The Decline of Appraisers

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 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 and warns that sharper declines may be on the horizon as appraisers begin retiring en masse.

And 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 for 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.

Some appraisers believe this is a fight for their very existence. The debate rages at national conferences, company meetings, and even around the family dinner table: what to do about the declining number of real estate appraisers in the United States.

Education Requirements
The Appraisal Foundation (TAF), a nonprofit 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 cannot become Certified without a college degree. Because much AMC work and all FHA appraisals require Certification today, this move chokes off opportunities for both longtime appraisers without a degree, as well as those contemplating joining the ranks. 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 appraisers with new recruits. This is a huge challenge for the profession.

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Limitations on Trainees
A number of states have strict limitations on how trainees can work under a mentor appraiser. Many states have provisions that require “direct supervision” with the licensed appraiser being “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 require that supervisors inspect both the subject and the comparable properties personally, and cannot 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.

Fees and Supply/Demand
Low fees are frequently cited as the biggest 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. As a result, most appraisers doing lending work saw their fees cut by up to half by AMC middlemen.

Appraisers argue that if AMCs and lenders paid more, more college grads would consider the profession and fewer licensed appraisers would exit. But AMCs and lenders counter that it’s supply and demand. They don’t have to pay more if appraisers accept the low fees they offer. The bigger picture is that the decline in the number of appraisers could one day become a shortage and in the midst of the next real estate boom there may 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 “property 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 this year, the Federal Financial Institutions Examination Council, 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. 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.

Solutions
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.”

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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.”

The NAC’s solution is a revision of state and lender client requirements. Instead of having to be directly supervised and accompanied by their supervisor on all inspections, 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.

The NAC argues that this 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.”

Appraisal Foundation
In an interview with Working RE, John Brenan, Director at The Appraisal Foundation (TAF), says that TAF’s Appraiser Qualifications Board (AQB) 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 supportive of the requirement and said it has raised the level of the candidates to where it should be. However, the AQB 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. “We want to ensure that people who want to be in business can be in 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 enter the profession and become certified because we recognize the supervisor/trainee mentoring model is experiencing difficulties,” says Brenan.

According to Brenan, the AQB is also looking toward the further development of practicum courses, which would be additional coursework that would satisfy up to 50 percent of a trainee’s required experience.

While the AQB is evaluating the trainee model, Brenan is quick to note that it is not the AQB that requires direct supervision of trainees. “There is nothing in the AQB criteria that prohibits trainees from inspecting properties or even from signing appraisals. These issues will need to be addressed on a state and client level. However, the AQB is looking at its own requirements for ways to facilitate the process and incentivize supervisors,” Brenan says.

Note: The AQB recently issued a call for comment on a Discussion Draft regarding changes to the Real Property Appraiser Qualification Criteria. One of the proposals considered is setting an experience threshold through which appraisers can petition to waive the College Degree requirement for a Certified Residential license after they have worked full-time as an appraiser for five to ten years. The AQB is also considering setting alternative experience requirements, perhaps allowing real estate agents, brokers, loan officers, or county assessors to count their experience towards up to 50 percent of the required trainee hours. Hundreds of appraisers submitted their comments in the run up to the April 8, 2016 deadline. After taking public feedback, the AQB is now deciding what changes to the qualification criteria are necessary to ensure the health of the appraisal profession.

Looking Forward
As the overall number of active appraisers has decreased, according to the Appraisal Subcommittee’s national registry, there are actually more Certified General and Certified Residential appraisers now than there were in 2006. The result has been relatively positive for 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.

 

 

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About the Author
Isaac Peck is the Editor of Working RE magazine and the Director of Marketing at OREP.org, a leading provider of E&O insurance for appraisers, inspectors and other real estate professionals in 49 states. He received his Master’s Degree in Accounting at San Diego State University. He can be contacted at Isaac@orep.org or (888) 347-5273.

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Comments (90)

  2. by Paul

    WHAT A JOKE!!!
    Solutions
    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.

    And who ask for your Help??? Are you helping the Appraisers make more money?? Can we now grow our business without the AMC??
    Working RE is also full of SHIT!!!!!!!!!!!!!!!

    - Reply
  3. by Paul

    The NAC and the AMC are the problem. It’s amazing to me that Working RE did not come out and mention this in the article. F the AMC!!!!!!!!!!!!!!! And all you of backstabbing General Appraisers, MAI, AI. Most of you own the AMC. The Appraisal Industry should have unionized years ago. I rather pay unions dues, than have the AMC rip me and the consumers off. Oh, can we disclose to consumers in the HUD settlement or disclosures how much the AMC’s are getting??

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  4. by Josh Willions - ALG00986

    In this day and age, I do not see the appraisal profession progressing any further than it already has. We are making too many advancements in the AI field which will be 100% data driven. Going to be interesting to see what happens over time.

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    • by Craig Williamson

      I have not done appraisals from AMCs for over 25 years. I am not going to do bifurcated appraisals either. Appraisers are the lowest compensated in any real estate transaction, but the most regulated. I have been appraising for 48 years and I am getting grumpy kinda like “Ferdinand the Bull” if you remember that tale. Getting an appraisal approved by some underwriters is similar to passing a kidney stone. Soon, I will just be smelling the flowers and having a cold one.

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  5. by Braden Bills

    I want to make sure that I get my equipment appraised properly. It makes sense that I would need to get a professional to handle that for me! That would be a good way to ensure that I get my equipment sold for the right amount.

    - Reply
  7. by Gillian Babcock

    My dad is planning to sell his farm and retire in a condominium. It was explained here that a good appraiser is well trained and educated. Furthermore, it’s recommended to hire professional appraisers for quality work.

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  8. by Mark Mason

    The requirements to be an appraiser in relation to what it pays is just ridiculous. I hold a CG and teach appraising on the side and have never understood it. Why on earth would a kid with a college degree, 50k in debt (or more) decide to enter a profession where it will take a minimum of 3 years to start making decent money.

    Appraisers are so worried about being lumped in with Electricians and Plumbers. We are not a profession, we are a trade. We should have an apprentice program out of high school and do away with college requirements.

    Not that any of this matters. Blockchain technology and AI will be the end of the appraisal profession.

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  9. by luludog

    The magic word for the fix is “Fees”. The fees have to get back to a level were people will be breaking down the doors to get in the business. That level will be a sticker shock to the banking community, but they may not have a choice. They’ve been keeping the lid on fees for years while their top execs retire in luxury with millions.

