The entire appraisal industry is extremely overwhelmed right now. They are experiencing the lowest population of appraisers this profession has ever seen, coupled with unprecedented turn times. Why is that? You may be asking. Well, every year since 2011 the number of active Real Estate Appraisers has declined. The Appraisal Institute (AI), estimates that Appraisers have been shrinking down by 3% each year and warns that sharper declines are on the horizon, as many appraisers begin to retire in masses. But the problem is not solely that too many appraisers are retiring. Very few appraisers are entering the profession as well. For example: In the state of Illinois, there was a drop in Real Estate appraiser applications. The applications went from 1,231 in 2005, to merely 55 in 2015. That’s about a 95 percent decline.
So what does this mean? Well in some areas, you will start to see the appraisal turn times take longer and the appraisal fees may rise as well.
Why aren’t people lining up to become an appraiser? Low fees are frequently cited as the biggest reason why appraisers are leaving the profession and why new recruits are not lining up to replace them.
Why was there a decline in fees? The Home Valuation Code of Conduct (HVCC) in 2009 ushered in the era of AMC prominence. As a result, most of the appraisers doing lending work, saw their fees cut by up to half by AMC middlemen.
Appraisers argue that if AMC’s and Lenders paid more, then more college grads and other applicants would consider the profession, and fewer licensed appraisers would exit. The big picture here is that the decline in appraisers, could one day become a shortage and in the midst of the next real estate boom, there may not be enough time to train the next generation of appraisers adequately. That could create considerable delays in loan closings, slow down commerce and expedite the demise of the profession.
The future is still bright! Overall, as the number of appraisers has been declining, according to the Appraisal Subcommittee’s national registry, there are more Certified General and Certified Residential appraisers now, than there were in 2006. As a result, that has been relatively positive for appraisers, as they’ve seen fees rise modestly in their favor.