shortsighted. A decline in the number of appraisers threatens the integrity of lending and undermines the stability of the real estate market according to many, not to mention putting the economy at risk of future bubbles. It does not bode well for the appraisal profession either. Many fear that lending interests are itching to find a reason to replace appraisers where and when possible with big data and automated systems, should turn times for appraisals become untenable.
number of active real estate appraisers has declined Some appraisers believe this is a fight for their very existence. At national conferences, company meetings, even around the family dinner table the debate rages: what to do about the declining number of real estate appraisers in the United States.
The Appraisal Foundation (TAF), a non-profit agency empowered by the federal government to regulate appraisers, implemented a Bachelor’s degree requirement for Certified appraisers, which took effect in January 2015. This means that an appraiser can not become Certified without a college degree. Because most AMC work and all FHA appraisals require Certification today, this move chokes off opportunities for both long-time appraisers without a degree, as well as those contemplating joining the ranks. Many just starting out have young families and obligations and find going back to school impossible- especially without a good chance for financial reward. With the onerous 2,000 hour experience requirement for trainees- a one or two year period when newbies earn next to nothing, and the 150 hours of additional appraisal education required for licensing, the odds seem stacked against replacing the supply of retiring and fleeing appraisers with new recruits. This is a huge challenge for the profession.
Limitations on Trainees
Also running counter to growing the profession, a number of states have adopted strict limitations on how trainees can work under a mentor appraiser. Many states have provisions that require “direct supervision” and that the licensed appraiser be “physically present for the inspection of each appraised property.” This all but removes the financial incentive for taking on a trainee, according to many. Lenders are requiring that supervisors inspect both the subject and the comparable properties personally, and can not rely on the work of the trainee. These state laws and lender requirements are a serious obstacle for appraisers to take on trainees, as it prevents them from fully benefiting from the economies of scale that trainees once provided the profession. There is some talk of AMCs being the new training ground for young appraisers. Their considerable financial resources and eye for quality control make them a logical choice.
Fees and Supply/Demand
The decline in fees was precipitated by the passage of the Home Valuation Code of Conduct (HVCC) in 2009 Low fees are the biggest and most obvious reason why appraisers are leaving the profession and why new recruits are not lining up to replace them. The decline in fees was precipitated by the passage of the Home Valuation Code of Conduct (HVCC) in 2009, which ushered in the era of AMC prominence. With its passage, appraisers lost direct contact with their clients and the ability to compete. As a result, most appraisers doing lending work saw their fees cut by up to half by AMC middleman.
decline in the number of appraisers could one day become a shortage Appraisers argue that if AMCs and lenders paid more, more college grads would consider the profession and fewer current appraisers would exit. But AMCs and lenders argue supply and demand. They don’t have to pay more if appraisers are still accepting the low fees they offer. The bigger picture is that the decline in the number of appraisers could one day become a shortage and that in the midst of the next real estate boom there will not be time to train the next generation adequately. Such a scenario might create long delays in loan closings, gum up the wheels of commerce and expedite the demise of the profession. At that point, lenders will push to replace appraisers with a combination of big data and lesser trained inspectors to get the job done quickly and cheaply.
De Minimus Threatened
In response to the low number of appraisers entering the profession, some stakeholders in the mortgage industry are declaring that there is an appraiser “shortage” and are calling to have the federal de minimus raised from $250,000 to $500,000- the threshold below which an appraisal is not required for a federally-related transaction. Just last year, the Federal Financial Institutions Examination Council, which includes the Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Federal Reserve System and the Consumer Financial Protection Bureau, indicated that the $250,000 threshold is under review as part of a larger effort to identify “outdated, unnecessary, or unduly burdensome regulations.”
The effort to raise the de minimus is led by the American Banker’s Association (ABA) and a coalition of smaller regional banks which are more likely to experience a shortage of appraisers in rural markets. The ABA argues that appraisals are unnecessary costs that make it hard for small banks to compete. The AI, the American Society of Appraisers, the National Association of Independent Fee Appraisers, and many other organizations have opposed the proposition, arguing that “increasing the appraisal threshold levels could have a negative impact on safe and sound real estate lending practices.” While it’s unlikely the de minimus will be raised in the immediate future, the fact that it is on the table is an indication of the challenges facing the appraisal profession.
