The Other Market Shortage: Home Appraisers
Increased regulations, retirements, and licensing requirements are slowing a much-needed supply
What is a house worth? That’s an important question and, many times, a loaded one. The answer: It depends who’s asking. Is it the seller? The buyer? Is it part of a divorce settlement, or maybe part of a trust? And what about the size and condition of the house, its amenities, its location? Then there’s the state of the market.
All those elements go into determining the true value of a home. It’s the job of a licensed appraiser to sort it all out and provide an unbiased valuation.
“What is a home worth begs the question, what is your definition?” said Juan Carbonell of Carbonell Appraisal in Traverse City. “Is it on a tax basis? Then I need the IRS definition of value. If mom died and it’s in a trust, I need to get the appraisal for the trust.”
Mary Jane Dewey-Canfield, branch manager and loan officer at Mortgage 1 in Cadillac, said the unbiased part is crucial to fairness and consumer and lender protection. “Years ago, you could pick whoever appraiser you wanted. Now lenders can no longer do that,” she said.
A PERFECT STORM
Since the 2008 banking meltdown and the subsequent implementation of the Dodd–Frank Wall Street Reform and Consumer Protection Act, lenders today must go through an appraisal management company (AMC). Only AMCs can select state-licensed or state-qualified appraisers to valuate properties and deliver appraisal reports to lenders, ensuring the appraisal process is fair to all parties.
In this current market, however, sales left and right have led to an ever-tightening inventory of available homes, resulting in quick sales with multiple offers. At the same time, low interest rates are driving a refinancing boom. The end result is that as hard as it may be to determine a home’s value, it may be more difficult to find an available appraiser.
“This is about as far behind as I’ve ever been,” said Bob Schaafsma of Quadrant Northwest Appraisals, in Cadillac. “I’m a month out.”
“We do have a shortage” of appraisers, agreed Faith Tanner (pictured above). A certified residential appraiser at Appraising Residential Real Estate of Suttons Bay, Tanner said the biggest reason is low interest rates, which are driving both sales and refinancing.
“I’ve never seen a market like this. I’ve never appraised as many million-dollar homes as in the last year. Those people typically don’t have mortgages, but the refinancing … every lender is inundated, so it’s hard.”
Carbonell is optimistic the pressure of the current situation will ease off. “It’s cyclical. I’ve been doing it since 1991. I’m busier now than I’ve ever been, but it goes up and down. Right now there aren’t enough appraisers, but there’s recent times when there have been too many,” he said. When interest rates increase, and the refinancing boom peters out, he believes the supply of and demand for appraisers will even out again.
Schaafsma said he sees two main reasons for the shortage of appraisers now. “Every time there is a downturn, the regulatory agencies’ answer is more regulations. They also stepped up the requirements” to qualify as an appraiser, he said. The result was a number of appraisers left the field, many of them among the most experienced. “Almost one-third said, ‘Enough,’ and retired.”
COMPLICATING MATTERS
More stringent regulations and the subsequent clearing out of so many longtime appraisers have created a dearth of knowledge and experience that gags up the machinations of the market. There isn’t much hope that large classes of apprentice appraisers are coming in to replace them. Real estate appraising is simply not an easy business to get into, said Dewey-Canfield: “An appraiser has to go through a lot of education and time.
Exhibit A might be Schaafsma’s son Joe. He is following in his father’s footsteps, but despite growing up watching his father work and the fact that he's coming up on two years in the field himself, he’s still not licensed to go out on his own as an appraiser. To qualify as an appraiser, you must complete 75 hours of classroom time, then work directly with a licensed appraiser for 1,500 hours — and then gain another 75 hours of classroom experience.
Then you’re qualified … to take the licensing exam. And the opportunity to sit down for that isn’t immediate either.
“I’ve been here full-time since July 2019,” Joe said. He’s completed all required classes and field hours but is still awaiting the opportunity to take the exam, which he applied for in October and isn’t scheduled to take until May. “It’s a long process,” he said.
WORK PERKS
So while this might seem to be a good time to get into the business, don’t expect to jump into the business and hang out a shingle anytime soon. But if you do, you’ll not only be a highly sought-after professional — chances are good you’ll enjoy the work. Never routine but reliably challenging, appraisal work uses both sides of the brain, something Tanner said she loves most about it. “It’s analytical, with number-crunching, but you also go out in the field,” she said. “Appraising is a great profession, and I absolutely love my job.”
Bob Schaafsma said he, too, likes the fact that the job takes you into homes to walk through and measure them, as well as seeking other similar homes to which they compare.
Carbonell equates it to detective work. “I look at properties Tuesdays and Thursdays. Monday, Wednesday, and Friday I sit in front of a computer, researching, analyzing. This morning I wasn’t clear how much lake frontage a home had. It’s an odd-shaped lot, and there was conflicting information,” he said. Using old tax maps, descriptions, tax records, and plat maps, plus additional metes and bounds descriptions, he was finally able to come up with what he believes to be the correct amount of frontage, which allowed him to calculate the value of the home.
For those who gravitate to challenges and enjoy the detective aspect of the job, appraisal work is especially fulfilling Up North. Tanner told Northern Express that her daughter is an appraiser downstate, where there are many more houses built around the same time, with the same plan, on the same size lot. Here, not so much.
“You have to find three to six recent sales that are similar,” she said. When they’re bigger or smaller, older or newer, you have to analyze them to determine where the house being appraised fits in. And the comparable homes sold — the comps — have to be within the past six months to be valid.
All that means it’s neither an easy nor a quick job, which means that, as hard as it may be, those looking to get a home appraised simply have to wait their turn.
What’s it Take?
Becoming an appraiser in Michigan isn’t easy — but the investment of time and education depends what kind of licensure you seek. Here’s what’s required to become licensed as a:
LIMITED REAL ESTATE APPRAISER
• Complete 75 hours of approved prelicensure appraiser education, including 15 hours in a National USPAP course and the completion of an approved supervisor trainee course. A list of approved prelicensure courses may be found at www.michigan.gov/appraisers.
STATE LICENSED REAL ESTATE APPRAISER
• Complete 150 hours of approved prelicensure appraiser education, including 15 hours in a National USPAP course.
• No college-level education required.
• Complete 1,000 hours of experience over at least a 6-month period.
• Pass the required examination
CERTIFIED RESIDENTIAL REAL ESTATE APPRAISER
• Complete 200 hours of approved prelicensure appraiser education, including 15 hours in a National USPAP course.
• Complete 1,500 hours of experience during not less than a 12-month period.
• Pass the required examination
CERTIFIED GENERAL REAL ESTATE APPRAISER
• Complete 300 hours of approved prelicensure appraiser education including 15 hours in a National USPAP course.
• Possess a bachelor’s degree or higher from an accredited college, junior college, community college, or university.
• Complete 3,000 hours of experience over an 18-month period, of which 1,500 hours must be in non-residential properties.
• Pass the required examination