The Appraiser Challenge
The housing industry had a busy 2016, with low mortgage rates, rising home values, and a steady volume of mortgage applications throughout the year. However, not every segment of the industry is keeping up with this volume. Appraisers, in particular, are facing staffing and training issues leading to missed deadlines, longer turn-times, and in some cases, higher appraiser fees. Appraisers are facing many challenges in 2017, such as meeting turn time expectations, an aging workforce, and competition from low fee appraisers.
A typical purchase or refinance loan is expected to close within 30 to 45 days of application submission. Unfortunately, due to the volume of loan applications in 2016, many appraisers failed to meet deadlines. As a result, lenders and real estate professionals had to increase appraisal turn-time expectations for home buyers.
Since 2003, demand for appraisal labor has increased by 100% and appraisal fees have only increased by 12%. Total appraiser compensation is down 77% since 2003. The industry is struggling to attract young appraisers who do not want to go through the apprenticeship it takes to become certified in exchange for low pay. The average age of a real estate appraiser is about 53-years-old and few young people are choosing to enter this field. Additionally, older appraisers do not want to devote substantial time to an apprentice that may end up taking over their market share.
To cope with the appraiser shortage, Fannie Mae and Freddie Mac announced changes to their collateral valuation policies including the utilization of automated valuation model (AVM) appraisals. However, many appraisers argue that appraisals cannot go totally virtual and home value cannot be assessed through algorithms and predictive software. With housing market activity starting to slow, industry experts expect appraisal times and fees to level out also.
Sources: HousingWire, Rob Chrisman