Are Appraisers Becoming an Endangered Species?

Where have all the appraisers gone? The Appraisal Institute has performed a demographic survey of the population of real estate appraisers. The trend showed a continued 3% decline per year for the past 5 years. Younger workers are not choosing the profession due to the hurdles it takes to become Licensed or Certified. It simply takes too long to become a producing appraiser. Given the education and necessary training, there is a giant gap with other professions for potential income and career opportunities.

To become a Certified Residential real estate appraiser an applicant must have completed 200 hours of courses approved by the Commission and hold an associate’s degree or higher, or in lieu of an associate’s degree, 21 semester credit hours in specific courses prescribed by the Commission and compile at least 2,500 hours of appraisal work over a period of at least two calendar years (24 months). With all of the uncertainties in the market and the fluctuation of the seasonality of the real estate market it should not be surprising that young professionals aren’t knocking down our doors for training.

And if someone actually did want to become a trainee, having a trainee is a huge commitment for an appraiser. We are bogged down with all the additional criteria required from the bank, it takes up valuable work hours and some appraisers can’t afford to give up that time. From an income perspective it is not beneficial to have a trainee. Appraisals are more time consuming than ever: an appraisal at one time could take less than an hour to work up but today it takes several hours to write up an appraisal report. With additional requirements, specific requests varying from lender to lender and changes handed down from Uniform Standards of Professional Appraisal Practice (USPAP) an appraiser’s job is continually changing……and taking more time for each individual report. With no spare time and everyone trying to pinch the appraisers’ fees, when or why would an appraiser take on the responsibility and commitment of having a trainee?

Beyond specific requirements and requests from lender to lender there are also additional state requirements upon completion of an appraisal report in Baltimore City: There is a report that needs to be filled out for each Baltimore City property appraised with the State of Maryland Department of Labor, Licensing and Regulation. All of our Harford County appraisers, Baltimore County appraisers, Baltimore City appraisers, Carroll County appraisers, Howard County appraisers, Cecil County appraisers and Anne Arundel County appraisers are all required to report their valuation of Baltimore City residential properties.

Appraisal management companies are also an additional entity that appraisers deal with on a regular basis. They have made their presence in our industry and are gobbling up fees for appraisal reports. So… is a little explanation of the role of management companies. The Federal Housing Finance Agency (FHFA) implemented HVCC in May 2009.When the Home Valuation Code of Conduct (HVCC) was originally introduced, and most opted to employ a neutral third party Appraisal Management Company (AMC) to dish out and assign appraisals, the fees suddenly jumped. Appraisers were forced to sign up and be approved with the AMCs in order to continue to be delegated business. Yet, in order to be chosen to undertake an appraisal they also had to be subject to a bidding process. This saw their actual fees drop as low as 30% below industry standards. This debacle went on for a good few years, until only more recently, they are climbing back up to their original fees. But, within that time they have now been given an additional number of tasks to complete within the scope of the appraisal report, required by the majority of lenders, adding more hours to the work load, and yet still they are being paid the same fee (if they’re lucky) as they were in 2002! These include quality of home codes, market analysis, additional comps, more photographs of the home, not to mention the more stringent requirements FHA/HUD have placed on their certified appraisers to complete their report. Even with all of this extra work for the appraiser, the management company still receives a portion of that fee.

Sara Stephens, president of the Appraisal Institute noted, “The Appraisal Institute expects the rate of decrease will increase sharply over the next five to 10 years due to demographic and economic factors.” A high rate of retirements, individuals leaving the profession due to poor business conditions and few new individuals entering the profession could result in a 25 to 35 percent decrease in the number of appraisers in the U.S. in five to 10 years, according to the institute.

With the apparent hurdles of this job it is not a shock why the amount of appraisers are shrinking. Don’t get me wrong, this is a great job to have, this profession does afford the luxury of making your own hours, working from home, meeting different people from all walks of life and being part of helping someone achieve the American dream of home ownership…but like most jobs it is not the work itself that causes the battle to be uphill, it is all the red tape that comes along with it.