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  10. by matthew schwartz

    Who in their right mind would become a residential appraiser today for $200 a pop or even LESS? Getting into this field today reminds me of the classic scene from ANIMAL HOUSE where the bad fraternity boys screamed out loud as they were paddled during initiation, “Thank you sir, may I have another” I got out 5 years ago when the 1004MC market conditions addendum was required. That form required so much data analysis / data manipulation / tedious importation downloaded from MLS it was just incredible. And how much extra did we appraiser maggots get paid for this? NOTHING. Then they piled UAD on top of that, and how much did we get for dealing with that? NOTHING. Thank you MR. AMC for taking HALF of our fee. Not to mention having your appraisal conditioned by clowns in Manila or Karachi or wherever, that had no idea what a residential appraisal even WAS. This is without a doubt, the most abusive self-destructive and degrading occupation I have ever known. All residential appraisers should resign right now in protest.

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    • by Craig Williamson

      Your comments are very true. I have a college degree, but I could have made MUCH more money if I had gone to trade school to learn plumbing or an electrician. If the appraisal “profession” is made obsolete by AI then so be it. It will be the lender’s problem then.

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  11. by John Eden

    Why is the average age of a residential appraiser 55 years old? When I entered the residential appraisal industry a the age of 34, most mortgage lenders were local or regional. Since the money being lent for mortgages was deposits from their customers, those lenders mandated a residential appraisal be performed by a SRA or RM designated appraiser or an appraisal performed by a non-designated employee be signed by a SRA or RM as a reviewer. Lenders and designated appraisers had a relationships built on mutual trust, ethics and respect. In 1985, an appraisal for a typical single family dwelling in a subdivision in Atlanta, GA required at most 4 hours to compete, two which consisted of office work, and the base fee was $225. Trainees had incentive to earn a designation through a professional organization since a designated appraiser could earned $450 a day before expenses. SRA and RM designations were rendered obsolete by federally mandated licensing by states. The last appraisal I performed required 10 hours for me to complete, 7 of which were office work, and I received a $190 fee before expenses. Fixed expenses are substantially higher than in 1985. I couldn’t afford to continue to work as a residential appraiser because of the long hours, low fees and high expenses; consequently, at age 62, I began receiving early Social Security benefits and took a part time job. What incentive does a young person have to become a residential appraiser? Answer: None

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    • by Joe Harper

      I started at 22, took a staff position with the state at 31 in 2002. I wholeheartedly agree with you, there is no incentive for younger guys to get in the biz, this has become a shiny object that once a prospective appraiser really looks into the requirements and the low fees, they move on to the next shiny object. Even day laborers can make more money nowadays. In the Eminent Doman world, I don’t see trainees at all, only older shops in the bigger cities desperate for work and beating each other up on fees.

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    • by Craig Williamson

      Prior to State Certification (Florida), I appraised for an S & L. They actually wanted to know my opinion of what the property they were about to loan on was worth. I went on to obtain an SRA and SRPA designation. State Certification made residential appraisal designations obsolete (in my humble opinion). I dropped my designations and none of my lender clients cared. I just spent over six hours doing the appraisal inspection in a rural county and inspecting seven properties to comply with USPAP. There is very little incentive to continue in this “career”. I can stay home, have a garden and eliminate my stress. I will let the “youngsters” take my place when they will eventually realize that they made a critical mistake in their career choice.

      - Reply
  12. by Scott Wachter

    There are many good points within these comments. The point that I would like to add is not regarding fees or trainee qualifications. The advent of the HVCC and later Dodd-Frank changed the business model of appraisal firms. Prior to those regulations, a certified appraiser had more of an ability to market to local clients and receive a substantial amount of business from those clients. There was an ability to maintain true business relationships and grow a business. As a result, trainees were necessary and desired. For the most part, the AMC model destroyed that ability and those relationships. With most AMC models, appraisers sign up individually and are given appraisal assignments in a piecemeal fashion either through a rotation or bidding process. Thus, the business owner was reduced to just another appraiser. It became unnecessary for most appraisers to hire trainees and trainees, once licensed, found it unnecessary to rely on their mentors. The playing field was leveled when anyone was able fill out a form and suddenly be on equal footing with another appraiser regardless of experience or reputation. In my opinion, lowering the barrier to entry into the appraisal profession is not the correct answer. The answer is to make the appraisal profession something to be desired so that potential appraisers will want to raise their standards to pay the price of admission.

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  13. by Bigrock

    Lets see. Regulation enacted to keep a small business owner (appraisal owner) from directly marketing to the consumer (buyer) or other local businesses (Mtg Brokers ) who can help drive revenue and increase profits for a small business owner (appraisal shop owner). Instead, set up a ponzi sceme where the profits that used to be made by the local business (appraiser owner) who could actually train and manage a staff of appraisers, – take that cut of the money (former profit) as a revenue source for the lender – broker.
    The issue is the lender and their owned AMC’s cant train anyone to do the assignment for which they are taking a large portion of the cut – for doing nothing. Many lenders set up their profit center overnight and dropped thei appraisal fees to $400 to $250 for the actual appraiser doing th work…. So the local business owner (appraiser) has NO incentive to train anyone much less go out of their way to do anything for any AMC or lender who uses an AMC. Its one thing when this was the large banks like Wells Fargo and Bank of America. But now its the local small lender who is also taking a cut of the apppraisal fee.. MOST Everyone is doing it now…

    There is NO shortage of appraisers just ones who are unwilling to accept work from AMC’s.

    - Reply
  14. by Steven Schwartz

    Why does the appraiser pay for the AMC fee to extort out of their fee and get no benefit from this relationship? We are harassed for faster turn times, threat of panel removal for not meeting 48 hr turn times(like they are our only client) and lowering the already low fee for not making the turn times! While the lender gets all the benefits of using an AMC to prequalify the report for less underwriters time to review, why doesn’t the cost be to the lender receiving ALL the benefits without any costs?? This is the real problem, why not any solutions to lenders passing the buck, or lack of bucks, to the appraiser to pay for their AMC who is making their load lighter having the AMC do their preliminary work & saving them time & money? Why does the Appraiser foot this cost out of the Appraisers fee!! Why does the bank get the money up front from the borrower, send to the AMC immeidiately, then pay the appraiser on 30 day Net contracts, then send fees over 30 days? No wonder I can’t pay my monthly obligations & bills!! Always too much month at the end of the money!! This is criminal greed & an abuse of an industry!! Leave a comment as this is the biggest issue no one is talking about!! …24 yr Appraiser Veteran

    - Reply
  15. by Bob

    Paloma Faith performed a song in 2009 called “Do You Want the Truth or Something Beautiful”, that contains lyrics with a haunting double meaning that holds parallels to this issue of the relationship between appraisers and those big money lenders and their AMCs who “preached the value of deception changing shadows by shape shifters rules”. No matter how you want to spin it, to cure this appraisal shortage problem without changing the compensation and the rules of disclosure, the trajectory of change will remain the same, downward.