The National Appraisal Congress (NAC), an organization made up of some of the largest national AMCs and appraisal firms, has recently begun advocating for reform to the experience and education requirements for trainees. The NAC sees changing the “direct supervision” requirements in state laws and in lender guidelines as critical in helping the appraisal industry meet the coming demand for appraisal work.
An NAC White Paper, Removing Barriers to Entry in Valuation, argues that given that the average age of an appraiser is 55, there is a “very real potential that over the next 10 years there is likely to be a large segment of the currently practicing residential appraiser population that will retire or become semi-retired, thus further decreasing the supply of appraisers.”
The Mortgage Banker’s Association projects an increase in 12.7 million owner households from 2014 to 2024, averaging 1.3 million households per year. The inference is that the formation of these new owner households will require appraisals. The NAC believes that “even without further attrition, the current population of residential appraisers will be inadequate to fulfill that growing mortgage demand.” This is both good and bad news for the industry.
The NAC’s solution is a revision of state and lender client requirements. Instead of having to be directly supervised and accompanied on all inspections by their supervisor, trainees can be allowed to perform appraisal inspections on their own after being adequately trained by performing at least 30 inspections in no less than 90 days with their supervisor.
This, the NAC argues, is a critical component of making the training process more economical for both the supervisor and the trainee. The trainee may be able to negotiate a higher fee split or greater compensation because of the increased contribution. The supervisor would be able to delegate more to their assistants and profitably employ trainees.
The NAC draws similarities between appraisers and Certified Public Accountants (CPA), arguing that CPAs are currently able to utilize their trainees to a much greater extent than appraisers. The NAC believes that much like accountancy, the appraisal industry must “maintain a gold standard for qualifying and testing new appraisers, while also creating a structure that prevents the process from becoming cost prohibitive, redundant and a barrier to entry that prevents the admission of newly qualified appraisers.”
In an interview with Working RE, John Brenan, Director at The Appraisal Foundation (TAF), says that TAF’s Appraiser Qualification’s Board is not looking to roll back the College degree requirement. “At the AARO Conference in 2015, we didn’t hear any testimony saying we’ve gone too far. Members of the panel were actually saying that we should not remove the requirement. It has raised the level of the candidates to where it should be. I don’t think the AQB will get rid of that requirement, but it is looking at alternatives. If you’re a licensed appraiser with a track record of professional experience, but you don’t have a college degree, is there a way to be a Certified Residential? The AQB is considering that,” says Brenan. “FHA/ HUD not accepting appraisals by licensed appraisers is also an issue. The AQB is very proactive about this and looking at what it can do to ensure people who want to be in the business can be in the business.”
Brenan says the AQB is looking into the experience requirement. “TAF and the AQB are considering if the 2,000 and 2,500 hour experience requirements are the right numbers. What is 2,500 hours of experience today compared to when these numbers were first done? Technology means appraisals are being performed in less time. We are also exploring what are other ways people can get that experience to get into the profession and become certified because we recognize the supervisor/trainee mentoring model is experiencing difficulties,” says Brenan.
According to Brenan, the AQB is looking toward the further development of practicum courses, which would be additional courses that would satisfy up to 50 percent of a trainee’s required experience. The problem, Brenan says, is that no practicum courses exist today as it hasn’t been economical to develop and offer such courses until now. In response, the AQB plans to develop a course that could be offered by other education providers.
Brenan is quick to note that it is not the AQB that requires direct supervision. “There is nothing in the AQB criteria that prohibits trainees from inspecting properties, or even from signing appraisals. A lot of the impediments to hiring trainees are not created by TAF or the AQB. But we aren’t an advocacy group. Banks not wanting to use appraisals performed by trainees and states restricting what they can do is an issue the industry will need to resolve on a state and client level,” Brenan says.
