I just returned from Washington D.C. to participate in The Appraisal Foundation Advisory Council (TAFAC) meeting. This organization is composed of representatives of organizations that provide appraisals, those that provide education and support for appraisers and those that are users of appraisals (Fannie, Freddie, FHA, etc.) There was significant commentary on the issue of an appraiser shortage. The commentary, though, was essentially that there is not a significant shortage of appraisers; and where there is, the concerns are being addressed.
Let’s start where the shortage does actually exist. The shortage is most prevalent in rural areas – areas where there might be as few as two or three appraisers to serve an entire county. And those rural areas are not in New England. Instead they are in states where there is huge geography and very limited population. Some of these areas might generate a need for only two or three appraisals per month. Consequently, persons considering a career in appraising see that they are not going to be able to make a living doing so. Where these actual shortages exist, the agencies that regulate appraisers have granted waivers to allow out of state appraisers to assist in meeting the need. There are reasons for the perception that there is an appraiser shortage. Principal among these is the statistic of how many people have left the professional since the 2008 mortgage meltdown. A significant number have indeed left the business. These mostly fall into the category of “licensed” appraisers – those who did not upgrade to the “certified residential” category before the requirements become much more substantial. The second reason for the perceived shortage is that there have been fewer and fewer people entering the “trainee” category. While both of these observations are accurate, it is now true that applicants for both of those categories are up about considerably. The number of people who have sat for the certified general national examination is up about 25% this year over last year. And, the percentage of folks who are passing the examination is up as well.
The issue of trainees is working itself out as well. Who would go into a profession in which they could not work on their own until they completed all of the required education and experience? And who would hire and train anyone to do that job if the client said that they would not accept work from those people? Turns out, that problem is self-imposed. Lenders, AMCs and other users of appraisals have been telling owners of appraisal firms that they would not accept work done by trainees. They said this because they did not understand the regulations of their own industry. There is no such regulation. A properly supervised trainee can work on just about any appraisal assignment because the licensed and certified person doing the training is ultimately responsible. Now that the more enlightened users of appraisal services are allowing efforts by trainees, more people are entering the profession.
Finally, additional changes are on the way. The Appraisal Qualifications Board (AQB) have proposed changes to allow more people into the appraisal profession. These are the folks who required that new appraisers earn a bachelor’s degree in order to become certified. The most recent “exposure draft” of proposed changes received over 2,000 comments. Generally speaking, there is support for providing alternatives to the “experience” requirement. It is generally agreed that 2,000 hours of experience for residential appraisers and 3,000 for general certified appraisers is probably too much – especially in a world where so much data, information, tools and techniques have become available to allow the preparation of the appraisal to be substantially shortened. Additionally, the proposal to allow an alternative track to experience was well received. The argument has been successfully made that a person who has been actively working in a real estate related field might well deserve to step in front of a recent college graduate on the track to certification. The related fields might be construction and development, home inspection, engineering and architecture or brokerage. And finally, there is growing support for some sort of “virtual inspection.”
While such a method of learning and experiencing might well be effective for some situations, it is likely to be very expensive to develop such a virtual tutor.
So, appraiser shortage? Not really. But while there are varying opinions on the solutions to any potential appraiser shortage, there is near unanimous support for the belief that if a well-educated person with good judgement wants to enter the profession, they will expect competitive pay.
Shaun Fitzgerald is the owner of Fitzgerald Appraisals, Easton Mass.