    AMCs are not appraisers. Plain and simple. They should have NEVER been allowed to co-mingle their fees on the same line item as appraisers! Without just compensation for all the services requested, who in their right mind would enter a profession without the hope for increased financial reward the longer you stay in it and improve? Instead, as far as AMCs are concerned, all appraisers are lumped together from seasoned, nationally designated to freshly minted. Fee and turn time are their only metrics for choice of appraiser. Why care about qualifications or quality? Just stip until you get what you need to complete the loan. Most appraisers for lenders fail to charge by the hour, unlike other service professionals, so they get most to work at an even greater loss for their time.

    Forget the increased education requirements argument. If there is reciprocal compensation for higher qualifications and experience, there will be folks up to the challenge. Just look at the increased number of new MAIs.

    And the argument that AMCs and lenders can still find appraisers willing to accept low fees fails to address quality. Why was UAD and CU necessary, if not the growing concern for lower quality by lower paid appraisers? Why do you think FHA/HUD stopped accepting licensed appraisers, if not for the concern for lower quality by less qualified appraisers? Both these concerns caused financial loss that the taxpayers bailed out in the past, but since this bailout may not be so generous the next time, they made changes. But still, not the right changes.

    Not too many folks talk about the ever increasing CEO and executive compensations that influence the continued path of keeping down the compensation for those doing the actual work. For those who don’t understand that relationship, keep living your dream.

    I wonder how many shortages exist in non-lender, well-paid assignments? Seems the only ones complaining are those who are under paying… just saying.

    - Reply
  16. by H B

    Although most of is said here is true, I find the fact we are unable to actually market our product and services is a huge problem. We are all licensed, borrowers should be able to choose which appraiser to use. They can use whomever they want doe mortgage broker, attorney, home inspection, etc.. We are at a severe disadvantage over other professions since, realtors, local mortgage reps and borrowers have no say in the process. I just had to turn away 2 borrowers because they tried to hire me direct. I have never just hit a number in my career, my volume is down because its getting harder and harder to speak with a human to market yourself.

    - Reply
    • by Michael Morris

      HB wrote: ” realtors, local mortgage reps and borrowers have no say in the process. I just had to turn away 2 borrowers because they tried to hire me direct. ”

      And NONE of the above should have a say in hiring an appraiser.

      Why?

      Because ALL of them are BIASED toward “making the number” and therefore will ONLY select an appraiser that will make the number.

      - Reply
      • by Robert J Marshall

        If you are an ethical appraiser, you don’t “make the number” you arrive at your own value conclusion. That’s the impetus for all of these problems. There were too many of us who sold our souls for those appraisal fees BEFORE all of the regulations that are putting us out of business. We only have ourselves to blame.

        - Reply
  17. by Pat Bange

    The demise of the appraiser profession can be directly related to the introduction of the AMCs who took the heart out of the profession, took our money, made us answer to unqualified phone monkeys with their demands for greater scope to comply with each of their clients’ whims, for ridiculous due dates, constant monitoring, and competing for low fees. Of course they now want standards lowered so they can get a new crop to abuse.

    - Reply
    • by Michael Morris

      Doesn’t really matter because 90% of residential lending will not require an appraisal within 3-5 years tops.

      Just look at Corelogic.

      In the past two years they have purchased a slew of MLS systems, FNC (AppraisalPort) and RELS and Landsafe AMCs.

      The Corelogic “REALAVM” model is already very accurate in most markets and will only get better with all the information that they will have mined from appraisal reports and MLS data.

      Any residential appraiser under the age of 40 had best be looking for another career sooner rather than later………

      - Reply
      • by Eric

        BS on the “valuation models”.. they just don’t work in too many cases. Real estate is complicated – and personal… nobody wants their castle judged by some computer using irrelevant data. With that said they will get better and be usable to a degree with low risk loans etc. It also boggles me that there is a push to this automation at the same dumping more and more on the “appraisal” process forcing “us” to be more and more expensive. Why don’t we work toward a simplified and local certified appraisal that is held ACCOUNTABLE. How will REALAVM be held accountable with their 15 pages of disclaimers?? There is NO REALITY in Real Estate any longer…. just manipulations of currency and data.

        - Reply
        • by Jeff

          SO Who is our Client?? Risk management; that is what we provide to the big residential lenders; its collateral value not market value they care about. Learn the difference!That is precisely why modeling based appraisals will come for those markets; and poof, suddenly nobody will be responsible for the number!! If were protecting the consumer, then why don’t we do appraisals with the buyer as a client??? Like for $600, a buyer could save thousands off the purchase price in so many instances; so what if another appraisal is done for the bank for $500, because the GD brokers want quick commissions; and the buyers wants to walk down the isle at W.Mart. and buy a house with 45 min. of effort; that’s why!!
          I have no sympathy for those consumers, none! sorry!

          - Reply
        • by Michael Morris

          Feel free to keep your head stuck in the sand…

          Major lenders have been analyzing the Corelogic AVM product and are impressed with its accuracy as far as collateral lending goes. By 202, there will be at least 90% of residential appraisers out of business. You can take that to the bank…Good luck…

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      • by DA

        Who would buy the loans? With the massive disclaimers and risk ,they would get rated lower and be less profitable. It would be worth the extra fee for the bank to have independent eyes on the property and get the paper rated and sold higher.

        I have no doubt that this will happen in some degree for low LTV or 800 credit, but there are MANY of those that don’t get appraisals today.

        I guess that my fear is that the rating companies go back to the mid-2000s and rate everything AAA again knowing that the models are more risky and just not caring. My only hope is that the rating companies know that none of them would survive this time since they barely did ten years ago.

        I think that the mid 2000s are too fresh for too many people and the devastation is still too real. I might worry about this many years from now when more people on wall street or some of the regulators are retired and the fresh people can get greedy again with no experienced eyes on them.

        - Reply
      • by Victor

        There will never be a replacement for someone to actually go and measure the subject and offer a professional opinion of value. If they were to do what you say, it would soon be so out of wack, because they would have to get their data from public records, or mls which is where realtors get there gla from,,,public records. Public records does not have accurate measurements and is off by 300 sf or more at times. They also do not not list deferred maintenance in a property, nor do they take pictures of the deferred maintenance. Realtors are not going to note the deferred maintenance because it would cost them a sale,,,and that is all that they care about. Appraisers are not going anywhere. As far as AMC’s ,,,,if all appraisers would simply not work for them they would go out of business, and the banks and other lending institutions would be forced to set up their own appraisal management department, at full fees to the appraiser. But as long as there are appraisers that are willing to work for $295.00 for an appraisal there will be a demand for AMC’s and they will hang on like the vultures that they are.

        - Reply
        • by Michael Morris

          “There will never be a replacement for someone to actually go and measure the subject and offer a professional opinion of value.”

          WOW, what foresight. It amazes me the number of appraisers that believe its still 1990.

          Dude, this isn’t 1990, 2000 or even 2010.

          How many lenders are ALREADY accepting 2055 Exterior and some form of AVM product for a high percentage of their loans?

