Leaving the Appraisal Profession
It’s a Great Time to Leave the Appraisal Profession.
I can hear the chorus of my fellow appraisers rising up in disagreement with me. I envision many of them screaming, “But I love being an appraiser”! Yeah, I hear you. I loved being an appraiser too. Let’s not consider what we were but what they want us to become.
First, ask yourself if you are still making a livable wage. I’m not and instead of blaming myself, I started running the numbers. In, my high value market, 18% of the solds were cash sales. No appraisal required on those! Values are so high that buyers are putting a lot of money down to lower the monthly payment as much as they can. So, based upon what industry insiders tell me, Fannie and Freddie are probably waiving the appraisal on another 17% of the solds. Add it up and I estimate that 35% of the sales in my market did not require an appraisal.
I ran the number of solds in my market and divided that by the number of Certified Residential and Certified General appraisers in my market and it came out to 1.4 appraisals, per appraiser, per month. Pretty bleak!
Now let’s consider the business from AMC’s. This business has dropped significantly In my market but I still get some offers emailed to me requesting a bid and turn time. I dutifully make a tolerable bid and quick turn time but I lose about more than 90% of these opportunities. Obviously, I’m losing business to an appraiser who is submitting a very low bid. My business cannot survive by being the low bidder. I’m hamstrung by not knowing what an acceptable fee is anymore. Where is Customary and Reasonable?
Next, let’s consider this racial bias issue. I am sick and tired of being accused of racial bias when I have never considered people, and/or their color, in any of my appraisals over the last 24 years. I appraise property, not people and I’ve not seen any examples of appraisal bias. I don’t understand how a biased appraisal could survive the gauntlet of eyes and machines that scrutinize every report before it is accepted. I have seen a fair amount of racial bias among lenders. I’d suggest the Feds look at them and stop pointing the finger at me!
One of the things I really enjoy about being an appraiser is getting out in the fresh air, inspecting homes, and meeting nice people. It’s really the field work that I love, not the “grind” of crunching numbers in the office. I find it hard to imagine how I am going to be able to produce credible, accurate appraisal reports without the benefit of personally doing the field work myself. AMC work is faceless and impersonal until I leave the office for an inspection.
The GSE’s, FHA, and VA will take all the field work away from us, shutter us in our offices and ask us to crunch the numbers all day at reduced fees. And, we’ll be held legally responsible for the errors and omissions of property data collectors. The chance for error increases when you take appraisers out of the field.
New forms will present yet another challenge and a steep learning curve to climb. I understand there will be more data and more analysis required. It will be hard for an old dude like me to become enthused about this major change.
Looking back 24 years ago, my business was dependent upon the relationships I cultivated with mortgage brokers and the work I performed. All those relationships and the business I grew were trashed in one fell swoop by the HVCC and replace by parasitic AMCs.
Tomorrow, I’m supposed to become a data scientist and try to decipher the value of a property I’ve never seen, bought and sold by buyers and sellers I’ve never met. I will be expected to make sense of the collective mindsets of thousands of people and describe all this in chart and word using a limited vocabulary so as not to offend anyone. I’ll need to spit two or three of these out every day to make a living. It really doesn’t sound like much fun to me.
Fannie and Freddie didn’t like what I was 20+ years ago and I don’t like what they want me to become.
It’s a great time to leave the appraisal profession.
I spoke with a chief appraiser at a 3 man shop yesterday in a different city here in Colorado. He had a complex appraisal and was looking for help/data in my area. I asked why he took the assignment, and he said this was the first appraisal his company has had in 8 days. He has had 2 licensed appraisers leave the industry this year due to the declining work.
Sounds like this will get worse.
I’m just waiting for Baggins to start that lawn cutting business. I can trim with the best of ’em.
Hands off the gas powered lawn care equipment! Legislators in Denver are fixated on making use of and retail sale of gas powered residential lawn care equipment illegal. Just this last cycle a vote to outlaw sales of them throughout the entire state missed by only a person or two, and it sounds like the effort to prohibit their use will be successful soon in only the Denver areas.
