The state of the real estate appraisal profession in 2018 - by Maria Hopkins

October 19, 2018 - Spotlights
Maria Hopkins,
Maria Hopkins Associates

As refinances have slowed down a bit with the recent interest increase, I’ve had a moment to take a breath and reflect on a few topics. One issue that concerns many appraisers is the attempt by some to implement a hybrid appraisal product. What bothers me the most about this is that it is almost certain that less qualified if not unqualified inspectors will most likely be engaged to inspect the properties. The biggest reason this is being pushed is to try to get cheaper, faster appraisals. Users of these products are assuming they will get experienced real estate agents, insurance adjusters or some other professional to perform them. Currently lenders are having sales agents do broker price opinions (BPO’s) and they assume they have experienced sales agents inspecting properties to perform these, when often they have very inexperienced agents actually going to the properties, mostly because those are the people willing to spend time doing that for the low fees that they are being paid. Anyone can fill out a BPO form, an admin person, a newer agent. Busy, successful agents don’t have time to spend hours every week doing BPO’s. The same will be true of the inspection reports that will be filled out and sent to appraisers who then will have to rely on those to complete appraisal reports to save time and money on the inspection presumably. There is no good outcome for this scenario. It will have far reaching unintended consequences. What is even more ridiculous is that experienced and licensed trainees are currently not allowed by most appraisal management companies (AMC’S) and most lenders from inspecting a property and performing the appraisal, even if their more highly experienced and fully licensed supervisor inspects with them and signs the report as well, taking full responsibility for that report. 

The licensing law allows this scenario in order for trainees to become licensed. This ensures that there will not be a shortage of licensed appraisers in the future. In addition, now the trainees must have the equivalent of one year or so of college education instead of just a specific few relevant college level classes, in order to obtain just the basic license. They must have a 4 year degree to become certified residential licensed. Unfortunately few lenders or AMC’s will approve a basic licensed appraiser. So the reality is to work on their own they need a degree. The original thought was that a degree would make the profession more professional. That sounds good, but in reality the degree does not ensure professionalism and adds tremendously to the barrier of entry into the field. 

The second largest barrier is that licensed appraisers have very little incentive to train these new appraisers into the field where the cost to do so is high, the value of work swings from high to low seemingly overnight, and these people can then go out and become their competitor. Often new appraisers undercut fees paid by users still not paying customary and reasonable fees and looking for the cheapest, fastest appraiser. So we go from a reasonable system by which trainees were trained into the field in a safe and reasonable manner, to users requiring a non-appraiser with no guaranty of any qualifications at all to perform property inspections that appraisals will be based on. We go from one extreme to the other. Appraisers, of course, are against this from happening mostly because it just doesn’t make sense. 

I’m sure we can make money sitting at our desks and accepting these assignments but, it’s concerning that lenders and other users don’t see how ridiculous this all is and most appraisers really care about their profession. Just allow the trained but not yet licensed appraisers to perform inspections as allowed by existing license laws. The end result will be far better than the proposed hybrid appraisal product and ensure that there will be no shortage as we older appraisers retire. Heads up though, I have no intention of ever retiring. I actually believe in training the new generation of appraisers and intend to do that as long as possible. Belonging to a professional appraisal organization does matter and has numerous benefits to newbies and veterans alike. I will enjoy discussion of this as well as other issues with my colleagues at the Appraisal Expo on October 22nd. See you there!

Maria Hopkins, SRA, RA, is president of Maria Hopkins Associates, Spencer, Mass.

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The Appraisal Foundation 10/24/18 2:50 PM

Maria, there are no college-level education requirements for the Trainee License credential. Candidates must simply complete 75 classroom hours of qualifying education (30 hours of principles, 30 hours of procedures, and 15 hours on the Uniform Standards of Professional Appraisal Practice) in order to become a Trainee. Also, on February 1, 2018, the Appraiser Qualifications Board revised the minimum qualifications for the Licensed Residential, Certified Residential, and Certified General appraiser credentials. The changes, which went into effect on May 1, 2018, include several options for a Certified Residential candidate to become credentialed without a Bachelor's Degree as stated in your article. In addition, the experience requirements have been revised, with fewer hours and months of experience required for the Licensed Residential and Certified Residential classifications. A summary of all the changes can be found by clicking on the following link to The Appraisal Foundation website: https://appraisalfoundation.sharefile.com/d-s40e607fb0d64915a

Steve Whitby 10/22/18 6:31 AM

Nice job Maria! And yes, the going from one extreme to another can be quite challenging (and exhausting). I think the "it just doesn't make sense" is about as spot on as spot on can be and yet the nonsensical ways appear to be making their way to reality. Hopefully this profession will once again survive this "new age" thinking and return to its roots with its reasonable system that has worked, still works, and will continue to work. Steve W. stephenpaulappraisals

Mike Ford , American Guild of Appraisers 10/21/18 6:46 PM

You point out besr case hypithetical scenarios that simply dont exist. First and foremost, these are designed to facilitate loan fraud. That is why incompetent off the street inspectors are routinely advertised for. The next issue is reasonable fee for the scope of work required. For $25 to the aporaiser there will be no USPAP compliant, credible aporaisals performed. I have an ooen national challenge to ANY hybrid huckster to post just one, verifiable uspap compliant completed hybrid for peer review and NOT ONE hybrid hustler has been able to do so. Not one.

clevy@acceleratedasi.com 10/21/18 4:11 PM

Truth.....

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