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      • by Victor

        There will never be a replacement for someone to actually go and measure the subject and offer a professional opinion of value. If they were to do what you say, it would soon be so out of wack, because they would have to get their data from public records, or mls which is where realtors get there gla from,,,public records. Public records does not have accurate measurements and is off by 300 sf or more at times. They also do not not list deferred maintenance in a property, nor do they take pictures of the deferred maintenance. Realtors are not going to note the deferred maintenance because it would cost them a sale,,,and that is all that they care about. Appraisers are not going anywhere. As far as AMC’s ,,,,if all appraisers would simply not work for them they would go out of business, and the banks and other lending institutions would be forced to set up their own appraisal management department, at full fees to the appraiser. But as long as there are appraisers that are willing to work for $295.00 for an appraisal there will be a demand for AMC’s and they will hang on like the vultures that they are.

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        • by Michael Morris

          “their data from public records, or mls which is where realtors get there gla from,,,public records. Public records does not have accurate measurements and is off by 300 sf or more at times. They also do not not list deferred maintenance in a property, nor do they take pictures of the deferred maintenance. Realtors are not going to note the deferred maintenance”

          That’s all well and good for the subject property, but is your data on the COMPS as good. Please tell me that you are measuring every comparable and inspecting the interior of said comp the same as the subject. If you are not, then your entire “argument” falls apart…

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  18. by John Galt

    You know… I just don’t care anymore. After the way we have been treated over the years (34 for me), I am just going to ride it out as long as I can then that’s it.

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  19. by Lori Noble

    Would the number of appraisers be inflated in 2005?
    In comparison, the volume of retail mortgages today are down to more in line with 2001 levels; which is where the number of appraiser comparisons would be more aligned. It’s incumbent for folks presenting analysis and argument of an appraiser shortage to factor actual trends, not the anomalies. Lastly, I spent the last week with 30 plus Millennials, most all trainees, and a few months prior to that in a different state revealed similar numbers and credentials. I see a great group of up and coming appraiser professionals; I do not however see them settling for the status quo of the AMC model.

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  20. by Rachel Massey

    I am of the opinion that the bar to entry into the profession is too low as it stands and should not be lowered. While a degree might not be necessary (and probably shouldn’t for those already in the field for X number of years), the lack of meaningful education past qualifying is severely lacking. One simple solution would be to require testing on continuing education, not just attendance.

    We need to focus on specific appraisal theory and practice, as well as report writing. There are so many appraisers who know what they are doing through years of practice, but have a very hard time with the communication end of the process. Since the end product that is delivered to the client is a technical communication, this too should be a focus, not simply techniques and methods.

    Common sense is also often lacking, as is the ability to ferret out what the potential buyer for the subject would view as alternatives, and just as importantly, what the comparable sale purchaser would perceive as comparable. To be comparable, both properties would need to be considered by buyers of the subject as well as the alternate, otherwise they are not truly comparable.

    In order for more appraisers to enter the field, there has to be incentive. Currently the system does not reward appraisers who strive for excellence, except in situations such as litigation, or in a rare QC position. If appraisers could differentiate themselves with the standard lending client (talking residential mortgage work here), then there may be a good incentive to up the game. As it stands, a 30-year veteran with superb work quality and ethics may be considered equal to a fresh-off-the-chair certified with virtually no experience.

    Most appraisers want to produce perfect work products (as perfect as we can do, since perfection isn’t really possible). The problem lies with the time required to do so compared to compensation. The only way to change this is for appraisers to bite the bullet, do their best work, and wait for the clients that they do have to see that the quality is above that of the masses, which hopefully results in higher pay.

    Probably dreaming. Just musing.

    Thanks for the article Isaac!!!!

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  21. by Lee N Greenwood

    Nearly all discussions of the number of appraisers seem monolithic in the residential area. The decline in appraisers is actually steeper in the residential mortgage finance area because many of those so qualified has remained in appraisal, but decide to work in non-mortgage residential, non-residential, or management. They find these alternatives much more satisfying compared to the typical residential mortgage appraisal environment. Sadly, these individuals have the most experience with markets, neighborhoods, properties, and market cycles, and the loss of that experience only increases the risk for those investing in residential real estate, either as a property owner or a lender.

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  22. by Burr Robson

    Gee, go figure. Appraisers’ fees crashed. All our ‘friends’ including the Appraisal Institute stepped in to add a fee here and a fee there, all in the name of making the profession better. Unintelligent requirements were made to appraisals by bureaucrats who wouldn’t know an open market if they saw one. The AMCs skinned us, lied to us, demanded we be available 24 hours a day in order to get work for about $15 an hour. And the liability? Wow, appraisers got sued. Appraisers got blamed for lower values. To control this group of ruffians the states hired more investigators who lowered the boom for any little thing. Lenders treat appraisers like criminals, demanding pictures of house numbers. Apparently they aren’t smart enough to look at Google maps to confirm that we appraised the correct house. And now shockingly the number of appraisers has dropped. Probably because they discovered they could make more money managing a Starbucks.

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  23. by DA

    The AMCs around me aren’t looking for more appraisers. They are looking for more cheap appraisers. Where better to get cheap appraisers than the newly licensed who don’t have other business and will accept cheap assignments?

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  24. by David Stephens

    A good article with many good points.
    I do hope and pray those staying in this industry will have great levels of success.
    After 17 years as an appraiser, I have decided to be done. I could ramble on as to the all the reasons why I have decided to change career’s but what’s the point in that.

    I do remember one conversation I overheard many years ago during a classroom break while I was taking my original trainee classes. An individual said and I quote
    “all one needs to do is hit the magic number needed”. Tip of the iceberg.

    Best wishes to each of you that tries to continue on.

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  25. by Robert (Ted) Transue

    I left the SFR market in about 2002 because of the issues raised above. I now do only commercial work. Similar annual income, musch less headaches. I am going to raise the same questions I raised back then when lenders wanted to dump appraisers/appraisals and do “drive-bys” and “desk tops”. This led DIRECTLY to the bubble and subesquent collapse. They will say that they better metrics now, baloney. Here is the result of not inspecting properties.

    In any large tract subdivision, there is a bell curve of properties. Some are well maintained, some poorly. Most maintained at an average level. There is remodelling, some need new kitchens, bathrooms etc. Some need roofs others have new roofs, etc.
    The problem is that the automatic valuations gravitate to the middle of the market, within one standard deviation from the norm. The people with the below average houses will leap at the mortgage offered. The owners with the above average houses will either turn down the offer and insist on an inspection. They will get an increased offer.
    The net result is a loan portfolio that is already over a standard LTV ratio. ANY downturn in the market affects these houses first and the dominos fall. Lenders don’t care because they make their profit up front with fees and points and then unload the loans on FANNI & FREDDIE and know they have 0 recourse. There is no downside for the lenders. They need to havee 100% recourse for 5 years and then decline after that.
    In economics, we are taught that profit is supposed to be the portion satisfied. Lenders have put it first, with government blessing.