Nevertheless, the AQB is evaluating the trainee model. “I don’t think the AQB will throw out the model completely, but there is an effort to incentivize supervisors. And of course there is a concern as we don’t want to over incentivize. We want people to be a supervisor because they believe that they have a valuable role bringing someone into the business and training them properly,” says Brenan.
sharper decline on the horizon… As the overall number of active appraisers has decreased, according to the Appraisal Subcommittee’s national registry, the number of appraisers is expected to continue to decline with no end in sightthere are actually more Certified General and Certified Residential appraisers now than there were 10 years ago in 2006. The result has been relatively positive for active appraisers, as they’ve seen fees rise modestly. No acute shortage of appraisers seems imminent either. Baby boomers are retiring later and real estate appraising is a profession that lends itself well to working part-time in one’s retirement, as many appraisers report doing. However, the number of appraisers is expected to continue to decline with no end in sight.
The decisions of the AQB and the success of the NAC and other interested parties in reforming state and lender requirements for trainees will play a role in how many new appraisers enter the field in the coming years. Given the time required to bring new professionals into the industry, the recent actions by the NAC and others seem timely. Because of the appraiser’s central role in real estate lending transactions, the health of the real estate appraisal industry will remain something that appraisers, AMCs, and lenders will continue to watch closely in the years ahead.
Be Heard: AQB Call for Comment
The AQB recently issued a call for comment on a Discussion Draft regarding changes to the Real Property Appraiser Qualification Criteria (Criteria). The AQB acknowledges that “certain rural and other isolated markets may have already been impacted by appraiser shortages” and that the ability “to gain experience for Trainees and Licensed Residential appraisers is diminishing.”
In response, the AQB has indicated that it is examining changes to the Criteria in the following areas:
- Alternative Track for Licensed Residential to Certified Residential
- Enhanced Practicum Curriculum • Documenting Alternative Experience
- “Trainee” Nomenclature
- Three-Year Supervisory Residency Requirement
As stated, TAF believes with certainty that there is general agreement among appraisers on both the expanded college degree and experience requirements. Now is your chance to send your thoughts directly to the AQB with their assurances that “each member of the AQB will thoroughly read and consider all comments.”
Appraisers are encouraged to submit their (concise and considered) comments to the AQB before the March 31, 2016 deadline: Email: firstname.lastname@example.org or mail to: Appraiser Qualifications Board, The Appraisal Foundation, 1155 15th Street, NW, Suite 1111, Washington, DC 20005.
Republished with permission from Working RE and OREP E&O insurance. Serving appraisers 14+ years with comprehensive E&O coverage. “Don’t let anyone tell you that complete coverage means you have to pay more. You can have complete coverage and great rates.”
Comments on the original story are worth reading: http://www.workingre.com/the-decline-of-appraisers/
AMC doing. . Need to retire that law of having to use AMC
And the answer from all the highly educated appraiser with all the letters behind their name is, lets make the process more complicated and redundant, when all they really have to do is simplify the process and get rid of meaningless data that indicates useless and unreliable results. You should be able to finish the computer part of the process in under an hour for a standard residential report, it currently takes me 8 to 10 hours.
AMC’s on average pay $300 or less, in most cases less if they can get away with it which in most cases they can because people a desperate. If you get $300 a report and it takes 10 hrs that’s $30 dollars a report less expenses, about $20 per hour for a professional and you wonder why folks leave the business or elect not to get in the business. I want as as soon as I can manage.
desperate? maybe. i also think appraisers are just doing whatever they can to by themselves some time too. i know of two who are doing it right now, and i am only friends with three appraisers locally. yikes.
it wont be long till everyone is gone. the implosion of the appraisal profession by banks is working as planned. thats ok, AMC’s, all the Appraisal Institutes, the software providers, the educators like McKissock, all the boards, all the panels, all the state regulators, are all going down with us too. so sad for a few, good riddance for most.
dont forget to vote for me in November. thank you.
the bleeding continues . . . . .
I beleive you are correct, I’ve been working on other projects so I can leave this business.
