The real estate appraisal community is aging and retiring—and apparently shrinking. According to McKissock’s just-completed Annual State of the Appraiser survey, just over 25 percent of real estate appraisers in the U.S. plan to retire in the next five years. A further 19 percent plan to retire in six to 10 years. Meanwhile, only 14 percent of licensed appraisers are currently working with a trainee. Only five percent of licensed appraisers plan to take on a trainee in the next 12 months; a further 17.5 percent are unsure whether they’ll take on an appraisal trainee in that period.
The outlook is uncertain, but it appears that “attrition” will be a key word in the profession over the next decade or two. Some observers say that since appraisals are becoming more and more automated, this won’t be a problem. Others insist that the human factor is indispensable, and a shortage of well-trained professionals could compromise the quality of the process and the product.
Many appraisers say they’d like to train new professionals, but it takes a chunk of time out of their day, and the trainees might well set themselves up as competitors once they’re fully licensed. Others say there just aren’t enough people looking to enter the profession. Even if more real estate appraiser trainee jobs became available, there may not be enough young appraisers to fill them. How, or whether, the industry ought to attract new blood remains an open question.
“A lack of trainees is one of the struggles the industry in general is facing,” agrees L. Craig Harris, ASA, a Certified General Real Estate Appraiser headquartered in Shenandoah, Iowa. “Trying to find appraisers willing to work as supervisors is difficult today, though, and by the time you lead them through the process, it doesn’t work out for anyone financially. Plus, training detracts from the senior appraiser’s business.
“Time was you could say, ‘I’m going to be an appraiser,’ and you were off and running, but now with all the certifications you’re required to have before you can be on your own, it’s a lot tougher. I’d like to see more people get into supervisory work.”
Rebecca Stone, vice president of Farm Credit East (Watertown, N.Y.), says recruiting might be the hardest part of the process of bringing new people into the appraisal profession. Most people—whether they’re looking for a career in real estate, or simply looking to buy or sell a home—have no idea of what an appraisal is, so recruitment has to start with education. Moreover, she says, new appraisers will often gravitate toward one specialty or another, and there might or might not be an immediate demand for appraisers in that area.
“My own specialty, agricultural properties, is interesting to a lot of appraisers,” she says. “That field is constantly changing. I grew up on a dairy farm, and you go with what’s in your blood. You have to keep on top of the technology, too, which is constantly changing.”
Jay Proost, executive director of the American Society of Agricultural Appraisers (Twin Falls, Ida.), notes that he appraises farm equipment and livestock, which can be fairly straightforward if you know where to find the right comps—but an understanding of those comps is the essential piece of learning in that area of specialization.
“We offer a 105-hour training course,” he says, “but the learning process is ongoing. You have to stay versed in the current market. You need a thorough knowledge of the comps and where to find them.”
Many appraisers report that they have plenty of work that they’d love to farm out to an associate, but they don’t have the resources to hire and train new appraisers. They say they have nothing against trainees—quite the opposite—but they’re frustrated by the various regulations and requirements that nowadays prevent trainees from doing any work without a supervisor looming over them.
Some have suggested that rules be relaxed so that trainees can handle parts of the appraisal process on their own, just so long as the supervisor signs off on the work. If the supervisor has ultimate responsibility for the trainee’s work, they argue, the integrity of the appraisal won’t be compromised.
However, today, most engagement letters contain a proviso to the effect of, “The Certified Appraiser must physically inspect the property and all comps, and complete the appraisal report. The use of Trainees for this assignment is not allowed.” To many appraisers, this means, “I can hire trainees, but they’re not allowed to do anything for me.”
These requirements appear to come from lenders—not from any oversight organization from within the industry, and not from any governmental body.
“Our clients are shooting themselves in the foot with these regulations,” writes Dustin Harris, owner and president of Appraisal Precision and Consulting Group (Idaho Falls, Ida.), on his website. “Fees are naturally going to rise as the number of appraisers dwindles. If lenders and AMCs are all about saving money, they had better consider making some changes to these policies. It should not be hard to do, as USPAP (as well as other regulations) still requires that the supervisor be fully in control of the appraisal process—thus providing some indemnification for the lenders.”
For more info, check out our article, Is it Time to Take on an Appraisal Trainee?, featuring a Q&A with McKissock’s own Jo Traut.
Article written by Joseph Dobrian. Joseph Dobrian has been writing about commercial and residential real estate, and real estate-related finance, for more than 30 years. His by-line has appeared in The Wall Street Journal, The New York Times, The New Yorker, Real Estate Forum, Journal of Property Management, and many other publications. He is also a noted novelist, essayist, and translator. His website is www.josephdobrian.com, and he can be contacted at email@example.com.