No one can argue that a residential appraisal is of little importance. It’s the keystone to the mortgage industry and a product that takes time, training and experience to produce with any confidence.
No less important are the experienced, professional appraisers responsible for determining property values. But being important is no guarantee that an appraiser will be there when you need one.
That’s especially true today. The fact is we are on the verge of a major appraiser shortage unlike any I have seen in my 30 years in the business. At a time when the average age of today’s residential appraiser is in the late 50s and growing older, the total number of residential appraisers is falling even as mortgage origination volume grows.
Unless this trend is stopped, the quality of appraisal values will eventually decline and public trust in the housing economy could once again fall apart.
Clearly something must be done. The Appraiser Qualifications Board (AQB), the leading body responsible for establishing credentials in our industry, agrees, and is proposing changes to its Property Appraiser Qualification Criteria.
These changes include eliminating the requirement for graduation from a four-year college and cutting in half the length of time a new professional needs to spend being mentored by a certified appraiser.
While these are necessary first steps, they only scratch the surface of what needs to be done.
I speak frequently with newly licensed appraisers, and I’m familiar with the hurdles they climb to break into the field. By far their biggest frustration is finding a committed mentor to work with them. Because most appraisers work alone, there is little motivation for an experienced appraiser to take on a mentee as they will more likely than not become a competitor.
Even if they were motivated, what time does a certified appraiser have to train someone? Appraisers in the majority of U.S. markets are stretched thin because of the ever-increasing demands being placed on them by their clients, who in turn are facing pressure from regulators and investors.
Let’s suppose for a moment that certified appraisers had the time and desire to train new candidates. Is mentoring truly the best way to learn the business? This may seem a silly question, but the reality is that not all mentoring experiences are the same.
A mentor’s area of expertise and market can have huge impacts on the quality of training. I know appraisers who have spent years without seeing an oil-burning furnace or an example of inadequate off-street parking, both of which can impact value.
So what can be done? It is clear to me that a broad classroom experience that includes simulated lessons and perhaps even virtual reality can provide a more complete learning experience than the current, limited appraiser career path.
Similar tools can be found in the fields of commercial pilots and physicians—fields in which lives are at stake. More advanced medical programs and airline-training programs are investing in simulated learning environments, where trainees must successfully complete a series of training modules to show competency in a particular area.
The appraisal industry could adopt many of the same techniques—in fact, virtual reality and gaming systems can replicate almost every situation and experience an appraisal may confront on the job. Such training could incorporate real world scenarios, the latest technology tools and case studies designed to touch on primary appraisal principles and include frequent exams to test for proficiency.
I don’t mean to negate or downplay the role of mentoring. There is always value to gain from experienced professionals. But in our industry, the mentoring system is actually preventing qualified people from even considering an appraisal career. For our industry’s sake, we need new career options that are not only practical, but that also create stronger, better prepared appraisers—which will ultimately benefit us all.