I watch all of this and wonder what went wrong. The people who are elected to represent us in the various appraisal organizations keep on operating AMCs to exploit their fellow appraisers. Some of the sheep (fellow appraisers) cannot wait to send dues, take classes and work for these self appointed clowns!
We have FNMA (in conservatorship). These are the folks that could not stay in business without tax dollars bailing them out. They still cannot operate on their own without government assistance. However, these brilliant folks have zero problem telling appraisers what forms to use, what guidelines are necessary, etc. Appraisers just gobble up all of this crap like a bass on a spring day!
GO SHOUT IT ON THE MOUNTAIN! There is a shortage of appraisers! If an AMC or a national appraisal company cannot find a CHUMP CHANGE appraiser willing to work for cheese crackers…..there MUST be a shortage of appraisers!
It is difficult to believe how many people are earning their income off of the backs of so few appraisers. There is a whole group of AMC and national appraisal company parasites. There are those selling software, educational (LOL) courses, newsletters, coaches, etc. Who are these folks going to suck their living from after they destroy this occupation? Yep, it is time to flush this toilet!
The regulators that run this profession are clueless as to how the real world works. The appraisal business model prior to 2008 (HVCC) versus today is completely different. The small appraisal shops (3 to 5 appraisers) that flourished prior to 2008 exposed the trainee to a vast number of issues throughout any given day, even though they may have only been studying under one appraiser. USPAP guidelines were followed, but the goal was to highlight the complex issues to develop the next generation of appraisers. The business model of today (single appraisers/sole proprietor), gives only 20% of the exposure that a trainee received just 8 years ago. I honestly believe that if I studied under one appraiser today versus the at times 5 appraisers that I was around at the time of my training that I would need to have over 10,000 hours of training today to be equal to what I received. The idea that alternatives are being looked at (shorten the process), again shows that our leaders are out of touch.
Why does John Brenan Director at the Appraisal Foundation say that “Technology means appraisals are being performed in less time”? With what is expected of us today, I think most appraisers would strongly disagree with his conclusion.
I use all Technology availiable and it takes me 8 – 10 hours, when I started 12 years ago I could do an appraisal in 3 hours.
If John Brenan Director at the Appraisal Foundation is in part setting policy based on his belief that technology means appraisals are being performed in less time, then he should start over from scratch to set policy. We do not operate in a vacuum Mr. Brenan, and the technology you speak of is being used by our clients, AMC’s, borrowers, agents, underwriters, government systems (CU platform), software portal providers, etc. to add back more time than what the technology of the day can save the individual appraiser. I would agree Herb on the current 8 to 10 hours (non complex), however 12 years ago the range to complete for me was 4 to 5. I like to say it takes me twice as long today compared to years past.
I can’t finish a report without stopping and walking away for awhile to rest my eyes, after awhile everything runs together. An appraisal should never take that long unless it’s complex.
To make matters worse. Obama just streamlined the process for refinancing FHA loans.
I believe if you have paid 12 consecutive monthly payments and refinanced prior to 2102, FHA will not require an appraisal.
How stupid are these people? Who will they blame the next real estate crash on? Having appraisers leaving the industry will make it easier for the bank owned amcs to use avms.
if you havent heard, i am running for POTUS. vote for me as a write-in candidate. i promise to make all the changes necessary.
i am bubba jay, and i approved this message.
until i am elected, the bleeding continues . . . . .
Now for the rest of the story:
How many of those 55 applicants are sons or daughters of appraisal company owners?
[It’s safe to say that those kids will despise their parents for the rest of their lives].
One kid finished college ($38,000 and $36,000) and a second finishing up and guess what they are going where the money is and it’s not appraising!
STOP! you are getting the banks all excited!!
I had no idea that a National Appraisal Congress existed. Does it surprise anyone that AMCs are members of the Appraisal Congress?
Let me guess: Is there a National Appraisal Supreme Court as well with 5 of the 9 seats being held by AMCs?
If this crap were not so disgusting it would make for great comedy on late night television.
Between REAVA and NAC and Five Star there are some serious anti (independent) appraiser groups out there.
