What's The Future Of Appraisal?

[Zhen Cai]

I have a dumb question that I'd like to hear you guys' opinion.

I noticed the following facts (at least in N. Cal.):

1. There are a lot of refianance business now because of the low rate
2. There are more than a lot of new appraisers (like myself) start doing appraisal
3. Some banks either waive appraisal or use online appraisal for some loans
4. Low rate refiance won't last forever

So what's the future (3 to 5 years) of appraisal business? I'm a little worried because I just started learning. What if I get my license 2 years later then find out this business is no good? Do you think it may happen?

Thanks.

 

[Karl]

Lets see I think the 3-5 years has been said every year since the 70's Kinda like the truckin industry in the 70's they said if we can't get a buck a mile they'll be no more trucks in 5 years Just last week I heard if we can't get a buck a mile they'll be no more trucks within 5 years. Think the Appraisal business will have some SLOW years in the near future however the GOOD Apprisers will survive till they voluntarily retire.

 

[Austin]

Zhen:
I think it depends on where you live as to your future in appraising. CA is a new and modern state characterized by large cookie cutter subdivisions. AVM will rule this market; as well it should because it is generally a waste of time and resources appraising clones plus the fact CA is developing into a state controlled Socialist Republic. Average the last three sales and you have a good answer or just take the governments assessment. Even the commercial market out there is so large, structured, modern, organized, and with available data that commercial appraising can be done on a more limited basis.
Where I live in Virginia is a totally different story. We have houses going back 200 years and we don’t have cookie cutter subdivisions. You can drive down any street in town for miles and never see the same house plan twice. In the county areas, which have the highest residential growth, houses are not built in subdivisions and there are no big volume builders. Each construction job is custom built. In the commercial market it is the same. We have warehouse districts that are 150 years old. Across the street from my office is a four-story warehouse that served as a Yankee POW prison during the Civil War. Many of these buildings were original cigarette factors built in the 1890’2. If you don’t know the history and have years of market experience in this area you are a lost ball in high weeds. Nothing is comparable and every appraisal is a challenge.

 

[Willie]

Zhen, I'm 33 and have almost 11 years exp. It has been negative since I've been in the biz. It really does seem that the easy work is disappearing. The white meat is gone, if you will.

It has been a good job/trade in the past. Will be OK in future in areas and obsolete in other areas of country.

If you have any other good options, you will want to consider them carefully. If you are young, a simple 5 year study in pharmacy will yield you $90,000 a year (Probably 120K by the time you are out w' spirarling healthcare cost.). This will be very little risk and for 40 hours a week work, better pay w' benes.

I hate to say it, but a good recession/depression would actually help good honest appraisers, imo. If the economy is bullish, FNMA will and has doing all they can to cut our work volume.

Don't know what to tell you. I didn't recommend my siblings to become appraisers. Nor discouraged them. None of them followed my footsteps.

 

[Stone]

One thing I would suggest is if you have the oppurtunity to specialize in an area other than mortgage appraisal, consider it. Most of the work that is disappearing seems to be from mortgage lending. Other areas of appraisal aren't really affected by AVM's and should be fine. It will be interesting to see where lending work goes in the future.

 

[Michael Reilly]

Zhen,

The answer to your question is, know one knows for sure. I have asked that very question of industry participants many times over and to this day I continue to get the same answers. If there was a crystal ball that would provide the answer, each day wouldn't hold much of a challenge would it?

Mreilly-NY
ACE

 

[wyecoyote]

Zhen,

I agree with Karl on this one. Doom and Gloomers have been saying since I started 6 years ago that appraising would be gone in 5 years. My mentor hear that when she started 9 years prior to me and I talked to an appraiser that has been around since the 70's and he heard it then also. The only thing that I would say is that the industry will change with time. Those that don't change will fall behind. IE.. those that have not adapted to computers. In 5 years the one thing that is constant you will pay taxes.

Ryan

 

[Mountain Man]

Like Ryan and Karl, been around since mid 1980's. Remember many saying that the computer and Windows (this is back in DOS days) would put appraisers out of biz. Then the internet will put appraisers out of biz. Then AVMs will put appraisers out of biz.... we all know how reliable AVMs are. Cookie cutters where you have a choice of 4-5 models..... yeah okay, they may work. But through some odd parameters in there, and whoa! It can be the only million dollar house in the neighborhood!

Anyway,

Think the Appraisal business will have some SLOW years in the near future however the GOOD Appraisers will survive till they voluntarily retire.

Yeap, I agree. But I do think you will need to diversify your business. Don't rely just on mortgage work, or you will have a really hard time with the swings in the market. This is a service business where we sell an opinion from our own grey matter, and automation can not totally replace the appraiser. So get used to doing the thinking, and doing the tougher ones that AVMs and agents are clueless about. So yes, I think that the really, really easy jobs are pretty much over. But there is plenty of work out there for the good, competent appraiser that doesn't mind using the grey matter.

 

[Restrain]

Longer hours for less pay. AMCs are becoming the primary mortgage appraisal orderers, even from small mortgage companies. The small companies are contracting with companies like LSI, etc to do the paperwork (titles, appraisals, etc) and all they do is collect the fees and answer the phone. Downwards pressure on fees is ongoing, especially with the new RESPA rules proposed by HUD. I cannot recommend this business for someone who wants to get ahead. There is a maximum that you can do, period, before you start not seeing a return on investment and time. You're not going to get a raise each January, you're not going to get health benefits, and you're not going to get a pension.

That being said, if you want to take 2 years to learn the business, are a self-starter, don't like a structured environment, and want to be outside (in the heat, cold, rain and snow) rather than in an office, then go for it. There should be business for the forseeable future, even if it's not mortgage work. There is estate work, investment work, consulting work, and other purposes for appraisals. You should be able to make a decent living for you and your family. And if it doesn't work, the training should get you a job as a real estate salesman, tax appraiser, acquisition work for pipelines and transmission lines, etc.

Roger

 

[Tim The Enchanter]

Zhen, excellent advice you're getting. Watch put for Austin though. :lol:

CA is a new and modern state characterized by large cookie cutter subdivisions. AVM will rule this market;

There are those areas. Mostly in the desert and inland areas with large flat spaces. But there is so much variety in some areas, I can't even think about calling them "conforming". :lol:
Examples? Los Angeles. Venice, Hollywood Hills, Malibu, Downtown, The Valley, on and on. If 1 area does not have the variety of life you seek, move over a couple blocks. Let's not even talk about San Francisco. I don't work there but I bet there's not many cookie cutters / slam dunks. Must be a nonconforming area. :blink: