The shortage of appraisers has been an ongoing concern within the real estate industry. According to a National Association of Realtors (NAR) survey conducted last year, there are three major factors resulting in the appraiser shortage.
Being in the business of real estate lending, I sat down with industry expert Chuck Mureddu, Chief Valuation Officer of SWBC Lending Solutions™, to discuss the appraiser shortage.
What is the most recent update on the appraiser shortage?
There has been a lot of buzz around the appraiser shortage from several industry organizations and institutions that are asking for appraisal waivers in specific geographic areas. Appraiser shortage is a real challenge in some areas but not all. In fact, TriStar Bank was unsuccessful in getting appraiser waivers for four Tennessee counties. The Appraisal Subcommittee (ASC) did not agree with the argument that there was a shortage in those four counties.
There has been a steady decline in the number of appraisers currently in the workforce and that number continues to decline. Much of the shortage is due to an aging population of appraisers facing retirement, the challenge of attracting new talent entering the appraisal profession, various economic factors, and government regulations and certification requirements. There are several solutions by various agencies that are already in the process of being implemented in an effort to help with the shortage of appraisers. The Appraisal Qualifications board, for instance, approved appraiser qualification changes that were implemented on May 1, 2018, to make the criteria for real property appraiser qualifications a more enterable career field while continuing to maintain high standards. SWBC Lending Solutions continually monitors areas where an appraiser shortage exists and will always communicate to our clients on increased turn times in those areas.
What do we typically see in the summer months regarding turnaround times on appraisals?
For the most part, and in those peek volume months, we may see an additional 24-48 hours. However, we strive to work with appraisers who are dedicated to fulfilling those assignments within the service level agreements.
What impacts turnaround time on appraisals the most?
High volume times, appraiser shortage in specific geographic areas, complex properties needing very in-depth analysis that takes more time to complete, and appraisers not able to get into the property due to scheduling conflicts with the homeowner or agent. Working with a partner that is always proactive in ensuring acceptable turnaround times is highly recommended.
What’s the most interesting compliance update you can provide?
The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency issued a final rule that increases the threshold for commercial real estate transactions requiring an appraisal from $250,000 to $500,000. The final rule allows a financial institution to use an evaluation rather than an appraisal for commercial real estate transactions exempted by the $500,000 threshold. Evaluations provide a market value estimate of the real estate pledged as collateral, but do not have to comply with the Uniform Standards of Professional Appraiser Practices and do not require completion by a state licensed or certified appraiser. SWBC Lending Solutions has several options. Expanding on basic broker price opinions, our commercial evaluation products start with an actual person standing on the subject property, with boots on the street, eyes on the property, and integrate relevant real-time market data (including condition and location factors affecting value) to provide a more comprehensive evaluation that allows our clients to make informed decisions. Ideal for asset managers, portfolio managers, or underwriters, commercial evaluations give you the peace of mind that comes from knowing your asset is properly assessed and valued.
What are your thoughts on the appraisal shortage? Share with us in the comments below. To learn more about appraisal services, visit our website.