Think you can stand up to them or their influence by yourselves? JOIN AGA NOW! We, along with a VERY FEW of the State Coalitions are actually doing something about appraisal abuse. http://www.appraisersguild.org
As it relates to a good laugh in my state (CA), I like to search the BREA Licensing Stats to keep up to date on the decline of the industry. As of 01/28/2016 they noted 11,091 active licensees and as of 02/19/2016 there were 11,062. Over this 22 day period there was a reduction of 29 appraisers! If projected out, the state will lose 475 licensees or 4.2% over the next 12 months.
Hey Bill, when licensing started out didn’t we have around 7,500+-? Then in mid 2000’s around 25,000?
11,062 is still 3,562 more than when we started. If we lose 475 a year it will only take us 7.5 MORE years for supply and demand to achieve the kind of relative fees we had back in 1991!
As usual, another highly informative article by Mr. Peck. I (surprise) do take exception to some of the comments or perceptions being reported.
Decline: After being intentionally abused by regulators and legislators; and then largely abandoned by the most famous of the peer organizations I don’t think residential appraisers ready to retire give a DAMN about what happens after they retire. Why should they?
To maintain the pretense of ‘being professionals’ despite every rule or regulation passed in recent years that suggests otherwise?
The ONLY reason the integrity of the appraisal process and introduction of new trainees is required is to preserve (or rebuild) the public’s trust in the system; and to keep taxpayers from being victimized YET AGAIN by crooked, self serving, mealy mouthed opportunists!
Remember, banks do not need to make sound lending decisions when the loans are insured or guaranteed by taxpayers; and no one ever gets jailed for violating lending laws!
Education: Calling 2000 hours of experience “onerous” is a step TOWARD lowering the meaningful experience standards in deference to the meaningless unrelated college requirements.
Even with 2,000 hours, it is still under a year with 40 hour work weeks (anyone here ever worked THAT short a work week when you were new?). More on this purported “widely accepted requirement for college” further in this response. The ONE THING that should NOT be lowered, is the requirement for experience !
Consider this; a LICENSE is merely a permission to practice a profession or trade. A certain level of experience and competency is assumed. CERTIFICATION is a statement by the State CONFIRMING (“Certifying”) that I am trained, experienced and sufficiently educated and TESTED to be competent in performing highly complex real estate appraisals.
In my humble opinion NO ONE should EVER be certified with less than three full years actual appraisal experience. Frankly, in the current residential AMC/FNMA/CU appraisal world, FIVE years is more likely required to get meaningful experience.
Trainee Limitations: This is really the second most important factor, aside from unreasonable fees that is destroying our profession. Both the terminology adopted, such as ‘direct’ supervision; AND lender policies are choking off any meaningful new entry numbers.
The answer is NOT the one proposed by the NAC which coupled with Five Star Institute is less an appraisal “congress” than it is a national appraiser companies; franchisees, mortgage companies and AMC congress. Look them both up.
They are close, but clearly developed a model optimally suited to their limited members rather than the profession a whole. Their model and use will assure low fees for the MBA!
Haven’t we suffered enough as a profession already under limited benefit ‘special carve out’ policies? No one other than the co signing appraiser should determine how long it takes to properly field train individuals to be competent!
Arbitrarily setting extended training periods that may OR may NOT be necessary is the kind of micro management that is killing our profession. IF I am a “professional” then it is MY determination when my trainee is qualified and competent…not yours! I am signing taking responsibility for the report! If the regulators tests are worth a damn, then THOSE would weed out untrained incompetents!
When I started appraising (1986) I was trained by the buyer of an appraisal company owned by an old timer MAI. I also had six years real estate sales experience that included a year as a condo tract sales manager. I was actively selling real estate at the time. I had completed two AIREA courses They did not have enough work for a full time trainee and I moved on after 3 months. I don’t think I had done more than six, co signed appraisals.
The new company was owned by an SRPA. He sent me out the first day by myself. Then we reviewed my work for two hours together, AFTER he had already gone over it by himself. Extremely humbling but effective process. He told me THAT would be the process as long as I worked for him, BUT that he would teach me enough to become a chief appraiser at an S&L in three years just as he had both my coworkers. He frequently went behind me unannounced (both inside at first, and outside drive bys later on). It kept me from developing or adopting bad appraisal habits. I KNEW my work could or would be double checked at any time.
