Leaving the Appraisal Profession

It’s a Great Time to Leave 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.

By Soon to Be Retired Appraiser
Image credit flickr - STOP VIVISECTION-USE YUPPIES

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149 Responses

  1. Avatar Eric Kretz says:

    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.

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    • Baggins Baggins says:

      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

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  2. Avatar Carrie Smith says:

    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.

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    • Avatar Mark Hastert says:

      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.

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Leaving the Appraisal Profession

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