I got interested in a statute that, starting last summer, made it illegal to pressure real estate appraisers into assessing a property for a specific value.
I wasn't sure what to write on the topic so I thought I'd start by asking the state Commerce Department for data on the number of licensed real estate appraisers in Minnesota. I was blown away by the data.
The number leaped in the first half of this decade, took a roller coaster dive and now is slowly rising.
It seems bizarre but that's the data Commerce sent me so I'll assume it's valid.
What's interesting is that the drop in the number of appraisers seems to have come before the real estate collapse -- almost like a leading economic indicator. Now we're seeing the numbers slowly rise again during the worst part of the recession.
"The number of appraisers does seem to be a leading economic indicator of the health of the real estate industry," said Julie Schwartz, an independent appraiser from White Bear Lake and a source in MPR's Public Insight Network. "The market actually started to decline in 2006, but was not public knowledge until 2007."
The increase in appraisers since 2006, she adds, relates to the soft labor market and the appeal an appraisal career holds for people trying to retrain for new jobs.
Wendy Walker, vice president of the North Star Chapter of the Appraisal Institute and a member of the Commerce Department's real estate appraisal advisory board, said she was aware of a decline although it's unclear what would explain the huge drop.
One of the problems is that many education providers have been promoting the appraisal profession as a quick route to high income. They get people to take classes and become licensed, but trainee appraisers then find that there are few jobs available.
The licensing requirements changed January 1, 2008 in response to new national requirements from the Appraisal Foundation. I know that there were a large number of applications in to Commerce in 2007 because of this. If you had either the experience or education by Jan 1, 2008, they would give you an additional year to complete the requirements. Because of this, most people are anticipating that the number of appraisers will decline."
The state, she added, has already instituted the requirement for more appraisal-related education and hours of apprenticeship.
I'm a novice on the appraisal business but I'd like to know more. If appraiser counts are a kind of leading economic indicator, what's the market telling us now?
If you have a connection to the appraisal business, post below and tell us what you're seeing in Minnesota. Or contact me directly.
You are correct. The number of new appraisers coming into the business jumped by leaps and bounds prior to the new education requirements. This was actually a boon for appraisal management companies once they were handed the keys to the profession on May 1, 2009.
Having so many new appraisers at hand now allows AMCs to create extraordinary profits for banks. The seemingly unending roster of new appraiser makes it easy to hire out appraisal work for incredibly low fees.
Unfortunately, the intelligent appraiser (primarily the experienced ones) chose to leave the business on or before May 1st for careers that pay more than minimum wage.
David, thanks. I'm definitely interested in learning more about AMC's and their effects on the market. Can you send me a little detail on what you're seeing? Use this form: http://bit.ly/7nlGz
Whats going on now is even worse. The management companies are sending out bid requests to numerous appraisers and giving out the assignement to the lowest bid. In turn the management company is making more than the appraiser who is doing 95% of the work. I, as many other appraiser have had to do, am working for an AMC doing reviews. With this bid system going on the appriasals being submitted are extremely poor and are typically done by the least qualified appraiser. Someone needs to stand up for the appraiser since what is going on is not right. How are they going to take away an appraisers business and tell them to join the AMC's. Appriaser than applies to the AMC but is told the list is full. If appraisers are forced into AMCs than all AMCs should be required to accept all appraisers who apply and be given work as to the standard of the quality of their work not who will do it the cheapest. With this in mind the general public is not getting the most accurate evaluation of their property. Again as a review appraiser I constantly see reports where the appraiser has the value at the absolute lowest amount that falls within their adjusted and unadjusted ranges. Of course no commentary is found as to why they chose the lowest number when a higher value is justified. I have found this is typically done so the appraiser does not have to answer requests for additional comparables or work. Many figure that if they give it a low value they don't have to do as much work. This is very poor procedure and the overall industry will see a decline in the faith the public has in appraisers if this is allowed to continue.