First month fee split was 35%; second was 40%. He never paid more than 40% because he had all the overhead and orders. He ALSO provided professional training & review, and the benefit of many years experience. In 1986 he charged $275. Our competitors ranged from as low as $225 to $275 with most at $250. As set up I could rarely do more than 3 a week. Often only two either due to reviews in process or fluctuations in volume. Everything was manually typed and reviewed; retyped and re corrected…2 or 3 times on average.
By 1991 I had learned enough residential and C&I to be hired as a salaried Chief Appraiser at a title Company where I developed and learned high volume efficiency; reviewing (AND rewriting) up to 10-15 drive bys a day; done by 8 trainees and one experienced appraiser. I entered the computer word of appraising there. My computer had no hard drive at all, just a 20MB 5 1/4 floppy drive.
Another firm lured me away as a reviewer (circa 1992-93). 30 to 40 a day including a few rewrites. You KNOW how great THOSE ‘reviews’ were! LSI paid $300 then (at first); though within two years THEY drove fees down to $189 as they competed with their breakaway founders at ATM!
By that time I taught State approved USPAP and was recognized as a good appraiser trainer. Then the rules on teaching were changed. Then the requirement to supervise was made “certified”, then the number of trainees was limited. Then lenders started requiring personal inspection (by me). THEN the model ceased to be economic.
You want to solve the “shortage” problem? Let me hire UP to five trainees. Normal mix would be 1 or 2 fresh new trainee licensees and 2 licensed novices and at least 1 seasoned appraiser with income property experience. Two could be full time. Part time is probable for trainees. Let ME decide when they are ready to go out buy themselves! If fees were higher 3 would be enough, but with ultra low AMC fees, 5 is needed to pencil out.
When we “old timers” started, the cost of 35mm prints was a factor. Now its not. Also, smart phones can take videos. My trainee can take 100 pictures (or more) to help me ‘see’ what’s there. So can Google earth and google streets & mls. Reviewers are not as limited to trainee observations as they used to be.
Let me be a professional and let me operate in a professional INDEPENDENT manner! Let the quality of my work stand for itself (or take my license away).
Low Fees-Supply and Demand? Seriously? When fees are manipulated by outside participants, traditional supply and demand goes right out the window. HVCC stopped in 2009. Fees SHOULD have gone up to at least what they were BEFORE the crash, but they did not. Was it because we had too many appraisers? Appraisers that WANTED to work for half fees?
Hardly. It is because we had too many appraiser that were captive participants. Those with families and fixed expenses that did not allow them to be too picky or choosey over assignments. If the electric company sends you a shut off notice, then that $250 fee becomes a Godsend even as you know it is a trap. When your child cuts her leg and needs stitches and you have no health insurance because THAT requires monthly payments, that low fee of $325 is also a Godsend. When your former five digit savings account is emptied from infilling all those low fees or no jobs months, then that $375 seems downright “reasonable.” Its eight years since the bubble burst yet “supply and demand” has not raised fees to where they should be. Nor will they as long as outside manipulators are involved. THAT is going to take more than high paid commercial appraisers; or those ‘fudging quality and doing 3 SFRS a day’ saying “stop working for low fees.” Yes, isolated areas ARE seeing increases. Some are ALMOST reasonable.
The Foundation:The Board comprised primarily of NON residential appraisers; many from or formerly from AI or ASA, or AICPA which all promote degrees as a requirement of designation are misrepresenting the professions support for college degrees.
Read the posts here and get an idea for yourself. While “many” MAY support college degrees as an entry requirement; MOST do NOT!
OK, I am NOT going to win that argument with TAF. Not unless or until there is greater balance and representation on the Board composition itself. Its a stacked deck.
What IS possible is the alternative track they postulate for experienced appraisers that are licensed, to raise their licenses to certified by experience and testing as opposed to a degree. THAT WILL HELP! I know people in their 30’s and 40s that have ten or more years experience that SHOULD be certified. They are GOOD residential appraisers.