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  26. by John Hicks

    Great article and a lot of really good comments! Having gone back to finish my associates degree in 2010 to get Certified Residential and get my FHA clientele back, and then going back to finish my Bachelor Degree in 2014 to work towards my Certified General, I support having some higher education to be an appraiser. After all, we are required to be proficient in a number of fields of study: law, grammar, mathematics (statistics), economy, finance, etc. That being said, I just received a request from an AMC offering $330 for an FHA assignment 45 miles away in a rural, low activity area with 11+ acres. That fee is insulting as much as it is laughable. Clearly, I declined. The “we can’t find appraisers” argument is unfounded. Many lenders, or their AMC’s, don’t want to pay a reasonable fee. What’s worse is they’ll find some schmuck who will accept the assignment for $330 and receive an ill-prepared report in turn. Then, they’ll complain that appraisers aren’t doing their jobs properly. While AMC’s served a good purpose initially, they have done little, if anything, to strengthen our industry in the last five years. If they stopped skimming money off the top and gouging borrowers, we may regain the public’s trust once again.

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    • by Mike Ford, SCREA, AGA, GAA, RAA, Realtor(r)

      The AMC model itself is flawed. That’s why so many AMCs are now offering alternative service levels that include minimal oversight and automated order processing and uploading systems. As for college being required, respectfully you bought into the cool aid arguments. We are not attorneys; statistical analysis does not require a degree, and reports SHOULD be written to the same standard as federal agency documents (8th grade). Economics and finance can be very well understood by anyone with a high school education.
      Concur fully re low fee argument though. On THAT you are 100% correct.

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  27. by ken w

    by ken wolf

    Most all the reasons why the industry is shrinking have been addressed by the presented comments. If anyone knows the why it is the individuals who have been field appraisers for the last thirty plus years. After thirty years of being a field appraiser in the boroughs of NYC and the immediate suburbs the situation has not improved. All of the endless requirements to prepare a simple report are beyond ridiculous. The time involved to prepare any report is beyond reason. The advent of the AMC’s did nothing to help the profession. All they do is take a piece of our money off the fee. To increase requirements of future appraisers is going to do nothing for the profession. Some of the best appraisers I know are high school graduates. Obtaining a college degree has nothing to do with preparing reports with more integrity or quality. It is simple either you take pride in the product and realize you are protecting the borrower and the lending institution or do not much care about the end product. I receive about twenty desk reviews a year and half of them are a total disaster. There is dishonesty in every profession and to eliminate it is realistically not possible. Until we have a real organization nationally that fights for us via the lobbyists in DC nothing will change. All of what I have just written has already been stated in the prior comments. I am glad to see that those of us in the profession are all on the same page. I hate to say it but anyone who tries to become an appraiser today is making a big mistake. You have no life the hours are beyond reasonable and the pay is at best average today.

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  28. by jerry

    REALLY? Appraiser decline. Do you really need a reason. These govt morons stole our businesses. of course to hear them we didn’t create anything!! fha screws with everyone – I wrote them a 48 page rebuttal of their phony reviews, and took 100 phone calls to even talk to one of their incompetent supervisors,. you have trainees who you refuse to allow to go forward (no references) because they are dishonest and the state brings up a phony case to destroy you so that they can continue their bureaucracy because you shut the head down and his ego was bruised. the amc’s keep all the good work in house and you want them to train? they send out all the bfe garbage their in house doesn’t want to do. the underwriters don’t have a clue and most cant read or know how to read a report. we are barraged with work and they think because its inspected they should have it in 24 hours. the ficticious comps some inana machine provides when you have worked your fannie off that you have to address to some mindless clone. dont get mad, dont say anything, dont piss them off they will black list you. we all love being extorted. they are always wanting someone on these boards, but after the state has destroyed your reputation for their bs criminal acts, no one gives a darn anymore. to heck with them all. 33 years and i’m looking to retire. any one who calls me to ask about this profession and i get lots of calls cause im an “a” in the book. they get a hefty amount of discouragement about being in this field. who wants the hours, the screw over on fees, only being good as your last appraisal, lawsuits, e/o companies wanting to constantly up their fees based on your income, pay to get and order, pay to upload an order, pay pay pay. everyone has their finger up your backside. mindless dolts your cant read or write. trainees who steal your clients, data base, reputation, trust. they just are not worth it. I love what i do but i’m sick to death of all the unnecessary nonsense. im sure you wont print this because dissention is not allowed when your being bent over.

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  29. by George Hatch

    These analyses always benchmark off the peak of the market in terms of appraiser numbers instead of with a more sustainable benchmark.

    In my state, (California) the number of fully licensed/certified appraisers in 04/2002 was 5,847. that number nearly doubled by 2007 even though the workload didn’t. I know this because I’ve been keeping track every year. As of this morning, the state reports 7556 appraisers licensed at these levels. So even after 7 years of attrition via starvation my state still has 28% more SFR appraisers now than during the beginning of the last real estate boom. I reckon we still have 10 more years of attrition at this rate before we regain the leverage in the market that we had in 2002. By definition that means depriving the AMCs the leverage they have had and still have that enables them to threaten appraisers with taking their business elsewhere if the appraiser doesn’t agree to work for $10/hr.

    In checking the BREA’s database it appears that over 10% of the current residential appraisers in CA have been added since 2007, and that includes over 25% of the appraisers licensed at the SL level. This is during a time of famine for many SFR appraisers.

    Moreover, most of the attrition hasn’t even been attributable to age or disease. Appraisers have been leaving due to the bleak financials. You can tell this is the case because the majority of the licensees who have left over the last 8 years were appraisers who were licensed after 2003, not before.

    The point is that trainees are still getting in and have been getting in all along even if at the reduced rate. We obviously still have a few fools who think running trainees for profit or gain is a good plan. That being the case I don’t see any reason why The Appraisal Foundation needs to lower experience or supervision requirements in order to offset the functions of supply/demand in the market.

    If some of the states have imposed onerous *additional* limitations on trainee supervision then that is a states’ rights issue, not an AQB Qualifications Criteria issue. That situation can be rectified at the state level with the stroke of the pen pursuant to the legislative process if/when they want to make that decision.

    If many (most) of the lenders have imposed additional requirements that stop them from accepting reports where the trainee has signed or where a trainee competent to perform solo inspections is countersigned by a supervisor checking the “did not inspect” box then that’s also a function of the market, not an AQB Qualifications Criteria issue. There’s nothing in the law that requires them to impose these additional requirements. They only do it because they can; the oversupply is still so acute that it doesn’t cost them anything to have the extra requirement.

