For the better part of this year, I’ve had a recurring conversation with appraisers: there aren’t enough of them! I was pleased to see major media coverage of this over this past weekend, when the Chicago Tribune’s real estate section tackled this burgeoning issue on the cover of this section.
Here’s the scoop: the appraisal industry isn’t growing and has actually been steadily shrinking since 2007 (down about 20%). The predominant cause of this, I think, is the strict barrier to entry that appraisers face. To join the industry, one must earn a 4-year bachelor’s degree with a focus in appraising, followed by a 2 year apprenticeship. When I learned the requirements, I was shocked! As a real estate broker, I had to have a high school diploma and take 45 hours of class (today, that requirement is 90 hours in Illinois).
So how is it that the appraisers – one of the key pieces of our home sales process – are required to do so much?
What is most troubling to me is that in the current framework, there is no incentive for appraisers to join the industry. And, seeing as how a large portion of those in the real-estate related fields enter them as 2nd or 3rd careers, the steep requirements are likely to cause major backlog in the future.
We’ve seen the backlog this year – appraisals taking much longer to be scheduled, and then take place, and then get reports back to the underwriters. It easily takes a week longer than it used to several years back. As a consumer, that means potential additional rush charges for a short turnaround on a closing, or worse (and more likely) closing delays.
Here are a few other articles written these past few years that I also found that shed light on the situation: