My thoughts on the appraisal business - by Jonathan Lowe

Jonathan Lowe, Appraisers Collaborative

The appraisal business has some issues that, while in their adolescence, may become serious problems once they reach maturity. The first of these issues is the impending shortage in the number of appraisers themselves. Obtaining an appraisal certification is unnecessarily difficult, due to several factors. The first factor is one of money and time; our industry has not developed a workable standard for adequate training compensation, and as a result, prospective appraisers are often forced to train for several years with either no or reduced pay. In fact, the only people I know who were paid to train as appraisers are either family members of or personally known to the supervisory appraiser that hired them. This seriously limits the pool of potential appraisers, as most people cannot afford to dedicate at least part-time hours to something for several years with limited income.

The second factor in the difficulty of obtaining a certification is the unwillingness of clients to accept reports for which the inspection was completed by a trainee appraiser. This is frankly absurd, as the industry relies on having an adequate pool of appraisers in order to process to facilitate in processing mortgages. By refusing to accept trainee appraisals, they are unnecessarily limited the number of future appraisers, as the difficult in becoming an appraiser is increased. A trainee appraiser, even if he/she could find a paying job, has to wait that much longer to obtain the requisite 2,500 hours of experience, as the pool of clients they can work for is severely reduced. I know that in my office, we have only one client that is willing to accept trainee appraisals. This is not conducive to inviting prospective appraisers into the industry.

The second major issue for the industry is a combination of unrealistically low fees coupled with unreasonably restrictive appraisal requirements. The amount of work that goes into a UAD-compliant mortgage-related appraisal for a lender is out of line with the fees that appraisers are garnering for this work, even after the recent increase. Again, this is not very encouraging to prospective appraisers. For this reason, I recommend that any appraiser who has not done so already, seek out more private clients. Developing a private appraisal, whether it is for divorce, estate, or tax purposes, is far superior to working for lenders, for several reasons. First of all, the fees are actually reflective of the work that is required for an appraisal, and can be negotiated to a higher degree than lender work. Secondly, the requirements for developing an appraisal are much more suggestive of the actual appraisal process. This gives the appraiser the freedom to develop, in my opinion, a more accurate value estimate for a property, as the process isn’t restricted by onerous lender regulations and requirements.

Despite the challenges, appraising remains a worthwhile and engaging career. My office has been unseasonably busy during the past three months, which may be a result of a combination impending rate hikes and the aforementioned appraiser shortage. I was busier in December of 2015 than I ever have been since I started appraising, and the ensuing two months weren’t far behind. The flexibility, constantly changing nature of the work, and prospects for seeing really interesting properties are the highlights of my appraisal career, thus far.

Jonathan Lowe is a research assistant at The Appraisers Collaborative, Braintree, Mass.