If they (TAF) are serious about not lowering standards, then they should NOT be lowering experience requirements for ANYONE.
Boo-hoo! College grad with a degree in basket weaving, or political science wants to be “certified” in their first year when they really still don’t know their arse from a hole in the wall! (In terms of challenges REAL appraisers face every day.)
For those in “related fields” ONLY if those fields lend themselves to performing or understanding single family residential and 2 to 4 unit appraisals! Let THEM earn their experience in one year (still 2,000 hours though as the absolute MINIMUM!)
Going forward? Mr. Peck is an optimist, but the very groups he cites as having ‘positive ideas’ are some of the same ones that are trying to drive independent appraisers right out of the business completely!
Modest fee increases that are STILL LESS THAN FEES of EIGHT YEARS AGO are not going to attract newcomers or retain middle age appraisers when we old folk are gone.
1. REASONABLE current fees based on complexity and time to PROPERLY complete appraisals. Probably around $600 net to appraisers for non complex work. Require AMCs to ALL use a cost plus model OR separate quoting and collection of appraisal fees from them!
2. We need FNMA to stop attempting to manipulate the appraisal process to facilitate fraud being committed against their investors under the pretense of modern big data adequacy! CU IS such a fraud with its false assurances, and undue pressures on appraisers!
3. Non residential appraisers need to defer to the residential appraisers among the regulatory agencies when determining polices affecting residential appraisal. Being a designated C&I appraiser does not impart any particular expertise on SFR analysis. SFR markets are among the most imperfect AND subjective BY THEIR PARTICIPANTS in the market. Imposing inapplicable standards or “Big Data Solutions” on them is counter productive, intrusive AND disrespectfully offensive to other (SFR) professionals!
4. The AI and all other organizations need to stop trying to commoditize appraisals. IF you are going to do that, then just drop the pretense altogether and SAY you want to do written “comp checks” sitting on your rear ends at your desk for clients that are too cheap to pay for USPAP compliant appraisals!
5. I’m still waiting on an answer as to why the APB has a non citizen from a foreign nation sitting on the Appraisal Practices Board? FIRREA was not passed to merge or modify how American Appraisers to perform to FOREIGN bulk securities investor standards.THAT is a function of the SECC. MY obligation is to the American taxpayer. Not some hedge fund or NYSERIES-E-1234567 investment pool; or AIG insuring poorly underwritten loans!
mike, i would also like to add a #6.
6. Hold assessors and realtors to the same standards of excellence and zero-error standards as appraisers. garbage in = garbage out. i got tired of seeing lazy realtors filling out incomplete and error-filled MLS sheets. got tired of error-filled data from assessors offices. someone needs to grow a pair, and make assessors and realtors do their damn jobs or be held accountable like appraisers are.
HOW ARE APPRAISALS SUPPOSE TO BE ACCURATE IF APPRAISERS ARENT GIVEN ACCURATE INFORMATION IN THE FIRST PLACE? appraisers dont see every comp they use. appraisers rely heavily on realtors and MLS sheets for their information. an answer of “i dont remember” from forgetful realtors is unacceptable and provides zero useful information. appraisers constantly having to make assumptions, and having to explain those assumptions in reports, because lazy, LICENSED AGENTS AND ASSESSORS constantly refuse to do their jobs is totally absurd.
if it is the goal of the banks to get rid of appraisers, and rely on the data that is out there now, and eventually get realtors to provide accurate data in the future, then god help us all. because right now, too many realtors are not doing their jobs, and the organization is too big for someone to change their lousy habits anytime in the near future.
this is a HUGE problem. and until it is solved, the bleeding will continue . . . . .
oh, dont for get to vote for Bubba Jay in November! thank you!
my name is Bubba Jay, and i approved this message.
