MortgageReal Estate

Sorry, appraisers, you’re wrong – there is a shortage

And here’s why

Appraisers: We read your comments. You’ve been weighed, you’ve been measured and you’ve been found wanting.

Here at HousingWire we recently published an article which talked about the failing appraisal system and what could be done to improve it.

Before that we wrote that key government agencies finally addressed the critically growing appraisal shortage crisis that’s hampering the mortgage process, highlighting two alternative options to help areas that are facing a shortage. The two options include temporary practice permits and temporary waivers.

But that didn’t sit well with appraisers, who quickly flooded our comment boards to say there is no shortage; Quality appraisers are just unwilling to make, what they say, are unreasonable concessions.

Many complain about the appraisal management companies, and the allegedly excessive fees they demand from appraisers.

Here’s one comment from “wyecoyote”:

Look at the number of appraisers over the last ten years. There has not been a significant decrease in the appraiser population. What has decreased is those willing to work for a pittance. My area fees start at $600. I get emails for ones that want to pay $250 or $300. Those appraisers willing to work for those fees are going away. Those AMCs struggling to find someone need to up their pay. If there are loans not closing or waiting to close. Due to appraiser delay. Ask the AMC how much they are really paying the appraiser. I bet not C&R fees.

Or take this one from “Jacques”:

The problem is that Appraisal Management Companies keep a disproportionate percentage of the fee, unbeknownst to anybody except the appraiser. Today's appraiser is often paid less than they were 10 years ago, and the time it takes to complete an appraisal has doubled or tripled.

Some even went as far as to call HousingWire “fake news” and criticized the “inaccurate reporting.” Others make fairly strong arguments that the government-sponsored enterprises collude to undermine the appraisal industry. However, appraisers failed to prove that there is not a labor shortage in their field.

This graph from an Urban Institute blog shows the number of certified appraisers sank slightly over the past 10 years, and the number of state licensed appraisers plummeted, however there is still a strong number of workers licensed as appraisers. Certainly the middle columns show no "appraiser shortgage" on the surface. But, by definition, these numbers don't tell the whole story. 

Click to Enlarge


(Source: The Appraisal Foundation)

Having a large number of appraisers certified to do the work, and having appraisers not willing to do it are two separate things, as our commenters are quick to point out.

The fact is, despite the hardships the industry is facing, the lack of appraisers willing to work is the very definition of a labor shortage.

The Upjohn Institute for Employment Research published an employment research newsletter in 2013 titled, “How do we know occupational labor shortages exist?” In the report, it defined what constitutes a labor shortage.

“In our recently published book, Occupational Labor Shortages: Concepts, Causes, Consequences, and Cures, we define an occupational labor shortage as a sustained market disequilibrium between supply and demand in which the quantity of workers demanded exceeds the supply available and willing to work at the prevailing wage and working conditions at a particular place and point in time.”

Despite how many appraisers may or may not be certified, the fact is if they are unwilling to work, for any reason, there is a labor shortage.

By definition, having skilled workers available, but unwilling to do the task asked, constitutes a shortage.

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