In 2023, nearly half of appraisers surveyed said fee pressure was their biggest challenge, up 20 percentage points since last year. Fee pressure was followed by appraisal management company (AMC) requests for revisions (28%) and technology fees (26%), a category that was not included in 2022 survey responses.
The NAR survey included feedback from 2,174 respondents, including 388 appraisers. The top three concerns expressed in the survey were related to AMCs. These organizations were intended to function as a mortgage industry firewall in the aftermath of the 2008 financial crisis, acting as middlemen between lenders and appraisers and overseeing the logistics of property appraisal processes.
Appraisers, however, feel AMCs put pressure on the market by taking a increasing cut of appraisal fees. AMCs have a tendency to select appraisers who are willing to work for relatively low fees. Appraisers are also often incentivized to work with AMCs because they generate a steady flow of work and are seen as an integral part of the process. AMC surcharges are typically passed on to the customer. HousingWire published a deep dive on the topic in June 2021.
Appraisers were much less likely to cite high demand for appraisals as a challenge compared to the year-earlier period. Last year, 26% said it was their greatest challenge, compared to only 6% this year.
In spite of the growing popularity of automated valuation models (AVMs), nearly all appraisers conducted their work in person, while 81% did so through desktop/drive-by appraisals, according to the survey.
AVMs were used by 9% of the appraisers this year, up from 7% last year. Automation adoption has room to grow, with 60% of the appraisers noting that they felt “very uncomfortable” with AVMs, compared to 22% with desktop/drive-by appraisals.
On the consumer side, respondents were wary of appraisal bias and discrimination, which was highlighted as a challenge by 13% of appraisers. By contrast, among non-appraisers, 1% said bias and discrimination was a challenge.
“[It’s] essentially redlining — neighborhoods of predominantly people of color are given lower market value,” said one non-appraiser respondent.
Similar to 2022, some 63% of non-appraiser members cited a lack of inventory among their greatest obstacles, followed by rising prices and declining affordability (54%). Meanwhile, 39% said they had challenges finding sellers.
Real estate transactions fell through because of appraisal value (59%) and appraiser lack of knowledge or use of inappropriate compensation (48%), survey respondents said.