Here is a great little article written by a prominent appraiser recently. The William Fall Group, Forsythe Appraisals, and a great many other “sweat shops” are undoubtedly beginning to feel the manpower pinch. Sweat shops rely on a steady transfusion of new blood in order to remain profitable (at some point their dumbest appraisers either grow a brain or go broke and quit). You can expect this group to become more and more vocal as “fresh appraiser blood” becomes as rare as antimatter. At this point nepotism may be their only method of survival. Don’t be surprised if you see these Mill Owners marrying off their grand children at age 13 in order to keep their dynasties afloat.
Revamp Licensing To Refill Appraiser Supply
Unfortunately they created or joined something called the National Appraisal Congress, which in conjunction with the Five Star Institute are the ones referred to in Mr. Peck’s WorkingRE article.
The reason THEY support a 90 inspections process is it virtually assures them of ultra low paid a minimum of three months; and possibly up to six, or even a year. That’s why we need to resist the arbitrary 90 appraisals in no less than 90 days ‘rule’ they are seeking. WE decide when trainees are ready!
Bubba, I agree its a critical step in the process and one that’s becoming more important each day as more and more state regulators are of the opinion that somehow appraisers are supposed to magically KNOW when the agents (sometimes Realtors(r)) & Assessors are ‘off’.
A case we are working on in Minnesota has as one of the ‘complaints’ “Appraiser misstated the SF of comp #X”…because mls has a different size that the tax Assessor does. Even though the appraiser EXPLAINED which was believed to be more credible!
Its a double edged sword though. For years in California agents stopped reporting gla completely because some damn fool trial judge ‘found’ a 35 SF ‘error’ in mls as opposed to what the appraiser & assessor showed. Judge then took total sale price divided by total sf and extended THAT amount to the judgment amount! That total prices per sf ALSO INCLUDES THE VALUE OF THE LAND went right over his head. $1,300 sf overall x 35 SF = $45,500 (plus costs).
FACT is in that area normally the market does not even recognize such a small discrepancy in GLA. I think it was a 3,200+- sf house! (very high priced area though). So for the next five years all the local MLS told their agents they COULD NOT list SF!
I joined NAR and CAR as a Realtor(r) last year specifically to work on things like this but frankly, trying to deal with primary appraisal issues hasn’t left me the time needed to effectively deal with it.
Now if some of the more activist inclined posters were to JOIN ME at the American Guild of Appraisers, we could actively pursue a real solution. I’m spread a little thin. I’ve already spoken with NAR lobbyists and admin staff on these AND other issues. They are ‘receptive’ to improving relations with appraisers. (For those that may have forgotten how to join AGA-Call Jan Bellas at (301) 220-4100 or email to JanBellas@appraisersguild.org )
Two separate solutions; Assessors require local area voter persuasion. The Agents/ Realtors(r) being lazy ALREADY HAS some corrective actions possible that we need to promote and take advantage of. Some area Boards recognize how bad this is.
Others turn a blind eye knowing that some agents will lie to make their sale to list price ratios and exposure times look better than competitors. They have to be educated.
In the end WE are going to have to teach the local boards what’s critical, and what’s ‘nice to have’. We MAY have to give lessons in measuring houses (seriously).
Nope. Reducing the appraisal hours requirement is not a good idea. It’s too lenient as it is. Remove the collegiate requirement, and increase the supervisory period another thousand hours. Do not remove the supervisory presence rule, or else you’ll end up with endless puppy mills again, and those fyi, have never gone away despite the new rules. Try enforcing the junk fee rule. Solutions are so simple, nobody dares go against their lender masters to consider them. I demand that if alternative lines of qualification be present to become an appraiser, that my existing credentials be immediately applicable for me to bounce to managing broker and skip the supervisory period. Either those rules make sense for everyone, or they don’t make sense at all. So this industry will roll back the little helpful steps they have made, although rare, in favor of ignoring the larger issues like junk fees, ucdp irrationality pertaining to underwriting behavior, lack of individual amc worker licensing, absence of effective safeguards to appraiser independence, and the proliferation of typing and outsourcing services in the appraisal industry. A vote in favor of fewer rules, is a vote in favor of less professionalism. Demand the rules be applied to persons other than just appraisers. That is the solution which nobody dares point to.
More rules that’s going to attract more people.