The statistics that Appraisal Institute President Lance Coyle rattled off are not encouraging: a 20% decline in the number of real estate appraisers in the U.S. since 2007, a decrease of more than 20,000 people.
The reasons are numerous and varied, from the economic downturn that struck in 2007 to stricter regulations that made doing business increasingly difficult and less profitable.
The good news for the appraisal industry? The situation may have bottomed out.
“The Appraisal Institute is positive and optimistic about our business going forward,” said Coyle of Dallas. “In spite of these problems, we believe there is a lot of opportunity out there. Appraisers are going to have to adapt. They’re going to have to change. There’s a lot of opportunities for appraisers in specialization and true expertise in consulting and lots of different things.”
Paul Rowe, owner of Rowe Appraisal Group in Park Ridge, Ill., isn’t quite as optimistic, but he also sees reason for hope. The biggest sign was when a major bank went against the industrywide standard requiring a supervisor be present whenever a trainee does an inspection, “which has led to [my] hiring a trainee for the first time in two years,” he said.
It might not sound like a big deal, but for Rowe, being able to send a trainee out on the road while he gets work done in the office makes an enormous difference.
“Our value is in analysis. It’s not in driving a car,” Rowe said. “I can use my expertise to do more analysis and less sitting in traffic.”
An appraisal trainee is required to have 75 hours of education and must be under the direct supervision of a certified appraiser. To become a licensed residential appraiser requires an additional 75 hours of education plus 2,000 hours of appraisal experience and 30 hours of college coursework. The next stage, becoming a certified residential appraiser, requires 200 hours of education, 2,500 hours of experience in the field and a bachelor’s degree. Finally, a certified general appraiser, who can perform appraisals unsupervised on commercial properties, must have 300 hours of appraisal education, 3,000 hours of experience and a bachelor’s degree.
Changes to the industry as a result of the 2010 Dodd-Frank Act also have made it more difficult for appraisers. Coyle said. Dodd-Frank “institutionalized the whole idea of appraisal management companies.” Appraisal management companies built their businesses with banks on a model that drastically reduced the rates paid to appraisers, he said.
“If you built a business on a business model of $350 for a standard 1004 report and all of a sudden you’re down to 175 or 200 or 225 (dollars), the model just doesn’t work anymore,” Coyle said. “It’s not rocket science.”
Well worth the time and energy
Those who stick it out and make it to the top of their profession can expect to earn $90,000 a year or more with flexible hours. Also, according to the Bureau of Labor Statistics, job opportunities should be best for those who are able to switch specialties and appraise different types of properties.
Additionally, Coyle said bankers associations and mortgage bankers associations are aware of the negative trends, which could lead to changes in favor of the appraisal industry.
“They have concerns about a shortage of appraisers,” Coyle said. “They’re worried about fees. They’re worried about turnaround times. They’re worried about getting their deals done. I can’t say what’s going to happen, but I can tell you there is a bit of a push to take a look at that system and see if any improvements can be made.”
The Appraisal Institute is a professional association of nearly 22,000 real estate appraisers in almost 60 countries.