{"id":266,"date":"2015-11-18T19:54:19","date_gmt":"2015-11-18T19:54:19","guid":{"rendered":"https:\/\/clarksvilletnrealestateforsale.com\/?p=266"},"modified":"2015-11-18T19:54:19","modified_gmt":"2015-11-18T19:54:19","slug":"the-number-of-real-estate-appraisers-is-falling-heres-why-you-should-care","status":"publish","type":"post","link":"https:\/\/clarksvilletnrealestateforsale.com\/?p=266","title":{"rendered":"The Number of Real Estate Appraisers Is Falling. Here\u2019s Why You Should Care"},"content":{"rendered":"
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<\/i>Home<\/a> > News<\/a> > Trends<\/a><\/div>\n
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TRENDS<\/a><\/span> \"\"<\/a><\/span><\/div>\n<\/header>\n
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The Number of Real Estate Appraisers Is Falling. Here\u2019s Why You Should Care<\/h1>\n<\/div>\n
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By<\/span>
\nAmy Hoak<\/a><\/span><\/p>\n

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\"shutterstock_282439349\"<\/a>
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Image: Ewelina Wachala\/Shutterstock<\/p>\n<\/figcaption><\/figure>\n<\/div>\n

The ranks of real estate appraisers stand to shrink substantially over the next five years, which could mean longer waits, higher fees and even lower-quality appraisals as more appraisers cross state lines to value properties.<\/p>\n

There were 78,500 real estate appraisers working in the U.S. earlier this year, according to the Appraisal Institute, an industry organization, down 20% from 2007. That could fall another 3% each year for the next decade, according to the group. Much of the drop has been among residential, rather than commercial, appraisers.<\/p>\n

Some say Americans are unlikely to feel the effects right now, as it\u2019s mostly confined to rural areas and the number of appraisal certifications \u2014 many appraisers are licensed to work in multiple states \u2014 has held relatively steady. Others say it\u2019s already happening, and rural areas are simply the start.<\/p>\n

Since most residential mortgages require an appraiser to value a property before a sale closes, they say, a shortage of appraisers is potentially problematic \u2014 and expensive \u2014 for both home buyers, who rely on accurate valuations to ensure that they aren\u2019t overpaying, and sellers, who can see deals fall through if appraisals come in low.<\/p>\n

\u201cAs an appraiser, I should be quiet about this shortage because it\u2019s great for current business,\u201d said Craig Steinley, who runs Steinley Real Estate Appraisals in Rapid City, S.D. But \u201cwhat will undoubtedly happen, since the market can\u2019t solve this problem by adding new appraisers, [is] it will solve the problem by doing fewer appraisals.\u201d<\/p>\n

A shrinking and aging pool<\/h2>\n

As appraiser numbers are falling, the pool is aging: Sixty-two percent of appraisers are 51 and older, according to the Appraisal Institute<\/a>, while 24% are between 36 and 50. Only 13% are 35 or younger.<\/p>\n

Industry experts blame an increasingly inhospitable career outlook. Financial institutions used to hire and train entry-level appraisers, but few do anymore, according to John Brenan, director of appraisal issues for the Appraisal Foundation<\/a>, which sets national standards for real estate appraisers.<\/p>\n

That has created a marketplace where current appraisers, mostly small businesses, are fearful of losing business or shrinking their own revenue as they approach retirement. Many have opted not to hire and train replacements.<\/p>\n

The requirements to become a certified residential appraiser have also increased over the past couple of decades. Before the early 1990s, a real estate license was often all that was needed. Today, classes and years of apprenticeship are required for certification.<\/p>\n

And this year marked the first in which a four-year college degree was required for work as a certified residential appraiser. (It takes only two years of college to become licensed, but that limits the properties on which an appraiser can work. Some states, meanwhile, only offer full certification, not licensing.)<\/p>\n

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\u201cIf you come out of college with a finance degree, you can work for a bank for $70,000 [or] $80,000 a year with benefits,\u201d said Appraisal Institute President Lance Coyle. \u201cAs a trainee, you might make $30,000 and get no benefits.\u201d For some, especially those with student loans to pay, the choice may be easy.<\/p>\n

\u201cThere were definitely easier options of career paths I could have chosen,\u201d said Brooke Newstrom, 34, who became an apprentice for Steinley Real Estate Appraisals earlier this year. She networked for a year and a half, cold calling appraiser offices and attending professional conferences, before getting the job.<\/p>\n

For residential appraisers, business isn\u2019t as lucrative as it once was. Federal regulations in 2009 led to the rise of appraisal management companies, which act as a firewall between appraisers and lenders so appraisers can give an unbiased opinion of a home\u2019s value.<\/p>\n

But those companies take a chunk of the fee, cutting appraiser compensation. Some community lenders don\u2019t use appraisal management companies, according to Coyle, but they are often used by mortgage brokers and large banks.<\/p>\n

Appraiser numbers appear poised to continue shrinking, and as appraisers continue to get multiple state certifications they may be stretched more thinly, industry experts say.<\/p>\n

