Posted by: John Forsythe, SRA - Forsythe Appraisals LLC
Updated: January 15, 2019
Real estate appraisers are in higher demand than ever before. A recent report from the Appraisal Institute found that as of June 30, 2015, the ranks of professional and licensed appraisers in the U.S. had declined 20 percent since 2007. The report estimated that this rate of decline could persist for the next several years as current workers retire without replacements. There are also a percentage of real estate appraisers who used to do field appraisals who are now in-house reviewers for banks and appraisal management companies.
With these statistics in mind, a recent college graduate has a good chance of building a career in the residential real estate appraisal industry. For those interested in pursuing the career, navigating the complexities training and certification can be daunting. Having the right mentor is key to navigating the requirements. Each state requires licensing for appraisers operating within them, and these requirements differ from one location to another. By setting the right trajectory, however, becoming a certified appraiser is well within reach for dedicated individuals.
Historically, new appraisers have been mentored and supervised by experienced, certified valuation professionals. However, like any industry, there were abuses where trainees were not being properly trained and supervised. Federal and state requirements were put in place to provide the framework for proper supervision. But, as is often the case, there were unintended consequences.
One such consequence was that in order for an individual to enter the real estate appraisal profession, a 4-year degree became mandatory. This was in addition to required industry-specific education and one to two years of apprenticeship as a trainee. In other words, it can now take six years of education and training to become a licensed or certified appraiser. Additionally, many clients require (though most appraisal regulations don’t have a similar requirement) that Supervisory appraisers accompany the trainee on all visits to the subject property during the apprenticeship.
As a likely result of this more robust post-secondary degree requirement, enrollment in appraiser education classes fell off dramatically. Both trainees and supervisors saw this as too great of a commitment, with too little financial compensation, for two professionals to inspect each property for up to two years.
Appraisers and appraisal firms nationwide are taking note of this shift in the appraisal profession. In a February 2016 article from MortgageOrb.com, Greg Stephens, Chief Appraiser at Metro-West Appraisal, noted, “In a recent poll conducted by the Illinois Coalition of Appraisal Professionals, 80 percent of respondents indicated they did not believe there is an appraiser shortage.”
However, Illinois Appraisal Board data revealed that the annual renewals from 2014 to 2015 were down 11.4 percent. And the most alarming statistic of all, according to Stephens, is that in 2005, there were 1,231 trainees pursuing licensure or certification in Illinois, and by 2015, that number had dropped to 55. “The same data also indicate that historically, the Illinois Appraisal Board had an upgrade pipeline of approximately 50 applicants,” Stephens added. “In 2015, that same pipeline had 9 upgrade applicants in process.”
Within industry trade groups and regulatory agencies, many solutions were discussed. Some of these solutions include modifying or reducing the post-secondary education requirement to a 2-year degree, and allowing experience credits for real estate professionals working in the brokerage and mortgage sectors of the industry. Another possible solution is to allow college graduates from real estate educational programs to graduate as Certified Appraisers, eliminating the 2-year post-graduate trainee “apprenticeship” requirement.
In addition to these proposed adjustments, it should be noted that currently the GSEs (Fannie Mae/Freddie Mac) have no stipulations that require dual inspections by both the certified supervisory appraiser and the trainee appraiser. Several forward-thinking banks and appraisal management companies have begun to allow trainees to complete solo inspections after they have completed a pre-defined amount of experience and/or a set number of dual inspections. They all require the supervising appraiser to review each appraisal, mentor the trainee, and take full responsibility for the content and accuracy of the reports. However, the lending industry’s steadily increasing acceptance of solo inspections by trainees will have a profound impact on the quantity and quality of opportunities for professionals looking to enter the appraisal industry.
After much debate, on February 1, 2018, the AQB adopted new requirements that went into effect on May 1, 2018. Many of the more stringent education and supervision requirements were modified. This announcement details all the changes. So, if concern about any of these requirements has been holding you back from exploring the field or pursuing education packages, you can rest assured that things just became easier.
Fees for residential real estate appraisals are increasing. It is debatable if this is because an appraisal report today takes considerably more time than in the past, or if a lack of field appraisers has increased the demand.
Technology can have a significant effect on how efficiently appraisers can complete assignments, and this appeals to the next generation of appraisers. The trend toward more technology-driven solutions will increase dramatically over the next few years. “Big data” will become more accessible to appraisers, and mobile technology advancements show no signs of slowing down. The use of regression analysis and other analytical tools will also continue to have a positive impact on the credibility of the work.
The residential real estate appraisal industry is poised to take significant leaps forward in the next decade, as future-focused appraisers take the industry from a fragmented trade to a true profession. If you enjoy real estate, analysis of trends that impact buyers, time out of the office interacting with borrowers, and providing an independent valuation conclusion using technology, experience, and analytical skills, there’s never been a better time to consider a residential real estate appraisal career.
In addition, the financial benefits can also be rewarding. Fees, which have previously been stagnant or declining, have begun to rebound. Technology and data are key factors, and those who embrace both will have a tremendous opportunity awaiting them in a profession on the cusp of a very exciting period in its evolution. The income levels ramp up nicely as appraisers gain experience and certification, and demonstrate expertise in certain markets.
John C Forsythe, SRA, is a third generation, 30-year appraisal veteran. John is the CEO of Forsythe Appraisals LLC, the nation’s largest independent staff appraisal firm, with branches in 48 metropolitan markets throughout the United States. Employing over 275 W-2 employee appraisers, Forsythe Appraisals has a commitment to engaging, mentoring, and growing the next generation by investing in trainee appraisers who share our passion for delivering the highest quality residential valuations with unmatched integrity and legendary customer service. Forsythe Appraisals provides scheduling, sales, accounting, data sources, training, insurance, and benefits, allowing appraisers to truly focus on developing a quality report.