Upcoming Changes To Real Property Appraiser Qualifications

[Delta85]

I see something like this IF a shortage of appraisers occurs. Loans have to close. They will invent a new way to approve them. Brief statements from realtors or something else will be rubber stamped.

I DOUBT lenders will accept a brief statement from realtors...you sound very out of touch with the business somehow. More likely, if there is such a shortage, they'd use an AVM type product with an in house appraiser review of it.

There will always be staff appraisers, as some people just need that corporate structure and steady paycheck, ( and some college grads would like to align themselves with a large company, and go through a training program there).

The rest of it would be"real" appraisals, either private res appraisals for private money lenders or non GSE lenders, or more complex high end appraisals, and then all the commercial work and other types of work. Appraisers will either be anaylists working on staff or retainer with computer aided models, or field appraisers able to make decent fees because yes, there will be a relative shortage of field appraisers.

The profession will change and adapt, the way it is now is in transition on the res side.

What happens when there are little to no appraisers? I'm talking about a doomsday scenario. Right now we have an oversupply of appraisers but that number is dwindling by the month. I'd bet very few new appraisers, other than sons and daughters, are entering the profession now. Once the 4 year degree thingy kicks in that's all she wrote. You can't ramp up the work force like a machine shop once you run out of appraisers and fees and TAT improve. That will take time and during this period lenders will complain that they have to close loans. They will seek and get approved alternate ways otherwise loans won't close and the flow of money trumps all other issues.

 

[Delta85]

Prior to licensing, loans used to close with statements just like that, and I've personally seen some of these one-page, incoherent "appraisals." Of course, rates were approximately 13% in those days. The double-digit rates will come back if that type of risk is added to the loan.

The market is looking for less risk right now, not more.

I agree. But if there is an extreme shortage of appraisers there may be no other option.

 

[J Grant]

Okay Mr Gloom and Doom, in your doomsday scenario there will be a shortage of appraisers (won't happen for at least 10 years, but still), and then they will seek alt ways to close loans, big deal! If the res field pay and conditions are so unattractive that they are not attracting new appraisers, then the field will shut down for good, and nobody will care by that time.

 

[Delta85]

New people will come into the business when they compensation becomes appropriate given the amount of work.

My point though is that once you deplete the supply you can't just ramp up overnight. You can staff a machine shop nearly overnight and be producing widgets with initial and ongoing training. Appraisers will need training and seasoning long before they are able to provide a quality report.First they gotta get the 4 year degree, then they gotta find a mentor and invest that time and effort.

Fees and TAT will not improve until the supply of appraisers dwindles. By the time this happens there will be a severe shortage made worse by the 4 year degree requirement. Smart people who investigate the prospects of appraisal will still be hesitant to go through 4 years of college PLUS the time, effort, and money it costs getting a CR license at a minimum. They will be hesitant cause they may realise that just cause fees are inviting now once appraiser numbers come back to meet needs that could be in jeapardy all over again.

 

[Delta85]

Okay Mr Gloom and Doom, in your doomsday scenario there will be a shortage of appraisers (won't happen for at least 10 years, but still), and then they will seek alt ways to close loans, big deal! If the res field pay and conditions are so unattractive that they are not attracting new appraisers, then the field will shut down for good, and nobody will care by that time.

I don't see any other way. There is already gonna be a shortage due to the crappy returns being an appraiser offers now. Those that can move on are doing so. Many are retiring. Due to the average age of appraisers many will be dying in the next 10-20 years. This is all set in stone even before the 4 year degree thing kicks in. Even if fees and working conditions approve if a young person looking for career options asked me for advice I would still tell them to steer clear of appraising. Just as fees can rise they can fall again once numbers build up. A college grad has many doors open to them. Very few would choose one inwhich they were responsible for huge expenses, no healthcare, no sick/vaca, and fees that can turn on a dime. Why would they when they can walk into a corporate door with profit sharing, full benefits, and an above average set weekly salary.

