Within the past 10 years, the number of licensed appraisers has decreased by nearly 25 percent. Furthermore, the current crop of appraisers continues to grow older. According to the Appraisal Institute, more than 60 percent of appraisers are over the age of 50 and fewer apprentices are entering the industry.
What is it that’s stopping young professionals from pursuing a career in appraisal?
Each state has their own internal appraiser licensing requirements; however, an appraiser generally must have at least 2,500 hours of appraisal experience completed within a two-year time frame. Still, the root of the problem goes much deeper than the training requirements.
We spoke with Tim Detty, Senior Consulting Editor for Appraisal at Hondros College, about obstacles that may hinder aspiring appraisers. He identified the industry’s biggest roadblock: a lack of appraisers willing to act as supervisors for trainees.
“The number one issue is securing a supervisory appraiser under which to gain the required experience hours,” Detty said. “Students are understandably hesitant to invest in the qualifying education coursework without promise of a supervision opportunity. The few supervisors who might be willing to take on a potential trainee, are reluctant to commit without the trainee having completed the necessary prerequisites.”
The federal requirement is that a supervisor must accompany an apprentice on property inspections until the apprentice is competent to complete them on their own. Moreover, different states have requirements that specify a timeframe among other qualifying factors. Few appraisers have the time to offer for this part of an apprenticeship.
There are other factors in play as well. The obligation a supervisory appraiser has with training an apprentice can be to their detriment. The liability of a supervisor being responsible for mistakes made by an apprentice is a big reason why many appraisers shy away from the opportunity.
“The number one issue is securing a supervisory appraiser under which to gain the required experience hours."
So, what does this mean for the both the appraisal and lending industries?
With an increase in loan origination comes an increase in the volume of appraisals being ordered. Fewer appraisers would likely mean additional delays in the appraisal process in areas with the highest activity. Granted, a boom in originations has always slowed the appraisal process, but when we take a step back and look at the big picture, the appraisal industry’s lack of young professionals becomes a more pressing issue for borrowers, lenders, and investors.
For now, it doesn’t appear a lack of fresh faces in the appraisal industry is an immediate problem in most areas. While that may be true, the problem could be prevented entirely if change is enacted now.
What options are there to combat the issue?
To some, the answer would be to lessen the requirements on trainees and supervisors to allow someone to become a licensed appraiser quicker and easier. However, the need for highly-qualified, skilled, and accurate appraisers is no less important than it was some 10 years ago.
At an Association of Appraisal Regulatory Officials (AARO) conference earlier this year, it was suggested that a grant be created by the Appraisal Subcommittee (ASC), which could fund an incentive-based system for appraisers who choose to act in a supervisory capacity. “Right now, there is little to no incentive for an appraiser to supervise a trainee,” said Detty.
“The ASC is set up to be a grant providing entity and will soon be collecting fees for the National Registry of Appraisal Management Companies. Those funds could be earmarked to fund the grant that could be administered by the state to compensate supervisory appraisers, which could in-turn compensate trainees. While there would be many details that would need to be addressed, this at least appears to be viable.”
Whether through changes in legislation or incentives for appraisers to act as supervisors, it is vital that action is taken soon to create an influx of young professionals who can provide accurate and compliant appraisals well into the future.