What a two-year stretch it has been for appraisers.
The appraisal workforce was already in decline in 2019. When the COVID-19 pandemic hit in 2020, the industry’s workforce shrank even further. To compound matters, homebuyer demand skyrocketed thanks to historically-low mortgage rates and societal changes.
These factors combined to throw the appraisal industry in flux. It has a very uncertain future: will in-person appraisals be the norm, or will technology overtake the process completely or partially?
In a panel entitled “The Brave New World of Valuations” at HousingWire’s Spring Summit on March 4, Tony Reese and William Fall – chief appraiser at RPM Appraisal Services and CEO of The William Fall Group, respectively – tackled these subjects. Both said the human appraiser is still the future of the industry.
Overcoming the current appraiser shortage is the first hurdle in restocking the shallow field, Fall said. But compounding the problem is a lack of appraisers entering the profession, Reese said.
Mentor appraisers have begun letting their apprentices go earlier and earlier in the training process, Reese said, simply due to financials – the mentor doesn’t make as much money on a job if a trainee is with him.
“Usually the younger appraisers enter the profession and have a mentor, but there’s no real financial gain for the mentor in the first year,” Reese said. “So, trainees go out into the field with little training and the mentors don’t even break even. Plus, a lot of appraisers are nearing retirement age and don’t want to take on someone else at the moment.”
New appraisal technology and alternative products could offer life support, though, in bringing younger blood into the profession. Hybrid appraisals, desktop appraisers, and new online platforms are slowly being introduced, which could appeal to the newer labor force, Reese said.
At the onset of the pandemic in March 2020, the Federal Housing Finance Agency began easing standards on property appraisals that allowed drive-by and desktop valuations in certain circumstances. This was the first step the FHFA took in combatting the pandemic as it pertained to appraisers.
But the FHFA also backed the use of hybrid appraisals, which would increase coverage for rural markets and high-volume areas where time becomes a greater issue. In August 2020, several lenders voiced concern over the appraisal industry’s finite number of appraisers and underwriters as well as appraisal quotes taking anywhere from 10 to 27 days to hit the lender’s desk.
Though hybrid appraisals are expedited and typically cheaper, adding a layer of third-party involvement could complicate matters: a uniform set of standards does not currently exist at both the state and federal levels that hold non-appraisers accountable for their appraisals, the FHFA said.
If new technology is eventually the answer, it’s imperative to get all platforms working correctly before introducing them in the field, Reese said.
“There’s been a rush by people in the industry to try and be the first to solve everything,” Reese said. “One company will use hybrid appraisals, another one will use some kind of technology platform. These are all great solutions, but if the products don’t integrate together, we gain no efficiencies.”
As an example, if an appraiser in the field can’t get his 3D mapping to integrate with his form software, he or she will have to take a different step to make sure data transfers over, Reese said.
“I don’t really save any time that way,” Reese said. “The overall goal needs to be finding ways to make the appraisers job easier. We have some great products and an eager labor force, but we need to take our time to make sure everything is working together before we push them out.”
As the vaccine rollout continues and a second round of stimulus checks hits consumers’ bank accounts, expect the housing market to even out into the warmer months, with more inventory and less demand.
In the end, Fall said, there will always be a need for a human appraiser.
“As we talk to people in the secondary market, the human appraiser is still highly preferred, and I don’t see that changing.”