New CFBC final rules on AVM and AI algorithm for avm’s regulation were released a few days ago. They will assure quality control on a trust system; the avm automatic valuation model developers can certify their own products are defect free. Lenders will be required to fill out a quick survey once a year or so to verify they are compliant with best procedures. GSE’s will not have to release any of their proprietary information on how the avm programs operate or under what peramiters, as those are trade secrets. They all have one year to adopt the program.
They wrote themselves exceptions for everything avm related, read the 180 page document linked in this update article. Rural appraisers can kiss their high fee work good by, avm’s will be handling that. Reviewer appraisers can prepare to find new positions as well, because avm’s are now certifiably capable of reviewing human appraisers work. Sounds like they are going to move ahead with TAF certified avm appraisals. As good as the real thing, uspap compliant. Evaluators without appraisers licenses will ramp up substitute products. Participation for lenders will be mandatory and they will not be allowed to use traditional alternative options. The best part; Equitable appraisals which avm’s will have output adjusted if they promote ‘disparate value outcomes’ based along ‘racial and ethnic lines’. Specifically they described the avm regulatory and oversight program as ‘flexible, not prescriptive.’ The rules will be flexible to accommodate the size of the institutions using the products. Program participation is mandatory.
Read the CFPB 180 page final rule on AVM based appraisal substitutes. The long doc is the first link from this update article. The end is near.
https://www.consumerfinance.gov/about-us/blog/cfpb-approves-rule-to-ensure-accuracy-and-accountability-in-the-use-of-ai-and-algorithms-in-home-appraisals/
CFPB Approves Rule to Ensure Accuracy and Accountability in the Use of AI and Algorithms in Home Appraisals
The large amc companies are hiring their own appraiser’s, licensed or trainees who they can train now without a supervisor, and they will pay them a flat salary while raking in the appraisal fees for themselves and only have in house appraiser’s. That is how they will end independent appraising. Look our entire country is being destroyed by the same big businesses who want to put all the independent people out of business. Did you ever wonder why during Convid the big box stores and restaurants were allowed to remained open while the small stores and restaurants had to close? It was to put the independent ones out of business. Everyone in this country really needs to wake up to reality.
In a way all appraisers are economists. We study mostly micro markets to estimate a value for a single unit in a market. Because we understand markets it should come as no surprise that due to the economy of scale, the big fish have advantages that they leveraged to the independent appraiser’s detriment. I’ve always joked that we independent appraisers are too damned independent for our own good. Unfortunately, that makes us easy pickings for the AMCs to pick off. If there were 100,000 unionized appraisers, if the AI, ASA, Foundations and State Boards et al had taken a stand we’d have stood a chance, but now it’s far too late. I’m retiring at exactly the right moment.
This is a real advertisement in a Sports Illustrated magazine.
The National Fair Housing Alliance and HUD are using taxpayer money to hunt appraisers.
Substantial ignorance about the home valuation process, on display for the world to see. Your tax dollars hard at work. The appraisers involved had many competency issues. Courtesy of the discount fee amc engagement model. Too bad the home owners were denied access to three out of four ethical appraisers, whom refuse to work with amc’s because of the discount compensation and unethical business dealings so common with the amc companies. A hundred thousand dollar spread on a five hundred thousand dollar residential cookie cutter is obviously a process error or incompetency, not biased. Like would these people accuse a doctor of being racist, if they operated on the left hand if they were supposed to be operating on the right? Amc appraisers and amc companies are protected by the amc and lending industries. Nobody ever loses their license or even gets state penalties.
Besides, the marketing campaign is basically a glaring admission the lenders used incompetent services, and did nothing to correct the problem. Instead framing the issue as; Racism! (drum roll). Yet, because of the simplistic nature of action reaction driven socially focused zealotry of the day, people actually buy the story. Logic has left the building. I have an old meme for this one specifically.
TRUMP 2024 !!!!!
There you go proving the lady’s point for her.
Quite right and deservedly so. Are you not entertained?
Not entertained at all. This is how the AMC’s appraisal Foundation, AI, and all the others keep appraisers disorganized and down.
Gag
Why? What did he ever do for you or any Appraisers?
Why? What did he ever do for you or any Appraisers?
