Appraiser shortage hits both private, public sectors
Profession has been losing workforce in recent yearsJune 8th, 2017
Filling a national shortage of real estate appraisers comes down to a matter of compensation catching up with demand, says Michael Robinson, owner of Hearthstone Appraisal PLLC, of Spokane.
He adds, however, that some forces within the industry don’t have the patience for that.
Robinson contends that the emergence of appraisal management companies has contributed to the shortage by effectively reducing appraiser compensation.
AMCs help provide insulation between appraisers and lending institutions, although AMCs are mostly compensated through a cut of appraisal fees, he says.
Robinson says he’s worried, however, that just as appraiser fees have started to tick upward, there’s a movement to reduce the standards for appraiser certification.
That would allow lesser qualified people to become certified, presumably at lower wages, he claims.
“The real issue is that if we’re going to refresh the industry with new professionals, we have to be able to compensate them and attract them to the profession,” Robinson says.
In the private sector, real estate appraisals are required by financial institutions to determine or confirm the value of property to be used as collateral against a loan.
In the public sector, county assessors are required to determine the market value of property for tax purposes.
Robinson says it takes a certain amount of knowledge and experience to conduct a competent appraisal.
That’s why a college degree is required for private residential appraisers in addition to certification standards, he says.
“We present a point of view and support it with reasoning that a typical person can read and have confidence that it’s credible,” Robinson says.
Because there’s no specific college degree in appraising, a four-year degree in most any field is sufficient to meet the education requirement.
“You just need to have a degree in which you prove your academic core and apply the basics,” he says.
Robinson has a bachelor’s degree in secondary science education. He says that background has equipped him with analytical and problem-solving skills.
“I also went to grad school, and that helps me become more accomplished as a communicator,” he says.
In recent years, AMCs have stepped up their role as the required firewall between appraisers and lenders.
The firewall is intended to ensure that the lender doesn’t influence an appraiser’s findings.
Robinson claims AMCs took their cut out of the appraisal fees without raising them, putting less money in the hands of the appraisers.
That reduced resources that established appraisers had used to train people coming into the business, says Robinson, who’s a nationally certified standards and ethics instructor.
“We stopped training new people, because AMCs were taking the money we needed to train them,” he claims.
Robinson says few college graduates are willing to work for minimum wage for the amount of time it takes to become certified—a minimum of two years.
“College grads don’t want to come in at a wage you would get at McDonald’s,” he says. “We ended up with aging appraisers gradually heading off into the sunset and college grads not coming into the profession.”
With the demand for appraisals overwhelming the supply of appraisers in a heated real estate market, AMCs only recently have started to raise appraiser compensation, enabling Robinson to bring on a new appraiser trainee.
Robinson contends, however, that the lending industry now is leading lobbying efforts to reduce certification standards for appraisers.
“It looks like the lending and lobbying side is winning,” he says.
Bruce Jolicoeur, senior managing director of Spokane Valley-based Valbridge Property Advisors|Auble, Jolicoeur & Gentry Inc., says he can testify to the appraiser shortage through both anecdotes and statistics.
He says the number of active real estate appraisers has been dropping by 3 percent annually over the past five years, and that rate appears to be increasing.
“We’re really busy now, which is great,” Jolicoeur says. “In our case, we haven’t had anyone leave, but we’ve gotten busier and as efficient as we can get, absent new people to satisfy the need.”
He adds, “I have a challenge finding people to help us. Some years ago, we decided to hire people at the trainee stage to work with us as ‘para-appraisers.’”
One recruiting challenge is that the appraisal profession is unknown to most people.
“It’s not taught in college,” he says. “We’re chasing people who’ve never thought about (appraising), or who don’t have a clear idea of what they want to do out of college.”
As first reported recently in the Journal, the Spokane County Assessor’s office has been especially pounded by the shortage.
Assessor Vicki Horton says the office has had eight vacancies among its appraisers within the last year and has only recently filled seven of them.
Three of those filled positions are trainees, Horton says, meaning that it will take two to three years for them to become fully certified appraisers. The Assessor’s Office doesn’t require appraisers to have college degrees, but they have to meet state certification standards, she says.
Some of the newly hired, fully licensed appraisers are from out of state and are still getting up to speed with Washington state rules and regulations, she says.
Meantime, the Assessor’s Office last week missed the state deadline to mail out valuation notices for the first time during Horton’s tenure.
“This year, we won’t send out notices until October,” she says. “As the assessor, it’s difficult for me to have to be this late. We’ve been one of the state’s top producing counties as far as following rules.”
That also means time will be compressed to set levy rates for taxing districts throughout the county.
“They’re all going to come in at once,” Horton says. “We’re really going to be slammed in December.”
Hiring needs aren’t letting up, Horton says. One experienced appraiser is likely to retire from the office in September, followed by another appraiser retirement next year.