ARE WE FACING A SHORTAGE OF APPRAISERS IN THE FUTURE? I was doing some online reading today and came across a short blog asking this question. Since this is something I've not experienced in my nearly 20 years in real estate and the lending business, it caused me to stop and think.
There has never been a shortage of appraisers, but now with the HVCC (Home Valuation Code of Conduct), appraising is a whole different process. I never stopped to think how many appraisers there were, in the past I just had a few I used for the market I was in. I did not need to know how many more were out there. All I needed to know was who were the ones who gave me excellent service and turned in a great appraisal for a reasonable fee.
As I sit here today going into the third week of waiting on an appraisal for a purchase, I can see some merit in the fact that indeed there may be a shortage of appraisers in the future. Reasons:
1) Appraising used to be a good career; if one decided to go into this field it was pretty straightforward how to do it. The appraiser would have to connect with Realtors or lenders to have a source of business, but the ones who performed had no problem doing this, they could build a nice clientele.
Contrast this now with the HVCC method of getting business. With few exceptions the seasoned appraiser can no longer go to the above sources for business and one wonders how much good advertising would even do. Appraisal orders (from mortgage broker originated loans) are handed out now by an AMC (appraisal management company) blindly in a round robin fashion. So, no matter how good an appraiser is, he/she cannot grow their business in a normal way. They can sign up with a lot of AMC's and hope their number comes up often.
2) Appraisers don't earn as much as they used to. In my market an appraisal used to cost $350 for a single family dwelling. That fee is now $360 and the appraiser who used to get all the money only gets a portion of that. Some tell me they get $150 to $225. Appraisers have taken quite a haircut when it comes to income. Logic would tell you then that there is less incentive to go into appraising as a career. Appraisers have to work harder to make the same living.
So, the reduced income available to this group may actually reduce the number of people who would consider this a viable career choice. Additionally not having the ability to grow a business because of the dependency on a third party where any number of things could happen to terminate that relationship could make one a little wary of this career.
One thing I'm very sure of is that if a shortage of appraisers occurs in the future due to the HVCC ruling, then joining the sacrifice of many appraisers who have lost their businesses will be the consumer. As a result of fewer appraisers, fees will increase to the consumer and service would worsen. Another unintended consequence of the HVCC ruling.
And in ending, well, I'm not waiting on an appraisal for going on three weeks because of a shortage. At least not yet; I'm waiting because appraisers are blindly assigned jobs. Often they have no stake in doing a good job, or a timely job. Now, I'm not lumping them ALL in this category. Unfortunately it has been my experience more often than not in my market.
