Sounding Bored is my semi-regular column on the state of the appraisal profession. This week I create my longest (and most inflated) rant list ever on the state of the profession.
An appraiser from North Carolina wrote me looking for historical data on appraisal fees going back to the 1970’s (I graduated from high school in 1978 so I didn’t have a clue of what an appraiser actually was back then).
From what I’ve been told by some older appraisers…many appraisers are charging about the same fee today that they were charging 15 years ago. I think all appraisers could benefit from a historical overview of the evolution of appraisal fees to where they are today.
This comment triggered some thoughts on how bad our profession is as a business. Here’s why.
- We have little lobbying influence in Washington, DC to suggest legislation favorable to our profession (unlike NAR) so its easy to be blamed when things go sour. No one really understands what the problem is except those within our profession.
- Appraiser licensing laws have little teeth to them and as a result, its tough for good appraisers to compete with “good” [wink] appraisers.
- Our national appraisal organizations have lost membership by the thousands since licensing laws were enacted because a license is all that is needed to be qualified for many lenders (we take the state license test among dog groomers and pool cleaners applying for their industry licenses…whom are often more professional than we are).
- There is no teeth to the enforcement of bad appraisers, because resources allocated to the problem aren’t adequate and lenders are reluctant to turn them in because of (the real) fear of litigation liability.
- Good appraisers are being forced out of the business by high volume shops who employ trainees acting essentially as form-fillers rather than valuation experts.
- We have let the mortgage industry remove the barriers between the quality and sales function subjecting us to obvious as well as subtle pressures to be results orientated. Most of us serve those who are on commission and thats a fundamental flaw in the integrity of the lending system.
- Some of us work for Appraisal Management companies at half the going rate as our other clients with turn time expectations of 24 hours but provide slower more expensive service to loyal and sophisticated clients.
- We act defensively when our values are questioned, even if the client concerns are legitimate.
- Forget who our client is and speak to anyone about an appraisal who calls and asks. For example, a borrower who calls about a refi appraisal done for a bank client.
- We often backstab our own colleagues when reviewing their work, not because the work was substandard, but because we see it as a way to get more business from the client or we assume thats what the client wants us to do.
- The measure of our services (speed and “makin’ the number) was based on the desire for short term profits during the housing boom rather than long term gains. As a result, clients are moving to AVM’s and other alternatives because more and more we can’t be trusted as a profession. “What do you need the number to be?” With the credit crunch, do we really think the lender’s who need a real valuation are going to think we, as a profession, have changed our reliability overnight?
- Government regulators and legislators do not understand what we do and how important it is for us to be free to independently assess collateral without pressure, which is now the exception not the rule.
- Our industry guidelines such as USPAP and various associations are unwieldy, complicated and change frequently. Most importantly, theses guidelines and rules, although created with the best intentions, are disconnected from the real world making us appear less professional than the assumption of greater integrity. Less is more.
- The consumer and the lending industry have lost the understanding as to why appraisers are here: to estimate the collateral, not make the deal.
- We are afraid to charge the market rate for our services and instead let the client, rather than the market, dictate what the fee will be (not always the same) because we are not good at communicating the value of our services. We cave in to a lower fee at the first sign of rejection of work. There is always someone willing to charge less.
So back to the original topic of fees. These points are all negative but I don’t think I am too far off on most. If all of the above are true, what client in their right mind would want to pay us more than they did 15 years ago? What “value” does our profession of us bring to the table?
I suffer from fear and loathing of the appraisal industry’s future. For those of you (I suspect most who bother to read this blog) are doing a professional, credible job in your work. You believe there is some honor in the profession and its ok to do the right thing no matter what the personal or financial consequences.
For the rest of you, I hear there are openings as a dog groomer.