It’s tough to see so many appraisers expressing their frustrations with the current state of the industry. With AMCs and lenders pushing for lower fees, appraisers are increasingly finding themselves pressured to sacrifice independence and accuracy in exchange for speed and cost-efficiency. It’s no surprise that so many are considering leaving the profession or transitioning into other roles.
What stands out to me is the erosion of trust in the appraisal process due to these systemic changes. It’s hard to maintain the same level of service and integrity when you’re constantly battling against a system that undervalues your expertise. The discussion in the comments is a reminder that appraisers need to continue advocating for fair compensation and more independence in order to preserve the value of their work.
This trend signals a potential turning point for the profession, as appraisers grapple with a system that may no longer value their expertise as it once did. If you’re interested in a deeper dive into these changes, read the full post here:
If more appraisers would insist on higher fees our profession would gain more respect. Look, agents make thousands on almost every deal. Brokers/lenders also make thousands. Yet, appraisers have the most responsibility, responsible for our work the longest but make the least. VA jobs pay at least $600 for each appraisal in most states and if you ask me that’s not high enough. With the rising cost of software, E&O, gas, interest rates and nearly everything else appraisers should make a minimum of $800 per job.
Ok. Ask for $800 and get back to us. All of us will be curious about how that goes.
I do it all the time and I get it. I got $2000 for driving 3 hours each way and the subject was just a standard 1200 square foot home. Why did I get $2k, because I asked for it and that’s what my time is worth for driving that far. in my area I get $625 flat rate at a minimum all the time. Stop being afraid of asking what your time is worth!!!
I’m not afraid. I’m realistic. I know with certainty that none of my clients would pay $800 for a standard appraisal. Maybe you’re in an area where there is a limited pool of appraisers. I’m not. I have clients that I have worked with for years that don’t use AMC’s. Frankly, I think $800 is high.
I learned a long time ago if you do not ask. You will not get. If you do not think your time is valuable. You will not ask. We pay a lot and put in a lot of time to become appraisers. I do not begrudge any other professions and their fees. Just like they get their fees it is my right to get my fees too. Call an attorney, realtor, electrician, hvac, plumber or appliance tech etc. they are not afraid of asking for their fees why should we?
Yeah right. ? ?
I’ll believe this when you post your invoice and your paystub until then enjoy your fantasy
Exactly. This has become a discussion that borders on ridiculous. No. Appraising a 1200 sf house is not worth $2000. But if someone can gouge the client, go for it. Take advantage of the homeowner because he chooses to travel 6 hours to do an appraisal. How does anyone really even know a market that’s 3 hours away? “I don’t walk out the door for less than $750.” Get over yourself .
You are correct however, all and I mean all appraisers will have to buy into it. I paid $800 or more for several appraisals twenty five years ago before I got into the business. There are four appraisers in my county but we have other appraisers come from other counties to appraise here. If I cannot get my fee starting fee of $750 I will not accept an engagement. On average I get $950 because I take on more difficult engagements.
I must say my situation may be different that I can afford to turn down business since I am debt free and doing very well financially. When it comes down to it people are going to do what they think is best for their business. Also, many people do not value their profession and work will take low fees.
Living in San Diego R Bean where there are 668 appraisers in the county and a few thousand others a few hours a way, its the many appraisers who often support the few. In short, I call it the Dustin Harris syndrome. Meaning, for every small market where a few appraisers say the grass is green, the reality is thousands of other appraisers get taken to the woodshed (high AMC involvement / low splits, etc.) which in turn gives others the possibility to make a decent wage.
Seek the truth.
Like I said my situation is different. So, are others. Regardless what any of us think or say. Bottom line people are going to do what is best for them.
I do it all the time and I get it. I got $2000 for driving 3 hours each way and the subject was just a standard 1200 square foot home. Why did I get $2k, because I asked for it and that’s what my time is worth for driving that far. in my area I get $625 flat rate at a minimum all the time. Stop being afraid of asking what your time is worth!!!
Wells there’s your problem, you don’t know reality or you worth. Look I think $4 for a dozen eggs is too high, the stores don’t care what I think. With everything else doubling why shouldn’t our fee, and btw, your not getting as much work right now either because the rates are to high.
