Homebuyers and sellers could encounter longer waits, higher fees and lower-quality appraisals in the near future, MarketWatch reports.
Such issues are expected to stem from declining numbers of real-estate appraisers, particularly among residential appraisers rather than commercial appraisers.
Since most residential mortgages require an appraiser to value a property before a sale closes, [some experts] say, a shortage of appraisers is potentially problematic — and expensive — for both home buyers, who rely on accurate valuations to ensure that they aren’t overpaying, and sellers, who can see deals fall through if appraisals come in low.
According to the Appraisal Institute, a global trade association, there were 78,500 active real-estate appraisers in the U.S. as of mid-2015. That figure reflects a cumulative decrease of 20 percent since 2007.
Additionally, that average annual rate of decrease — currently pegged at nearly 3 percent — could continue for the next five to 10 years due to a host of factors, such as:
- Fewer new people entering the appraisal profession
- Economic factors
- Government regulation
- Greater use of data analysis technologies
For example, the shrinking pool of appraisers is also an aging pool, according to the Appraisal Institute. About 62 percent of appraisers are 51 or older, while only 13 percent are 35 or younger.
Craig Steinley of Steinley Real Estate Appraisals in Rapid City, South Dakota, tells MarketWatch:
“As an appraiser, I should be quiet about this shortage because it’s great for current business.
“What will undoubtedly happen, since the market can’t solve this problem by adding new appraisers, [is] it will solve the problem by doing fewer appraisals.”
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