What happened to all the work? No orders, no refi, no foreclosures, no purchases,

[Mark K]

The big question is: Is this a temporary or seasonal (or even a couple of years) slow down or demand permanently disappear?

IMO, its likely a permanent change. I don't think demand will disappear completely but I believe that about 50-75% of the business that was available to appraisers a few years ago will not return. The cat is out of the bag and waivers, hybrids, etc. will become the norm, at least until the sht hits the fan in the next housing crash.

 

[J Grant]

IMO, its likely a permanent change. I don't think demand will disappear completely but I believe that about 50-75% of the business that was available to appraisers a few years ago will not return. The cat is out of the bag and waivers, hybrids, etc. will become the norm, at least until the sht hits the fan in the next housing crash.

I tend to agree, though 50-75 % sounds on the high side. Of course, nobody knows the exact percentage, but let's say it is 30-40%. That is still a big reduction in volume, though whatever the piece of reduction is, it will affect appraisers differently depending on the area they cover, their geo area, and clients.

In a busy cycle, a reduction of orders is not felt as keenly. In a slow cycle, it is catastrophic.

 

[Vermonter]

I don't know why it is this busy.

Same.

Last month was the best February I've had in over a decade. March is starting out hot too. Solid mix of refis and purchases with 1 estate job.

 

[Mark K]

I tend to agree, though 50-75 % sounds on the high side.

You could be right.

But we both could be wrong and the % will be like the old days when people on horses said that those newfangled horseless carriages will never catch on.

Or...like 30 years ago when a lot of people said the internet was a cute toy but most people will never need or use it. (Side note: Last week my local bank was closed for 2 days because their internet was down. 20 people doing nothing because someone crashed into a utility pole.)

Technology has a tendency to sneak up and creep its way into places you'd never expect...and to a larger degree.

I'm just glad that my kids chose not to go into the appraisal profession.

 

[Terrel L. Shields]

Which is usually just printing a list of sales prices and/or assessment values; which does not meet the FIRREA guidelines for evaluations.

Examiners don't read them anyway. Only when a bank gets in trouble will they then demand the bank re-evaluate the loans and do so, often, with a certified appraiser. I saw two banks required to do that. One their in-house evaluator was also a stock holder in the bank. The examiners put the quietus upon that. I re-valued their commercial properties and a number of REO (they call it ORE) and tardy payers. We are not at that level yet. So I think work will remain slow for bank work for the next year, maybe more. I don't have a good feeling about the huge debt load this nation has taken on in the past 5 years. Your grandchildren will pay dearly for it.

 

[Raven59]

I only do these for small commercial Main Street type properties usually in the $20,000 to $200,000 price range. I am a residential appraiser, however, I have become familiar with these types of properties. I do not go outside of my competency and do not perform evaluations for other types of commercial property or anything over the de minimis value.

I don't do many, usually 6 or 8 a year, only for local banks, and do not know any other licensed appraisers located in my market that do them. I know of one semi-retired real estate broker that does them for both commercial and ag. Conversations with lenders indicate they usually document the value using their own in-house method. Which is usually just printing a list of sales prices and/or assessment values; which does not meet the FIRREA guidelines for evaluations.

I started marketing this in 2018 to local banks when Illinois changed the requirements for evaluations. Previously, anyone licensed as an appraiser must complete a USPAP compliant appraisal. Evaluations were allowed by non-licensed individuals only with the intended use of mortgage finance transaction. In 2018, they changed it that a licensed appraiser can complete an evaluation for mortgage finance transaction. I have 3 clients that order them. They started ordering them because they said an evaluation by someone outside of the mortgage department would look better to auditors.

I ask because I don't see many evaluation requests. This may be a direct result of my clients not going this route, or because they are being completed by people I don't know. One should always look at their book of business to stay relevant and to better serve their clients. Your post made me curious.

 

[OSU Beavers]

https://www.housingfinance.com/news/HUD-halts-foreclosures-for-60-days_o

Also, the VA is buying loans which are not current on payments off of the lenders to stop them from proceeding with foreclosure actions.

Like I said, all of this interference from the Biden Admin is just kicking the can down the road until after the election. Keeping inventory off the market which is preventing a much needed deflation of housing prices.

S is really going to hit the fan after November 4th!

 

[David S]

I tend to agree, though 50-75 % sounds on the high side. Of course, nobody knows the exact percentage, but let's say it is 30-40%. That is still a big reduction in volume, though whatever the piece of reduction is, it will affect appraisers differently depending on the area they cover, their geo area, and clients.

In a busy cycle, a reduction of orders is not felt as keenly. In a slow cycle, it is catastrophic.

How significant the AI or computerized appraisal will contribute to this 50%~70% decrease?

 

[J Grant]

How significant the AI or computerized appraisal will contribute to this 50%~70% decrease?

That kind of projection is above my pay grade !

 

[Raven59]

How significant the AI or computerized appraisal will contribute to this 50%~70% decrease?

I understand this is a challenging time for many appraisers, and it can be daunting. It's impossible to predict how successful a program will be. Throughout my career, I have experienced many programs that aimed to solve a problem, some of which gained much attention while others faded away. However, worrying will not change the outcome. Whenever one door closes, another one opens. The result will largely depend on your clients. Therefore, take the time to diversify. There is a need outside the mortgage arena, and those markets don’t care about waivers, hybrids, and AI. Many members of this forum have been around for quite some time and continue to survive and thrive. I look at AI as an opportunity, not a detriment. Keep in mind that the appraisal industry extends beyond mortgage work. The percentage will be based on the user buy-in, and the current appraisal bias theme might give them the push they need. Act, don't react.