The Decline of the Appraisal Industry: An Unsustainable Future

[J Grant]

The crux of the issue ^^^. Its basically The Golden Rule. "Those with the gold make the rules. "

Back in the late '80's early '90's when I was principal broker of a small brokerage (15 agents) every lender required:

1. Termite inspection, no exceptions.
2. Unstaked survey, basically the surveyor went to the property to see that the improvements were located within the property lines.
3. Flood Certification from independent vendor.
4. Well/septic inspection from licensed plumber if the house was on well and/or septic.

Eventually, they dropped the requirements for all of these. Buyers/sellers, agents, LO's were all happy because those inspection requirements were expensive and often delayed the closing, especially in busy times. Nobody cared about the inspectors and surveyors losing business...except the inspectors and surveyors.
These guys all sounded like appraisers that believe they are indispensable. "What if the house has termites, what if the garage is located over the property line, what if part of the property is in a flood zone, what if the well or septic doesn't work right...the bank could lose money when/if the owner walks?"

Sound familiar?

They were right, and the banks did lose money when if the owner walks ...back up - the bank did not lose money, it became the after market investors and the tax payers funding the loans losing the money.

I don't think a surveyor is needed, but IMO, if the lender really wanted sound collateral, they would make every valuation subject to a home inspection.

 

[Terrel L. Shields]

Sound familiar?

The bean counters determined that the cost to them and the customers were much greater than the typical losses due to a bad survey, bad well, bad septic, and even bad appraisal. That's one thing.

I don't think a surveyor is needed,

Might be needed more often than you think. The area below, about 1 mile south of me is a confused mess. A subdivision owns a spring but the house gets water from that spring. The previous owner sued and lost trying to reclaim the spring. The court ruled that the house had used the spring as a water source for decades and had established a right to it. Few in the subdivision realize the subd. owns a sliver on the other side of the road. Meanwhile, there is another sliver of land sold because there was a barn built over the line and again, the actual owner of the land basically was on the other side of the road. A piece was sold off so that the barn remained upon the property of the left side but the seller still owns a sliver on that left (West) side. For 50 years everyone thought the property on the west was property of owners on the west. It's taken a couple of lawsuits and some negotiations to clear title to it all.

 

[Surf Cat]

Everything is being put on the shoulders of the consumers these days. There is no more "customer service".

Check out your own groceries, push the colored screen for your food order, take photos of your own house to provide to your home insurance provider.

The provider, no longer has these "services" as it costs too much. Sure, the grocery store has to deal with self-checkout people who don't scan all the items. They'll take that loss as opposed to salary and health insurance for an employee. McDonald's will take the walk out of an agitated person who doesn't know how to navigate their big colored screen as opposed to pay the pimple face kid taking their order and making it easy. Insurance companies are saving Bucu Dinero by not having insurance adjusters salaries and health insurance on the books.

As we all know, real estate appraisals are heading down this path. Thus, the consumer should to be aware that it's sign the dotted line at your own risk. The consumer has to be the diligent one in ordering a home inspection, Septic inspection, survey of their lot line, waive the waiver and acquire an appraisal to make sure to purchase price is in line with competitive sales.

It's all self-service now folks. Buyer beware.

 

[Joe Flacco]

And the decline continues. An appraiser on FB posted appraiser numbers for his state (CA).

California appraisers, as of:
9,388 - Jan. 1, 2022
8,717 - Jan. 2, 2024
7,996 - Jan. 1, 2025
- Down 14.8% in three years
- Down 8.3% in the past year alone
- For the first time since licensing began in 1992 we are below 8,000

And not a single thing is being done to stop the bleeding. Not a peep from any org, TAF, ASC, state board, etc. but TAF's newsletter today announced another practicum initiative to train new appraisers. Wow, just wow.

We are down about 10% total over the last 10 years. Licensed down by around 50%, certified residential down about 10%.

 

[alebrewer]

TX continues to grow (at least through 2023), which is not unexpected given the population increase.

 

[Joe Flacco]

TX continues to grow (at least through 2023), which is not unexpected given the population increase.

View attachment 95245

Here are the current numbers for Texas.

 

[alebrewer]

View attachment 95246

Here are the current numbers for Texas.

In that case - it would most definitely appear TX is declining as well.

 

[Joe Flacco]

In that case - it would most definitely appear TX is declining as well.

No, you guys are higher across the board. The numbers are general, cert res, licensed, total. No trainees.