Their numbers are dwindling.
It takes a longer time period to get one done.
The costs have increased while appraiser compensation has decreased.
So, what’s happening and why is there a shortage of appraisers?
The National Association of Realtors recently took a survey and this is what was reported:
“Among the contracts that had a delay to settlement, 22 percent were from appraisal issues. Survey respondents blamed appraisal-centered delays on the shortage of appraisers, valuations that were not in line with market conditions, and “out-of-town” appraisers who were not familiar with local conditions.”
While there is no quick fix, here are some reasons why we are seeing fewer appraisers:
- Training. It’s expensive, and an appraiser trainee must have 2000 hours of apprentice training (that’s almost one year based on 40 hours per week) with a fully licensed appraiser.
- Fully licensed appraisers can’t make any money if they have to split the appraisal fee with a trainee.
- Trainees make very little money—an average of $27,000—during their training period.
- Appraisers get lower compensation if the appraisal is ordered through a management company.
- Appraisers will turn down assignments if REQUIRED to provide a quick turn-around time
- The average tenure of an appraiser is 22 years and they are not being replaced by younger appraisers.
- The average tenure of a NEW appraiser is 5 years.
- Appraisers have the added expense of keeping up with new regulations.
What types of appraisal issues have you been experiencing?
I recently read an article written by an appraiser who said, “Realtors have more control working with an appraiser—more than they think they do. Spending time providing information UP FRONT will reduce the time spent on the back end trying to deal with an appraisal that comes under the sales contract price.”
I’m sharing some of the appraiser’s tips with you.
- Provide Photos: In addition to the photos of the home that may be on your website, email the photos to the appraiser to review ahead of time. Include additional photos that may not have been posted online. Include a description of EACH photo.
- Provide a list of recent improvements: And if you can attached the receipts for the work completed or the cost of the improvement, it’s an extra bonus.
- Provide an Information Packet: If the home is vacant, the appraiser may not even call you to set up an appointment. Leave a folder marked APPRAISER INFORMATION. And if they do call, tell them about the packet and where it’s located.
- Provide Insider Information: If you have information about the neighborhood that they may not know about, provide that info to the appraiser. For example, maybe a new school has been approved by the city and will be built nearby within the next few years. If you know the reason the buyers have chosen that home, include that info too. Let them know if there were multiple offers on the property, too.
- Call the appraiser back—immediately: Appraisers typically schedule their trips within certain areas to reduce travel time. When they call, it usually means they have already done some preliminary work and are ready to do the physical inspection.
- Provide Comps: While appraisers do their own research, it helps to BRACKET comps and supply them with what you used to establish the price. Provide sales that have sold BOTH below and above the sales price. List why each is superior or inferior. Do not rely on “per square foot price.” If known, also include seller-paid concessions.
- Double Check the Square Footage: Appraisers must also measure the living areas, and if it’s substantially different, it creates a “red flag” and the appraiser may be looking for other things that may be inaccurate.
- Don’t ever say these sentences –
- “You should have no problems appraising this home…”
- “We need a good appraisal on this one…”
- “Let me know if you think the appraisal will come in low so I can get you additional info.”
What are some of the ways you’ve assisted appraisers in the past?
Please contact me directly to register for this exciting appraiser roundtable. It will be held locally at the SCAOR office in Georgetown on September 17th @ 3PM.
Contact me at 302-542-8205 or email at firstname.lastname@example.org or message me on Facebook or Twitter.
Learn about appraisal issues directly from your appraisers and the president of our appraisal management company.
Do you want your appraisal questions answered? Then save September 17th for an appraiser summit sponsored by Fairway Independent Mortgage. Remember, Fairway powers the Jeff Baxter Mortgage Team.
We are holding sessions in New Castle County (AM from 9-11) and Sussex County (PM from 3-5) on the 17th. The locations are TBD – stay tuned for more information and remember this summit is free.
Please email, call or message me if you would like to attend.
I recently read an article where an appraiser talked about how he figured “price per square foot.” He said it has become a common practice to take the selling price and divide it by the gross living area which has, in some areas, become the basis for establishing the listing price of a home.
However, it’s not as simple as that.
Appraisers also rely on an index provider called “Marshall & Swift” (MarshallSwift.com), which provides various cost estimates for different types of properties. When appraisers figure a price-per-square-foot estimate, they take the following into consideration.
Superior/inferior features as compared to other properties
One-story home versus two or more stories
Length of time on the market
Size of the land
Location of the home (i.e., view, utility easements, corner lot)
Seller motivation to sell (i.e., foreclosure, short sale)
There are many stories out there of buyers backing out of contracts because the square foot price of the home on the listing agreement (or verbal communication) did not match the appraiser’s estimate. So, when a buyer asks you the question, “What’s the square foot price?” you can say…“It depends upon….”