Those of us in the mortgage and/or appraisal industry have experienced issues with extended turn times on appraisals. In certain markets it is difficult to find quality appraisers to complete work in a timely manner. Based on recent order volume there appears to be more demand than supply of appraisers in some areas of the country.
Are the delayed turn times caused by a shortage of appraisers? If so, why is there a shortage? There are several factors to consider when reviewing the possible causes:
Per the Appraisal Institute, as of December 31, 2015, there were approximately 76,800 working real estate appraisers, down about 22% from 2007. The Appraisal Institute forecasts that the number of appraisers will continue to decrease approximately 3% per year will continue over the next five to ten years. The apparent shortage of appraisers is particularly noted in rural areas, but is also felt in larger metro markets like Denver, CO. The appraiser base is "graying" and retiring and is not being replaced by the next generation.
What is preventing qualified candidates from choosing a career as an appraiser?
The qualifications and licensing requirements state that a new appraiser (trainee) must work under a supervisory appraiser to gain the required experience to become a licensed or certified appraiser. Most lenders will not accept a trainees’ work without the supervisory appraiser also inspecting the subject property. Therefore, it is difficult for the trainees to get appraisal assignments. Additionally, the Appraisal Qualification Board (AQB) now requires a four year college degree in order to become a certified appraiser, adding additional time and education requirements to the process.
There are possible solutions to this issue. Supervisory appraisers may be given more autonomy to determine the scope and duration of oversight for a given trainee. Some trainees may need extensive training, requiring the supervisor to accompany him on the property inspection for 1 to 2 years, reviewing as the supervisory appraiser and accepting full responsibility for those assignments. Other trainees may only require such oversight for a period of six months, and then be allowed to inspect on their own. The supervisory appraiser would still review and sign the reports, and would accept full responsibility for the assignment, but would use his or her own judgment to determine the level of supervision necessary based on the performance of the individual trainee. The AQB has an exposure draft suggesting changes to the Appraiser Qualification criteria to try to correct some of these issues but resolutions need to be implemented quickly.
The current requirements of some lenders would also have to change, allowing trainees to complete reports with the supervisors reviewing and signing but without personally inspecting the subject. This would help trainees to enter the industry and give the supervising appraisers incentive to train the next generation of appraisers. Under the current requirements, the supervisory appraiser must complete the entire report along with the trainee; therefore, there is no economic incentive in working with a trainee.
In addition to sustaining quality and independence, we must all advocate for efficiencies in the appraisal process. Technology can be leveraged to validate data, enhance communication, expand QC capabilities, and expedite delivery. Certainly it is important - but people are, and will always be, the most critical resource for the future of our business. We must push for the removal of entry barriers and find ways to recruit tech-savvy millennials capable of driving transformation within the valuation services space. How can you get involved or learn more about this topic? Please see the link to The Appraisal Foundation’s website as well as the Appraisal Qualification Board’s Exposure Draft on Proposed Changes to the Appraiser Qualifications on MyAMC.com / Lender Resources.
MyAMC’s mission is to invest in technology and streamline processes, enabling us to better serve our customers and create stronger partnerships with our fee panel. We are active members of the Collateral Risk Network, a group dedicated to studying and resolving the challenges we face in our industry. We will continue to work to build sustainable partnerships with our fee panel and to optimize the customer experience - delivering the highest quality appraisals with the best possible turn times.