    The fact that some of the biggest sweatshop AMCs are having a tough time finding SFR appraisers who will work for $200 fees in a few outlying markets as a result of appraisers now having more leverage in the market doesn’t concern me one little bit. The market is supposed to work like that; and frankly it’s long overdue. Maybe if these AMCs had been a little smarter about what happens when the supply is inelastic they wouldn’t have made so many enemies among the fee appraisers.

    So they get what they get.

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    • by Mike Ford, SCREA, AGA, GAA, RAA, Realtor(r)

      George, I respect each of the views expressed though I disagree that anyone is ‘lowering’ the standards.

      Generally I like your ‘free market approach’ and for anyone that has the luxury or patience to wait an additional ten years for normal market forces to find equilibrium “the market” is the only answer needed. For the rest of us, including those that already see the concerted effort being put forth by the mortgage and banking industries to lower the de minimus appraisal threshold, gambling on our future is not an acceptable alternative.

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  30. by Edd Gillespie

    Mr. Peck,
    Thanks for the facts absent over-the-top editorial.

    I am among the appraisers that advocate for comprehensive training of appraisers. Licensing and regulation is a good idea and it is necessary, however for a time the bar to entry into the appraisal trade was (and still is) far too low due primarily to lender lobbying. So, in my opinion and on behalf of our profession yet to be the increased education and training can’t come soon enough.

    That leaves us with increasing the power for appraisers trapped in the secondary mortgage market. The lenders are selling their loans at a profit, and consistently compete for that profit in part by locating not the best appraiser for the job, but by finding the cheapest and fastest. An unfair, unfortunate and intractable problem that appraisers themselves exacerbate via competition to be the fastest and cheapest. From what I hear the contribution to the mess by appraisers is rationalized several ways, some of which are interrelated problems:
    1. Many appraisers, if not most, do not have much to loose if they work for cheap fees and accept assignments with turn times that are too fast to accommodate a thorough job of appraising. They have no education to waste and for the most part their equipment can be re-purposed. That leaves their investment in licenses and software, which just isn’t a huge.
    2. AMC assignments are contracts of adhesion, which are illegal in most jurisdictions. But appraisers don’t complain about the illegality and instead compete one another right “under the bus.” Lenders hate to be sued, and it is a really good question as to why our leadership hasn’t taken them and the AMCs to the mat on this issue of unequal bargaining power. Instead appraisers settle for “customary and reasonable” and have invented something called a “full fee”, yeah, right. Could it be we have no leadership?
    3. Appraisers and regulators have no idea what a good appraisal is, indeed no one has yet come up with an acceptable description. This justifies thinking of appraisals as an assembly line product and the thinking that all appraisals are the same. If that is true, and it is to many people, then finding the cheapest and fastest is justified.
    4. Appraisal is a complex process that done right requires thinking critically in the abstract. For most people that is a difficult task and it is not commonly taught. Certainly it is not commonly found among appraisers.
    5. Reporting an appraisal requires above average communication skills since most readers of appraisals seem to have little or no training in appraisal. Many appraisers are simply lost if they must go beyond a Fannie form.
    6. Finally appraisers hate being accountable for their opinions, and well they should since in many cases they simply are not educated enough, paid enough or given enough time to form a well-supported opinion.

    TAF and the AQB is on track. I’m concerned that yielding at all to the pressure for alternative tracks to credentials will delay much of what needs to be done to make progress in solving the profound problems this industry has that are preventing professionalism. It is well past the time to flip the switch, quit squabbling among ourselves and begin to actually accomplish the professional aspirations we advertise.

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    • by Mike Ford, SCREA, AGA, GAA, RAA, Realtor(r)

      As a PROFESSIONAL Edd, I take direct exception to much that you allege. Your first point:
      #1 is simply unsupported assumption. Most professional appraisers I know have invested more than fifteen years of their lives; some in excess of 40. They have considerable experience, and in many cases have degrees in both unrelated and related fields. Most of what we ‘had to lose’ was lost overnight through HVCC. THAT was our reputation for professional work established with specific institutional lenders over many years. HVCC negated THAT overnight. I cant speak for others, but I worked hard at building mine.
      #2 “There is nothing unenforceable or even wrong about adhesion contracts. In fact, most businesses would never conclude their volume of transactions if it were necessary to negotiate all the terms of every Consumer Credit contract. Insurance contracts and residential leases are other kinds of adhesion contracts.” Dictionary description further notes that some ARE unconscionable. That’s a far cry from ‘illegal in most jurisdictions.’
      #3 is both an untrue and insulting claim. While users of appraisal services may not know (or care), MOST appraisers sure as hell DO know what a good appraisal is.
      #4 you were right until you concluded this critical skill is NOT found among most appraisers. Again, both insultingly untrue and unsupported. Substitute ‘some’ for most and your point may be valid.
      #5 Reporting an appraisal takes no special communication skills beyond an 8th grade level; the same standard that federal agencies are supposed to adhere to. Regardless of whether I fill it with technical trade jargon or not, if the clients do not actually READ the appraisal in it’s entirety, then my communication skills become largely meaningless.
      #6, I think you are largely right. We do NOT like to be challenged over our opinions. It’s something we need to overcome. Be open minded to ALL inquiries; and for those that are valid; HONESTLY see if they have an impact on our original opinions. We are NOT required to be “perfect” in the absence of unknown data. That’s why the certification and limiting conditions traditionally had a clause where we were entitled to modify or amend our opinions in light of new information.

      I think we are in agreement re TAF/AQB being on the right track on alternative pathways. The devil is always in the details. What I HAVE seen in writing from them ‘seems reasonable”.

      Quit squabbling? Not a likely event; nor a necessary one as long as we respect each others right to our views; and seek to persuade rather than to dictate. Best to you in your career, sir!

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  31. by ROBERT MCDANIEL

    AS A LONG TIME APPRAISER (40 YEARS) I BELIEVE THE DECLINE IN APPRAISERS IS DUE SOLELY TO THE INCREASE IN FORMS AND PAPER WORK NOW REQUIRED IN ALL APPRAISALS WITHOUT THE FEES INCREASING ACCORDINGLY. FOR EXAMPLE THE VA WHICH SETS FEES FOR THEIR APPRAISALS HAS NOT RAISED THEIR FEES IN MY AREA SINCE 2009 HOWEVER THEY HAVE ADDED MANY NEW REQUIREMENTS AND NEW FORMS TO BE INCLUDED IN EACH APPRAISAL WITHOUT CORRESPONDING FEE INCREASES. ALSO THE AMC’S SIMPLY HIRE THE NEWER APPRAISERS WHO ARE NEW TO THE BUSINESS AND WILL TAKE ANYTHING AND DO WHATEVER IS NECESSARY TO GET WORK AND UNDERCUT REASONABLE FEES. I HAVE NO DOUBT THAT THE LACK OF ADAQUATE FEES IS THE MAIN CAUSE OF COLLEGE EDUCATED PEOPLE SEEKING OTHER PROFESSIONS WHERE THEY CAN MAKE A BETTER LIVING FOR THEIR FAMILIES AND HAVE OPPORTUNITIES TO ADVANCE THEIR CAREERS OVER TIME THAN TO BE STUCK IN A PROFESSION THAT DOESNT EVEN KEEP UP WITH INFLATION.

