From 2012 through 2016, the appraisal industry lost nearly 10,000 appraisers. It’s particularly significant given that 3,069 appraisers left the profession during 2016 alone. It’s no secret that the number of appraisers has continued to drop in recent years. However, even though there are fewer appraisers, it may not mean that the real estate industry is facing a shortage.
First, there are a few reasons that the appraising industry is shrinking. Data from a survey last year by the National Association of Realtors concluded that there are three areas contributing to the decline in the number of appraisers.
- Compensation – Pay for appraisals requested by bank-owned appraisal management companies (AMC) is often less than for other clients, and the quick turnaround time can make these projects unappealing to appraisers.
- Training – Veteran appraisers are called on to train the next wave of appraisers, but those providing the training do not get paid, meaning fewer appraisers want to spend the time teaching others. In addition, appraisals by trainees are not accepted by everyone, making it harder for trainees to get the on-the-job training they need to be successful. Additionally, supervising appraisers may be hesitant to take on a trainee because the supervisor is ultimately responsible for the trainee’s work, including the mistakes.
- Regulations – Appraisers surveyed said the burdens of dealing with the profession’s regulations is making the career less attractive for newcomers, as well as career appraisers who have watched the expectations of an appraiser change over the years.
There is one caveat to the idea of an appraiser shortage. A labor shortage doesn’t mean that there are not enough appraisers. If the pay for an appraisal is below what an appraiser will accept, then it will be harder to find appraisers willing to do the work. The real estate industry as a whole is aware of the lack of appraisers, whether it’s because of a dwindling number of professionals or a reluctance to take on appraisals lower on the pay scale. There are a few ways the industry is combating the issue.
One way that mortgage companies are circumventing appraisers is by offering refinancing opportunities without requiring an appraisal. The loans are contingent on the companies having sufficient information on the property so that the appraisal is not necessary. By skipping the appraisal, the loan process can be completed quicker, and buyers do not have to worry about paying for an appraisal.
Additionally, the federal government now allows appraisers with a license in one state to receive a temporary practice permit in another state that is faced with a shortage of appraisers. Appraisers can also be issued a temporary waiver that would give them the ability to complete appraisals in appraiser-limited states by waiving some of the requirements of regular certification.
These are mostly short-term fixes, and it’s nearly certain that the real estate industry, including appraisers themselves, will continue to look for solutions that will make positive changes for years to come.
What are your thoughts on the shortage of appraisers? Let us know in the comments.