A good client called me recently in need of an appraisal just
outside of my Portland service area. I
had a little extra time that day, so I said I would check around and see if I
could find someone to help them. Even after
calling five or six different appraisers, I was unable to find anyone willing
to take the rural appraisal assignment. Most
of the appraisers that I called are booked up for two to three weeks and are only
servicing their best clients or are cherry picking the easier or higher-paying
assignments. This anecdote suggests a
shortage of appraisers.
The number of appraisers has been declining since the 2007
real estate market collapse. According
to the Appraisal
Institute Research Department, the number of active appraisers
in the United States dropped by roughly three percent each year from 2008 through
2014. The decrease was smaller in 2015,
but it is noteworthy that 62% of appraisers are over the age of 50. Of the total number of appraisers, a mere 1% are
under the age 25.
I researched Oregon appraiser statistics back to 2010. The total of active Oregon appraisers mimics the
national trend, falling from 1,601 in year 2010 to 1,377 by year 2015. The number of Certified Residential
Appraisers has remained nearly constant since 2010 (losing only 15), but the total
of Licensed Appraisers has plummeted more than 50% in that time. There are currently only 69 Registered
Appraiser Assistants training to become an appraiser.
I believe there are several factors creating a shortage of appraisers.
is strong demand for appraisers due to an active real estate market that is bolstered
by an improved economy and continued low interest rates.
fees have not kept pace with inflation.
Ten years ago, the typical appraisal fee in the Portland area for a standard
lender appraisal was $400 to $450. I no
longer accept assignments at these fees, but this remains the payment offered
by the majority of lender and AMC clients.
You would think that supply
and demand would increase prices and balance the market. However, such market forces have not worked in
favor of appraisers because by receiving assignments from only a few larger
appraisal management companies, appraisers have less power to negotiate higher
fees. Additionally, appraisers are often
required to accept a client’s (management company’s) fee structure prior to
being able to receive assignments from them.
The result is that appraisers accept lower fees but often turn down more
report requirements and oversight have increased since the last real estate
market collapse. Appraisals that I do
today take at least twice as long as the same report would have taken prior to
2007. This is despite advancements in
technology and is caused mostly as a result of having to show and explain
everything that in the past might have only remained in the work file or would
not have been an issue.
liability has escalated since the 2007 real estate market collapse. Appraisers have increasingly become the target
for lawsuits when a homeowner fails to pay their mortgage.
It is more
difficult to become an appraiser. If you want to make money as an appraiser,
you must be at least Certified Residential.
The Certified Residential Appraiser now requires a bachelor’s degree and
hours of experience over a minimum of two years. Working for two years as a low paid
Appraiser’s Assistant after paying for college is the most difficult hurdle for
many appraisers will train assistants.
Only about 5% of appraisers in Oregon have an assistant and not all
assistants will survive to become appraisers.
Some of the reasons that appraisers tend to be unwilling to accept
assistants are listed here.
Assistants are employees. I am not an employment tax expert, but it is
my understanding that an appraiser assistant is an employee and cannot
be an independent contractor because the supervising
appraiser has too much control over their schedule and work. Most appraisers are home businesses without
the infrastructure to handle employees.
Liability is increased when training an
assistant because if the assistant make a mistake, the supervising appraiser is
Assistants are very limited in what they can do
to assist in the appraisal process. Lenders
will typically not accept an appraisal where the assistant was the only one who
viewed the subject property and the comparable sales. This means that even if the appraiser is
paying the assistant a small wage, the gain in productivity might not be
The problem of few appraisers is complex and likely will
continue in the next year. However, I
believe that there is promising technology on the horizon that will make individual
appraisers much more efficient and permit them to handle larger volumes of work
with fewer people. Additionally, any
increase in interest rates will likely reduce the number of homeowners
refinancing and relieve some of load on appraisers.
Did I leave anything out or do you want to join in the
conversation? Let me know in the
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