Reblogged from Scotsman Guide – Victor Whitman
Realtors are again ringing alarm bells over a potential future crisis in the appraisal industry.
In a new report, the National Association of Realtors (NAR) said that a wave of retiring appraisers and a lack of new entrants into the field could create a serious shortage of available appraisers for the housing and mortgage markets, particularly in rural areas.
NAR estimated that the current population of appraisers stands at about 82,000 nationwide. That number could decline by roughly a quarter over the next 30 years given the 2016 level of appraisers entering the field, the trade group said.
NAR cited figures from the Appraisal Foundation, which keeps tabs on people who pass the National Uniform Licensing and Certifications Examinations exam each year, a requirement to practice.
In 2016, that number reached a new low at 662, which is down from 2,087 in 2008. This number averaged just 1,000 from 2010 to 2014.
“We are well below replacement at this level, so we do need more appraisers, and we need high-qualify appraisers,” said Ken Fears, NAR’s director of housing finance and regional economics.
A wave of appraisers is expected to reach retirement age over the next 10 to 15 years. Appraisers also have been leaving the industry before reaching retirement as the government has ratcheted up the training requirements and regulations.
"A lot of appraisers seem to be very concerned about the AMCs [appraisal management companies, through
which lenders must now order appraisals services] adding to the workload without adding to their commissions, actually taking away from their commissions," Fears told Scotsman Guide News. "Essentially, in economics, we would call them rent seekers. They are not really adding value."
Fears said that increased automation will likely reduce the demand for live appraisers. Even if a large number of future appraisals are handled through automation, however, the industry will likely face a shortage of live appraisers. Fears noted that the modeling tends to work only in newer developments with similar properties. In neighborhoods with a lot of variation and aging properties, live appraisers will always be needed.
“Even if we do automate roughly 50 percent of the GSE and FHA space [loans purchased by Fannie Mae and
Freddie Mac, and insured by the Federal Housing Administration], that is not enough,” Fears said. “We need to train a lot more people.”
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