Shortage of real estate appraisers is hurting the housing market

by Michael Mata04 Oct 2016
While the US housing market might be experiencing a healthy rebound, the road to homeownership is being hampered by the growing shortage of real estate appraisers.

According to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, the share of home purchases that close on time has declined significantly in recent months, with many real estate agents pointing to slow appraisals as the main culprit.

Just before the onset of the spring home buying season, the on-time share of closings was high for mortgage-financed home purchases. Based on a three-month moving average, about 76.6% of home purchases in April with low downpayment mortgages guaranteed by Fannie Mae or Freddie Mac closed on time. Since then, the on-time closing share has declined for four consecutive months, hitting 63.6% in August. 

Slow appraisals are costing buyers and sellers money, and in the most extreme cases, have torpedoed deals. Appraisal issues caused 10.7% of delayed closings in April. By August, appraisal-related issues that led to delayed closings had increased by nearly 50% to a 15.6% share.

"The appraisal shortage is massive. You're seeing significant delays, you're seeing cost increases, you're seeing rate [locks] expire," noted Brian Coester, chief executive officer of CoesterVMS, a national appraisal management company.

According to the Appraisal Institute, the number of appraisers has shrunk by 22% since the start of the subprime mortgage crisis. Very few young people are also entering the profession, and the current crop of appraisers is aging fast, with more than 60% of appraisers being over the age of 50.

“We are seeing an enormous amount of regulatory burden on the profession. Some of the regulation excludes the ability of folks to take on a trainee. It makes it difficult even if you have a young person interested,” said Scott Robinson, president of the Appraisal Institute.

While appraiser apprentices were once allowed to perform full appraisals, new regulations require licensed appraisers to be on-site for the inspections. As licensed appraisers are no longer able to deploy their apprentices to inspect properties, they’re now swamped with work.

The end result has been a long list of frustrated home buyers and sellers who often have to wait weeks or months before properties are appraised.       

Related Stories:
Appraiser shortage could spring from education requirements
 

COMMENTS

  • by Indiana appraiser | 10/4/2016 11:37:16 AM

    Have you checked out your source and reputation of Coester? His company was fined earlier this week. Why don't you speak with Jonathan Miller?

  • by Me | 10/4/2016 11:53:30 AM

    What, exactly, did they think would happen with a profession where every wrong thing gets to be pointed at appraisers? There is a saying, "Appraisals never die." and it's apt. Someone goes into foreclosure 15 years down the road, the first thing they do is pull the appraisal and request someone do a retro appraisal, looking for someone to blame, primarily the appraiser. Then add in the CU--which doesn't allow appraisers to see what is said about them but give this info to bankers, yet every other article tells you how this is SO important and can get you on "do not use" lists and every comma out of place may have you before the state board. Then you get these whacked out state boards who tell appraisers that missing a due date is reason for sanctions...until the Appraisal Institute stepped in and say, Heck no, it isn't, where did you get that crap from? And they are surprised that appraisals are now taking 7 days or more. WHAT DID THEY THINK WOULD HAPPEN? All this oversight and even in the end, the effort is STILL to find wrongness on the appraisers part. How slow can they be?

  • by Appraiser | 10/4/2016 12:00:41 PM

    No shortage of appraisers. Only shortage of appraisers willing to do the work for a low fee with quick turn time.

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