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  32. by Thomas Molinari

    “Appraisers argue that if AMCs and lenders paid more, more college grads would consider the profession and fewer current appraisers would exit” BINGO! This is the solution to the shortage of high quality appraisers.

    “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” BINGO AGAIN. Appraisers can argue all day and all night about not being paid reasonable fees for the work that they do. But as long as there are appraisers out there accepting the lousy fees that AMCs are offering, things are not going to change. The fact is that it is impossible to do the required analyses, reporting, verification, and come to a reasonable value conclusion while doing 2 reports in a day. The cheap and fast business model results in unreliable appraisal reports.

    ” 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. ” Putting the mortgage industry in charge of appraisal qualifications and requirements is putting the fox in charge of the henhouse. AMCs have not solved the problem of appraisers being chosen by mortgage originators and loan officers. It just kicked this process up a notch. AMCs create shortlists of appraisers that are “recommended ” by local mortgage offices to complete their appraisals. The list may consist of 2 to 3 appraisers who get the bulk of the work for any given mortgage company. If you don’t believe this goes on then your head is in the sand. In the end, local mortgage industry personnel should not have a say in the appraisal process. Appraisers should be chosen by the end user of the report, the investor. This may be Fannie Mae, Freddie Mac, FHA, or other secondary market players. AMCs serve absolutely no purpose.

    I personally do not believe that loosening the requirements to become an appraiser serves any purpose whatsoever. That being said, what truly matters is the final product that is produced by an appraiser, not a college degree. Perhaps a better solution to the appraiser qualification dilemma would be periodic testing of an appraiser for their knowledge of basic appraisal principles. Perhaps completing more advanced courses in appraisal and passing a higher level examination would allow an appraiser to move up the ladder and qualify for doing more complex assignments and/or supervising trainees. Perhaps requiring that appraisers submit randomly requested reports periodically to a state board or other appraisal related qualifications board would result in higher quality appraisals. If the appraiser knew that any given appraisal report will be reviewed by some regulatory appraisal qualification agency then perhaps appraisers wouldn’t be cutting corners or doing things that they shouldn’t be doing. Perhaps all of the above could be required as well as submitting a demonstration report o f a complex property that demonstrates the appraiser’s ability and knowledge of the appraisal process . Appraisers may then be classified at a higher level within the CR or CG classifications based upon how they perform in the testing, randomly selected samples of their work, and how they perform on a demonstration report of a complex property. Oh wait, this is already being done in the designation process through the Appraisal Institute, the American Society of Appraisers, and other professional organizations. Maybe if more attention was paid to professional designations, appraisers could be chosen based upon their demonstrated knowledge, experience, and their previous work, instead of how fast they can get a report done and how cheaply they’ll do it for. More pay for higher quality work will attract recent college grads to a profession that is respected by the users of their products.

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    • by Mike Ford, SCREA, AGA, GAA, RAA, Realtor(r)

      You had me in full agreement right up until you cited the myth that designation equals quality. I would concur that designation COULD mean highest quality IF the SOW were not so reduced that the designated appraisers skills are not put to use when they complete their Narrative1 software based narrative appraisal report in four days; complete with boilerplate fluff and cursory CoStar ‘comps analyses’.

      Greater education IS the answer-not necessarily degrees OR designation; when coupled with greater accountability. Independent field reviews by other professionals-not state regulators, is also critical.

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      • by Tom Molinari

        Mike – I did not say that a designation equals quality. What I said is that in obtaining a designation from one of the major appraisal organizations an individual voluntarily subjects him/herself to a higher level of education, testing, and review by peers than simply being certified. There are many, many excellent appraisers out there without designations. But there needs to be a process where an individual can demonstrate that they have done more than just the minimum necessary to be an appraiser. Many years ago there was a system where appraisers were classified I, II, III, and IV, which demonstrated to clients their degree of experience and education. Today, Joe Skippy, and an appraiser with a higher level of appraisal education, experience, and knowledge are viewed as equals and are paid at the same lousy fee scale. That is simply not fair or reasonable. Sure, a designation is no guarantee of being a good appraiser but at least you know that this individual has submitted to being scrutinized by peers, has completed more than the minimum required education, and (in the vast majority of cases) takes pride in their final work product. Some standard that allows clients to be aware of the level of experience and knowledge of an individual appraiser needs to be stated. In the absence of any other standard, the designation serves that purpose best today.

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  33. by Bruce Flanagan, SRA

    So lets get this strait, The NAC which is made up of AMC’s thinks we should ease up on the licensing requirements and further dumb down our profession. Could it be that the AMC’s are having a hard time finding appraisers who are desperate enough to accept their absurdly low fees? With all of the very detailed statistical analysis, linear regression, and additional quantitative analysis going into appraisal reports these days, elimination of the college degree requirement or otherwise “easing” the licensing requirements would simply be foolish. Sorry AMC’s, the scope of work has been expanding for years, and appraisal fees will have to increase in order to retain competent appraisers.

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    • by Mike Ford, SCREA, AGA, GAA, RAA, Realtor(r)

      I’m glad someone else looked up who they are. AMCs and “National Appraisal firms (pseudo AMCS!) and mortgage banking interests. Five Star Institute is purely Mortgage Industry. I’d be more accepting of their ‘solution’ IF it also included a requirement that the appraisal firm be paid a C&R fee commensurate with the complexity of the assignment; and in no case less than $515 if a trainee is allowed.

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  34. by Rick Acker

    The banks have us tight where they want us. That is out of the picture. They already own most of the AMCs that took up to half our fees. AMCs also striped us of our identitys. We are no longer independent professionals that deal right with the clients if you do mortgage appraisal work. What other profession works this way. There were unscrupulous appraisers out there however there were laws to deal with them that were unenforced. Now we have a situation that for me it isn’t worth the continued more requirements coupled with less pay. I will keep my appraisal identity and do non lender worK until I retire. Thanks a lot for messing up a great profession congress. In particular Frank-Dodd.

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    • by Tom Molinari

      So right Rick. The primary goal of the mortgage industry when it comes to appraisers is to CONTROL appraisers. When Dodd-Frank was being written, mortgage industry lobbyists made sure that they still retained a significant degree of control over who is doing their appraisals. Thus, the AMC short lists whereby office managers and L/Os submit a short list of 2 or 3 appraisers who get the bulk of the assignments. This was not the intent of the law but is the result of mortgage industry influence over legislators. The mortgage industry should have absolutely no say in minimum appraiser qualifications or in the appraisal assignment process. Period, end of story. BTW, has anyone forwarded this post to the AQB or TAF?

