The End of *most* Full Time Appraiser's ?

[Zoe]

With the roll-out of Fannie and Freddie's 90% LTV appraisal waiver policy, in conjunction with incoming AI, etc. Will there be enough work as an appraiser to be full-time? Or, will appraising become a side-hustle? What are your thoughts?

Depends on the avenue you are in. You can switch avenues and do well.

 

[John Hassler]

I don’t see appraisal as a career if you just want to do Fannie-Freddie work. The fees are too low and the AMCs are all too eager to skim the easy work. That said, non-F/F lending and private work does offer the residential appraiser a path. After HVCC our workload went from 80% F/F to 20% F/F. It took about a year, and a lot of marketing, to change over but it was worth it. F/F work is the fetid end of the pool of work.

 

[RCA]

====== Part I
Most homes start off as rather conforming subdivisions, where there are plateaus of models with about the same features and quality. Homes in such plateaus have about the same price, perhaps varying a bit on location. But as time passes, some homes are taken better care of than others, some get upgrades or remodeling every so many years, some don't, and then they start to diverge from specific models into an almost endless variety. Appraisal keeps getting more complex - and that is where we are at today - as no time in the past. To get away from subjective, fly by the seat of pants estimations of market values on specific features you do need to get into non-parametric regression such as MARS. But it produces complex models that are difficult to communicate to laymen or even real estate attorneys and judges. That kind of communication, to be effective, requires a tool set founded in R or Python graphics. You shouldn't be surprised to find MAIs and SRAs very good at generating graphics with R.

- But now you are getting into the very high end of appraisers - and even they have their limits. Many can do the graphics but tend to stick to parametric and simple statistical methods such as cluster analysis and at best multi-linear regression.

A good appraiser capable of being an Expert Witness should know:

1. Data-mining, e.g. non-parametric statistics.
2. Skill at communicating relationships and patterns through graphics.
3. Skill at communicating with professionals such as real estate attorneys and judges, - and possibly, heaven forbid, juries.
4. Plus many other things - such as simply being able to explain the reason appraisers are needed over real estate brokers.
....

So, there is that. And another big problem is that good appraisal requires more time and money than a CMA or BPO.

Part of the reason we have Appraisal Organizations such as the AI is to explain these things to the public and market Appraisal so that appraisers get paid reasonable fees for their time.

And it seems all these organizations do is try to find less qualified individuals to work at lower fees.

So, why should appraisers pay into these organizations? It should be the mortgage brokers and lenders paying their fees and they should rename their organizations to something else, I had better not

===== Part II: "Financial Engineering". (or more specifically for appraisers "Valuation Engineering")
1. Financial Engineering (of which the newer field of Valuation Engineering is a specialty of) will become more dominant in the future. Anybody who wants to become an advanced appraiser or "Valuation Engineer" should think about getting a degree in Financial Engineering (MFE - Master of Financial Engineering) is a highly sought after degree:

https://quantnet.com/''

2. The equivalent certification is 'CFA' which I am sure you have heard of.

3. Besides Python, most Financial Engineers also know C++ because they write complex programs in fast C++. Rust is also used. R is still good as well - and R uses a lot of C++ libraries as well. Some would be surprised to know that R is often faster than Python, primarily because of a plethora of C++ packages written for R.

4. There are Financial Engineers that do high level valuation that uses very advanced statistics, who are not licensed appraisers. What they do is often way beyond what any appraiser would understand. Their end product is typically high quality, and they likely consider USPAP superfluous and unimportant.

5. That's the way things are going. You can certainly find differences of opinion. But, some organizations are more concerned about "the real thing" - rather than some, for them, meaningless stamp of approval, that in the end guarantees very little of what they need.

 

[Non Sequitur]

 

[Essexfenwick]

the end will be much smaller pool of residential appraisers. SRA desired for remaining work. Higher fees due to relative scarcity of credentialed professionals. The culling period will be rough.

 

[Zoe]

the end will be much smaller pool of residential appraisers. SRA desired for remaining work. Higher fees due to relative scarcity of credentialed professionals. The culling period will be rough.

Depends on avenue you are on.

 

[Essexfenwick]

If they bring in the new forms (which is doubtful now with the GSEs getting slashed) many will quit.

 

[Tom D]

Always thought that it would be a great part time job. Good money, direct lenders just doing 1 or 2 a week at me great age. But, also have gone back to flip fix, too boring to sit home all day long doing nothin.
We have been around thru the golden age of appraising. We know the true end now. Not sure about the vulnerable newer appraisers knowing the current danger.

 

[cpursley]

That's the reason AF has been running for 20+ years....

Yep. I talk about this often (appraisers skew introverted analytical types). Makes it it quite challenging to market my software to them - especially because I'm mostly introverted myself and can't do/stomach typical "sportsball" smalltalk that's common in the salesy world.

 

[BRCJR]

Residential Appraisers can gain competency and do some Evaluations, state permitting, for commercial loans up to 500,000.

There are a lot of those loans out there, especially in more rural markets. Those markets are the ones that lack higher volume for the res people.

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