By Daniel A. Bradley, SRA, CDEI
The hype and excitement for April 1, 2011 is now a memory. For appraisers who thought this date would bring about higher appraisal fees from AMCs and other clients, bitter disappointment has undoubtedly begun to set in. Appraisal-related blogs, message boards, and websites are trumpeting the news – it is just business as usual. The promise of higher appraisal fees turned out to be an April Fools’ joke on an entire profession.
So for residential appraisers, what now?
There are several options; not one of them is perfect. There is not one course of action that is right for every single appraiser’s situation.
Option 1: Leave the profession. This will undoubtedly be the choice for some; in fact, the exodus has been going on for some time. According to the ASC, there are approximately 10% fewer active appraiser credentials today than there were in 2008. It saddens me to think that others would give up on a profession when times get tough, but that is a decision that every appraiser has to make for himself or herself.
Option 2: Knuckle under and accept whatever fees are being paid. This is a very unattractive option. It helps perpetuate a “race to the bottom” in which the least qualified and experienced appraisers are doing the lion’s share of the work for clients who do not care about quality. It simply results in an appraiser working harder for less money. As a temporary measure, it may keep an appraiser from having to exercise Option 1 (or Chapter 11), but it is likely not a long-term solution.
Option 3: Complain. This will undoubtedly be the option chosen by many appraisers. The effectiveness of such a strategy depends on the party to whom the appraiser is complaining. Lodging complaints with federal agencies like the FRB, FDIC, and FTC is certainly more effective than complaining to one’s peers, family members, or online communities. In states that have AMC regulations already in place, appraisers have a ready-made repository for their factual complaints. The long-term effectiveness of this option remains to be seen.
Option 4: Specialize and/or improve one’s skills. This one takes the most planning, effort, and work, and may necessitate an appraiser getting outside his or her “comfort zone”. An appraiser may choose to upgrade his or her certification level; commercial appraisal clients typically do not use AMCs, and are typically more interested in quality than fee. Even without upgrading, an appraiser who wants to expand his or her horizons will find that there are many other types of appraisal assignments out there. Some are relatively simple, such as estates, assessment appeals, and divorce work. Others require additional knowledge and specialized skills, such as eminent domain or conservation easement appraisals. Specialization may require an appraiser to come up with an entire new marketing plan, which may involve marketing services to attorneys, government agencies, and/or individual property owners. By replacing, say, 30% of his or her mortgage lending appraisal business with other types of appraisals, an appraiser can retain his or her top-paying mortgage clients, and at the same time selectively dismiss their lowest-paying clients.
If you are thinking of replying to this article by telling me to wake up and smell reality, don’t bother. For me, this is personal. Appraising has been the only real job I have had during my entire adult life, and my wife is also an appraiser. I understand – better than most – the daily, weekly, monthly, and yearly trials and tribulations of an appraiser. Even though I spend most of my time these days writing and teaching appraisal courses, I still depend solely on the appraisal profession for my family’s livelihood.
The decision for every appraiser is individual and highly personal. What works for one may not work for another. I get that. I’m hoping, though, that most appraisers will select Option 4 above. The future of the profession is better served with more highly-skilled valuation professionals who are capable of providing a variety of different appraisal services, and fewer appraisers whose skill sets consist merely of inspecting houses, selecting comparables based on client-specified parameters, and filling out forms.
The best advice I can think of at a time like this is to spend your time thinking about what you can do, not about what you cannot do.
32 Responses to “Appraisers Ask: What Now?”
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