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  35. by DA

    Imagine how many new lawyers or judges you would get if after all of their schooling and training, the lowest law clerk could turn their world upside down by never leaving their desk and relying on a computer program that skimmed their motion/document for keywords and made broad assumptions from skimming past motions and laws. Does anybody blame a recent college graduate for not wanting to enter a professions that does not operate as the highest common denominator? Qualifications in the red herring – anybody who wants a strip-mall or online degree can get one pretty easily. Fees and the way that the banks treat the so-called professionals is the root of the issue.

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  36. by Richard Vadimsky, IFA, SCREEA

    There is a dead horse in the large Realtor owned barn next door. The line forming to beat him is growing. I see you already have your own stick.

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  37. by Dave

    If colleges had a degree in Real Estate Appraisal that would help. I see some jr. colleges have some kind of degree, or certification but cannot find them for the major 4 year University. You got to have a 4 year degree now anyway. That way they could come out certified and ready to go. In my area there are no shortages of appraisers- but there are not a lot of job opportunities here, but in areas with a good economy, appraisers don’t get paid enough, no need to go into this profession .

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    • by Mike Ford, SCREA, AGA, GAA, RAA, Realtor(r)

      How hard did you look? I personally know one man that obtained a PHd in Real Estate. Seriously Dr. Darryl (sp) Burns.
      In any case, how would that help. My acquaintance Dr. Burns cannot appraise real estate.
      I for one do NOT want fresh out of school grads being “certified” for anything. They have not EARNED their certification which is the State attesting to a level of expertise and competency that includes significant experience in the field. MDs have EXTENSIVE education and OJT but they still need to be interns for a year or so to get actual EXPERIENCE!

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  38. by Mike Miller

    I quit working at 11 pm last night. I am up at 4 am to have a cup of coffee and begin working again. I don’t expect to quit until 10 or 11 tonight. I am Certified and have a college degree. I worked for peanuts per report for years. Now it is paying well and the cries for lower fees are ringing out. The ridiculous requirements that lead to 50 page reports on a 1000 SF house with a value of $55,000 and 8 hours to produce that report need to be changed. We are not inspectors, pest inspectors, surveyors, engineers, legal experts, contractors, flood plain experts and do not have ESP. The fees do not just cover the estimate of value, the fees cover a bunch of “stuff” that we are required to do. Have the Lenders get inspections, legals, flood certifications, aerial photos, etc., etc.. Those can be generated for a few bucks per need. Provide them to us in an assignment package. Do not require they be put back into the electronic report and value estimate we send, nor require us to recheck all those docs. Make the loans more dependent on the credit of the borrower. We can estimate a narrow range of value for 25% of the time now required. Let us make the same amount of income by doing fast inspections, faster reports and more assignments. Our regulating bodies, government’s passing the buck by requiring us to assume so much responsibility and liability, and expanding USPAP every year…address those problems and you can worry about how many new Appraisers you need then. I’m making a reasonable income for my education, experience and certification, but I am working 60-80 hours a week. My last report required 15 hours to cover everything surrounding that unique property in a rural area with no MLS. I knew what its range of value was after inspecting it for 45 minutes. Lenders, FHA, HUD, etc. …you and the borrowers take some responsibility. We have to worry 80% of our time about everything else but the value estimate (20% for that).

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  39. by Stephen Eady

    Good Article.

    The NAC is obviously driving this to get more supply into the industry. I know almost all appraisers in my area can handle more work and are even having to lay off some staff. The answer is not lowering the barriers to entry. This will make the profession even less creditable. The AMC’s are having a negative impact, by times selecting the cheapest appraiser and not the best or most competent. They argue there is a shortage, yet state fees are driven down by supply and demand doesn’t add up.
    Increased scope, liability, regulations and implementation of AMC’s are the factors that are hurting the numbers. Fix these issues and the rest will take care of itself.

    Final thought-
    It is not a fair comparison to compare us to accountants. Yes, there are some similarities, but it’s not even in the same ball park. Math on many levels can be applied across the board. Learning the accounting techniques can be relatively standardized, heck turbo tax can do it.

    Inspection techniques, valuation methods (which are most often totally misunderstood by real estate agents), and learning appraisal standards…. is not learned in any other related field and the “experience” hours should absolutely NOT carry over. What should carry over? – real experience hours. I’d be more inclined to get rid of the 4-year degree requirement before allowing other areas to account for credit.

    Instead of comparing us to accountants, compare us to surgeons- we must master techniques and skills and have a vast knowledge of real estate markets (human body). We can specialize in certain fields. We need guidance (residency) in order to learn our trade. Why? To make ourselves competent; to promote public trust….which is the ultimate goal of TAF/AQB Would you trust you surgeon more or less if the hospitals needed more and just made it easier to become one? Let’s not make it easier for people to become surgeons. Get rid of some of the BS that’s driving people away! Just like surgeons, I feel bad they often times have student debt and don’t make tons money their first years, but deal with it. If they knew their fees would be driven down by AMC’s their numbers would drop too.

    Don’t be fooled by the groups trying to create a problem to meet THEIR needs. Identify the REAL issues and make a solution.

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  40. by Doug Parkes

    Which is it, too few appraisers or too many?One part of the article talks about the decline in appraisers which the other talks about fees remaining low due to supply and demand. Also the Feds & AMC’s will not accept an appraisal from a licensed and tested Licensed Appraiser, but are looking to raise the dollar level fro, $250,000 to $500,000 which would allow virtually anyone to complete the valuation form.

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  42. by Charles L Ford

    I am 73 years od and have been appraising in excess of 30 years. Over that time I have trained 20-25 appraisers, many who have gone on the create their own appraisal firms. I will not train any more due to the “direct supervision” issue. I agree there should be some initial direct supervision, but when a trainee is ready to go alone, should be determined by the supervisor, as its is he/she who signs and takes the risk. In addition fees paid by AMC’s have hurt the business. I do not do AMC work..

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    • by Mike Ford, SCREA, AGA, GAA, RAA, Realtor(r)

      I agree. Some are ready after 4 or 5 field inspections (with CLOSE DESK REVIEW and two way discussion before finalizing); and some will never be ready whether with 90 days or 1,000 days. I never want to underpay my trainees ($200 a day to start). Forcing 90 days of working with EACH one makes underpaying them a necessity (max $100 a day until they can go out on their own).

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  43. by Tom D

    too many babysitters making their own self important rules. good article to read, and then pick another profession that pays better, like a city bus driver. all this yayda, and how many more years of “we don’t know why this is happening problem”. keep closing your eyes and imagining side issues. which one of us would say we would love this profession if we had to start new today. unfortunately, there are some who like the new plantation..

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  44. by Mark

    I don’t think there is a shortage of appraisers, I think the appraisers who worked for $200 are out of business. It’s called supply and demand, and now it might be in favor of the appraisers for a change.

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