I wasn’t aware that I had a problem. I’m actually happy with the fees I get. I’ve done really well for 25 years in this business.
WE ALL miss the point.
Appraisers do not have free market fee, because we are not on the free market. That is the problem.
Reminder: the appraiser profession was created after the great depression to protect home owners from Sharks: the agents/brokers who bought low sold high, and from the mortgage companies.
RE brokers were hated, but they are in selling business, and they recreated their profession, they sold/still do their profession: per current survey over 50% of the borrowers need to be explained the selling/buying process, which means why they need an agent. In my home country there are agents, but most of the properties are sold privately; not in the US, ~15% are private sales, mostly between people who know each other.
Over 70% of the sellers hire an agent, because they do not know the value of their property.
Agents are taking our work and they make very nice money for it.
WE SHOULD SUPPORT FLAT FEE AGENCIES: flood them with the offer to add an option to their website next to staging, lawyer etc. to hire an appraiser on their websites. It would boost their business (70%?) and it would give us an option to enter the free market. When the free market establishes our fee, mortgage officers cannot set our fee any longer.
I do not have my fee set. I quote per the work, distance, how much work is on my desk, how many orders I quoted in the week and on the previous week. My fee is now ~$450 for an average close by; early this year my fee was $350, and yes, once I did go down to $300 while I was crying. Over 2 years ago I made $950, for complex ones $1200. I heard from borrowers how much they pay to the mortgage company, so I know that it is the mortgage company who is collecting from the borrowers much lower fees than 2 years ago. They compete against each other and one common way is to compete with the low appraiser fees…as if we would be asked…. while mortgage cost doubled/tripled in the past years….
Free market fee would solve all our problems: AMC couldn’t compete us against each other, mortgage officers couldn’t offer too low fees, (nobody would work for them).
I believe now is the chance to go to the free market, push the agents out of the appraisal of the property during the sale process, and get finally some respect.
You guys can believe it or not, and for the smart asses, I know the area because I lived there. I wouldn’t do work anywhere I didn’t have competence. btw, some other appraisers bid $4000 for this job because it was so rural according to the homeowners. I did leave out that they needed two types of values but my point here is too many of you are working for way too low of fees and you know who you are.
And maybe that’s the reason they are always trying to find alternatives to appraisers. when we start demanding fees that frankly I don’t think we’re worth we are forcing the industry to seek alternative less costly methods. I still say $2k for an appraisal is price gouging and $4k is bs.
Supply and demand: in my county there are 6 appraisal business, some have multiple licensed appraisers. I live in a relative rural area, with small towns, cities. I cover 12 counties…and have the least experience, only 10 years vs. 25-50 years.
Again, I quote per work. If I do not get a few, I go down. If I get the fee, I go up next time. I am very aware of the volume of the work there is out there and the fee is expected. I am sure in your area supply/demand sets the fee too.??
What was the value of that 1200 sf? How many times do you get the $2000 not driving 3 hours? etc.
Where do you live? I am (seriously) selling my home and am willing to relocate to anywhere.
btw, driving 3 hours is not average in our area. Covering 12 counties, I drive max 1 hour 15 min., still rural area.
I learned from an AMC, that they pay different fees in different states….
Again, WE need to open our profession the the public, to the free market.
In the public there is a misconception. Any time I ask someone why they think there are appraisers, I get the answer:
1. Mortgage
2. Tax Assessment
3. Selling/buying.
I ask than did you hire an appraiser when you sold your home? No, because the agents tell them that they do not need one!
WE are not enemies of each other, appraisers, though some think preaching from a high horse will make anyone feel better.
WE should do something, like talking with representatives.
I did and keep doing both on federal and state level, educating them.
WE need to enter the free market, and do the appraisal work for why we were created: to protect the home owners from the sharks.
Yes, it takes work, mostly advertisement, but now we have a chance with this court decision. The ground under the agents is shaking.
Instead of doing something, here you are arguing and stepping on other appraiser’s head.
I have 668 appraisers in my county and within a few hours away there are a few thousand more. Some appraisal markets are a single county (as in my case / 3.5 million), where other appraisal markets might be multiple states.
Seek the truth.