Posted by: JoAnn Apostol
Published: February 12, 2019
Several organizations complete surveys of appraisers and other professionals to discover trends in the industry for the coming year. Let’s look at the top 9 trends for 2019.
The current total number of appraisal licenses is a little more than 94,000. However, appraisers can have licenses in several states, so the number of actual appraisers is less than that. The numbers decrease each year, although not at the 15% rates that were prevalent in the late 2000s, and this will continue in 2019.
Nearly 41% of appraisers surveyed by the National Association of Appraisers (NAA) stated that they planned to retire in the next 10 years. Nearly 77% of those surveyed by Valuation Review did not have an appraisal trainee and didn’t plan on training anyone. If the survey results are any indication, the industry stands to lose more than 38,000 licensed appraisers in the next ten years. If you’re considering becoming a licensed residential real estate appraiser, 2019 might be the year to do it. This article about the tremendous opportunity in real estate appraisal has more details.
The Appraiser Qualification Board approved changes to the requirements for experience hours, degree, and experience log time, and they went into effect on May 1, 2018. Licensed appraisers no longer need a degree, and the four-year degree requirement to become certified residentially licensed was reduced to a two-year degree or alternatives (learn more about how to earn a Certified Residential license here). An example of the alternative is for a licensed residential appraiser to have their experience at the licensed level count instead of a degree. Other changes include reduction of experience hours and log time to earn the license.
Quite a few states did not adopt all of these requirements. Some didn’t adopt any of them. Therefore, you should check with your state to find out its requirements, and if any AQB changes have been made. However, enough of the requirements have been enacted to make an impact. Many people getting their licenses will now be able enter the profession more quickly than in the past.
Technology has entered the mortgage business in the last two decades, which has advanced many parts of the loan process. In the NAA survey, 70% of appraisers responded they have written a Restricted Appraisal Report. The 2018 Voice of the Industry Survey by October Research showed that 78% of appraisers do one to three assignments per month that are “alternate” valuation-type products. Neither survey published responses specifically on hybrid appraisals, but all signs point to an increase in 2019.
The 2018 Voice of the Appraiser survey shows that 67% of fees fall between $300 and $500 per assignment. Only 28.6% reported fees above $500, resulting in a gross income of $100,000 or more. The median income in the US was $62,450 as reported by the census in July of 2018. This means that 68% of appraisers are not making the median income for an eight-hour day and five-day work week. The same survey showed 60% of appraisers have not experienced an increase in customary fees, and only 8% feel the fees they are paid are customary and reasonable. More than 50% of appraisers surveyed rated low fees as a major concern with 36% indicating this is a major risk in the industry.
Markets have slowed, the Fed has increased rates, and the stock market is volatile right now. These are the major signs economists are watching for indications of a recession. In addition, the housing market is being impacted by tariffs, such has one on wood that has increased the cost of a new home by $9,000, according to the National Association of Home Builders. Other factors are driving the costs of housing up, such as labor and cost of goods. The good news is that the slowdown is expected to be minimal, but the housing market will still feel the impact. Watch the news as the forces that cause the changes reveal if there is a recession looming and how big that recession will be.
Although USPAP changes won’t take effect until January 1, 2020, the exposure process will come to a close in early 2019 with sweeping changes to the reporting formats in USPAP. These eliminate the two reporting options and replace them with one minimalistic reporting format, which will impact all disciplines of appraising.
One major change is the elimination of many of the comments in USPAP by incorporating them in the rule, eliminating them, or relocating them to more logical places. New definitions are being proposed, including: assignment elements, effective date, inspection, misleading, physical characteristics, relevant characteristics, summarize, and significant appraisal assistance. Appraisers should be involved in this process as they are the only ones who are required to adhere to the standards.
The NAA survey shows that 49% of appraisers prefer live continuing education, with 12% preferring online and 39% utilizing both delivery methods. Online education does provide many things live courses can’t, such as the flexibility of delivery and a wider range of topics. It also opens doors to appraisers who are not located where live education is readily available and saves the expense of travel. However, students in live courses say they benefit by meeting other appraisers, finding out what they’re doing, and keeping abreast of changes in the industry. Students should attempt to take at least one live course per cycle; many students only attend live courses for the 7-hour USPAP Update course. This is a great class to attend live.
The world, interpersonal communication, technology, and life have changed significantly in the last 20 years. I remember programming computers with punched paper rolls in high school—yes, I’m old. Today, technology is moving very fast, and many of the advances expected this year may have numerous advantages for appraisers in the long run. Although currently, most inspection apps are clumsy, require multiple clicks, and multiple pages to store the information, they are improving.
Software providers are designing cloud apps that address the numerous problems with paper. Word processing and worksheet programs allow for changes in the cloud where multiple users can modify a document in real time for all users to view. If every appraiser dedicates themselves to learning one new, small technological advancement to reduce either their time or costs to do business, they would find the benefits very rewarding.
Big data is defined as extremely large data sets that can be analyzed. So, what is it that concerns the appraiser? Many real estate appraisers believe that big data analytics will replace them. In truth, big data can never replace appraisers, since they are the only independent component in the lending decision.
Instead, appraisers should embrace big data and use it to their advantage. Leveraging data that is readily available to them will enhance their understanding of their markets and the reactions of buyers and sellers in the marketplace. The insights into market behaviors and patterns that big data can provide are invaluable during the appraisal process. The data supports market conditions, selection of comparables, highest and best use analysis, support for adjustments, and many other conclusions made during an appraisal assignment. Therefore, appraisers don’t need to fear big data. They should learn how to use it to their advantage in support of their value conclusions.
Kaplan offers appraisal licensing, continuing education, and license renewal education in many states. Visit our Appraisal Education web page and select your state to learn more.