For now, any shortages are likely regional, Brenan said. \u201cThere are certainly some parts of the country \u2014 and primarily some rural areas \u2014 where there aren\u2019t as many appraisers available to perform certain assignments that there were in the past,\u201d he said.<\/p>\n

Elsewhere, however, the decrease in appraisers isn\u2019t felt as acutely. In Chicago, according to appraiser John Tsiaousis, it may be difficult for young appraisers to break in but customers in search of one shouldn\u2019t have a problem.<\/p>\n

\u201cI don\u2019t believe they will allow us to run out of appraisers,\u201d Tsiaousis said. \u201cSome changes will be made [to the certification process]. When they will be made, I don\u2019t know.\u201d<\/p>\n

Longer waits, more expensive appraisals, and quality questions<\/h2>\n

The effects of an appraiser shortage could be substantial for individuals on both sides of a real estate transaction, experts say.<\/p>\n

Fewer appraisers means longer waits, which could hold up a closing. That delay means that borrowers might have to pay for longer mortgage rate locks, according to Sandra O\u2019Connor, regional vice president for the National Association of Realtors<\/a>. (Rate locks hold interest rates firm for set periods of time and are generally purchased after a buyer with initial approval for a loan finds a home she wants.)<\/p>\n

Longer waits also affect sellers who need the equity from one sale to purchase their next home. When they can\u2019t close on the home they\u2019re selling, they can\u2019t close on the one they\u2019re buying.<\/p>\n

A shortage also means appraisals will likely cost more, which some say is already happening in rural areas. Appraisal fees are generally paid by borrowers.<\/p>\n

\u201cAppraisal fees in areas where there aren\u2019t enough appraisers are higher than those areas where there are plenty of people to take up the cause,\u201d said Steinley, who holds leadership roles in the Appraisal Institute and the Association of Appraiser Regulatory Officials<\/a>.<\/p>\n

There is a quality issue, too: In some areas, appraisers come in from other states to value homes. While there are guidelines for these appraisers to become geographically competent, they could miss subtleties in the market, Coyle said.<\/p>\n

And if the shortage isn\u2019t addressed, and lenders are unable to get appraisers to value homes, lenders might ask federal regulators to relax the rules governing when traditional appraisals are needed, allowing more computer-generated analyses in their place, according to Steinley.<\/p>\n

Automated valuation models, which are less expensive and quicker, are rarely used for mortgage originations today, Coyle said. They\u2019re sometimes used for portfolio analysis, or when a borrower needs to demonstrate 20% equity in order to stop paying for private mortgage insurance, he added. They might be used for low-risk home-equity loans, Brenan said.<\/p>\n

Currently, appraisers are required for mortgages backed by the Federal Housing Administration, Fannie Mae and Freddie Mac. Those mortgages make up about 70% of the market by loan volume and 90% of the market by loan count, according to theMortgage Bankers Association<\/a>.<\/p>\n

And computer-generated appraisals can\u2019t match the precision of one conducted by someone who has seen the property, and knows the area, many in the industry say.<\/p>\n

The industry is beginning to address the issue. Last month, the Appraisal Foundation\u2019s qualifications board held a hearing to gather comments and suggestions, Brenan said.<\/p>\n

One of the options being discussed: Creating a set of competency-based exams that could shorten the time people spend as trainees. That way, someone with a background in real estate finance could become certified more quickly, Steinley said. The board is also looking to further develop courses that would allow college students to gain practical experience before graduation, Brenan said.<\/p>\n

Proper education is important \u201cbecause real estate valuation is hard to do, and you need to get it right,\u201d Coyle said. But the unintended consequences of the current qualifications are just too much, he added. \u201cIt\u2019s almost as if you have some regulators trying to keep people out.\u201d<\/p>\n<\/div>\n<\/section>\n<\/article>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Home > News > Trends TRENDS The Number of Real Estate Appraisers Is Falling. Here\u2019s Why You Should Care By Amy Hoak 1:16 pm ET November 18, 2015 Image: Ewelina Wachala\/Shutterstock The ranks of real estate appraisers stand to shrink substantially over the next five years, which could mean longer waits, higher fees and even … Continue reading The Number of Real Estate Appraisers Is Falling. Here\u2019s Why You Should Care<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-266","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/clarksvilletnrealestateforsale.com\/index.php?rest_route=\/wp\/v2\/posts\/266","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/clarksvilletnrealestateforsale.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/clarksvilletnrealestateforsale.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/clarksvilletnrealestateforsale.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/clarksvilletnrealestateforsale.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=266"}],"version-history":[{"count":1,"href":"https:\/\/clarksvilletnrealestateforsale.com\/index.php?rest_route=\/wp\/v2\/posts\/266\/revisions"}],"predecessor-version":[{"id":267,"href":"https:\/\/clarksvilletnrealestateforsale.com\/index.php?rest_route=\/wp\/v2\/posts\/266\/revisions\/267"}],"wp:attachment":[{"href":"https:\/\/clarksvilletnrealestateforsale.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=266"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/clarksvilletnrealestateforsale.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=266"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/clarksvilletnrealestateforsale.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=266"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}