Your description is accurate.

 

[J Grant]

I don't 100% percent agree with your doomsday scenario, was humoring you to an extent ...but there is some truth to the fact that lenders can and will substitute alt products for appraisals, in some cases. I think there is a shortage of who will be willing to appraise as conditions exist now, either conditions /aka pay and treatment will get better for res appraisers (if the product is still in demand), or the field as we know it will shrink dramatically, with mostly in house anaylists and a small # of res appraisers used for high end jobs/non conforming properties and to review in house docs perhaps, with commercial work still viable.

 

[The Warrior Monk]

First they gotta get the 4 year degree,

Wrong. A four-year degree is not required to be a trainee.

 

[Delta85]

Wrong. A four-year degree is not required to be a trainee.

Correct me if I'm wrong but the 4 year degree will be wanted at some point in the process before a license is handed out. So you could be trainee first I suppose, and spend 2-4 years under the supervision of an appraiser earning peanuts while learning, taking required coursework, and passing the state test. THEN, a candidate still is looking down the barrel of 4 years of college coursework before they can obtain that license and begin working. Four years of additional expenses and time invested.

Think about it, you could become a doctor or lawyer in the same amount of time practically once you add the 4 years of college on top of the 2-4 years spent training. It could be roughly an 8 year process before you have your license 1 day and can actually sign off on reports and earn money.

I see very few individuals going down that path unless the biz changes from top to bottom.

 

[Delta85]

I don't 100% percent agree with your doomsday scenario, was humoring you to an extent ...but there is some truth to the fact that lenders can and will substitute alt products for appraisals, in some cases. I think there is a shortage of who will be willing to appraise as conditions exist now, either conditions /aka pay and treatment will get better for res appraisers (if the product is still in demand), or the field as we know it will shrink dramatically, with mostly in house anaylists and a small # of res appraisers used for high end jobs/non conforming properties and to review in house docs perhaps, with commercial work still viable.

Exactly. Things will have to change once the number of appraisers shrinks to a level inwhich the volume of assignments can not be handled. Full reports will be eliminated in favor of brief summaries by bank appraiser employees or realtors or something along those lines.

The powers that be will do what they need to do to keep the flow of money moving in their direction.

 

[J Grant]

Exactly. Things will have to change once the number of appraisers shrinks to a level inwhich the volume of assignments can not be handled. Full reports will be eliminated in favor of brief summaries by bank appraiser employees or realtors or something along those lines.

The powers that be will do what they need to do to keep the flow of money moving in their direction.

For lender work, probably. At one time (even a few months ago), I was optimisitc that at least the secondary market would want quality reports to back up the collateral, and that is nothing else would force lenders to take responsiblity for the appraisals they are ordering. But nothing has changed, if anything getting worse, with any time a fee quoted that is not even C and R, but above peanuts, they simply give it to another appraiser (or I guess Forysthe or another mill, who has contracts to take on any and all work at rock bottom fees such as $175.).

Though private lenders coming in may want quality res products, and a few smaller banks might , and it may be still needed for jumbo loans, yes, the rest might morph to computer aided products with staff or affiliates paid to drive by and take photos. Yes, the lenders would rather save $200 per report than give up the profit mill appraising has become, and THANK YOU to all who supported "efficiency", because this is where it has led, a devaluation of appraisers because nothing can be as efficient as a computer, and with a rubber stamp by the few staff appraisers they hire, off this product will go (no matter how unreliable the value, the product was efficient and profitable ).

Commercial may well be impacted in future years as lenders extend their search for control and efficiency into the commercial side (already occurring,) though a larger amount of commercial work will still be needed by private parties or insurance companies etc. so overall, the numbers of appraisers will shrink to a core # of commercial, a small number of res specialist appraisers for review or /high end work, and then staff appraisers that are appraisers in name only, because they will really be tech people/analysists, hired to scan for errors/ data fluctations, computer generated reports .