Editorial
THE FUTURE OF APPRAISING
by Henry S. Harrison
The good news is that now that all the grandfather provisions have been extinguished for new appraisers, there are not going to be many new licensed appraisers within the next few years to add to the competition. Some of the existing 20,000 licensed appraisers who have a college education will take the additional courses, pass the required exam, and obtain a job where they can get enough work to meet the certification experience requirements. I predict that most of the others will give up and look for other employment in other fields.
According to the Appraisal Sub Committee’s website (www.asc.gov), there are currently 56,941 Certified Residential Appraisers and 37,988 Certified General Appraisers in the U.S.. This indicates that there are 94,929 appraisers who will be able to do FHA appraisals. (These estimates are not 100% accurate as there is duplication caused by appraisers who are certified in more that one state and the fact that some states only report to the ASC annually).
However you look at it, there are a lot of appraisers! If in 2010 there will be 10 million appraisals made, (a very high estimate), it would work out to an average of two per week per appraiser. Sooner or later the number of residential appraisers is going to go down substantially.
When appraisal licensing and certification started about 20 years ago, many pundits predicted that the initial number of licensed and certified appraisers, which was about 80,000 at the time, would slowly decrease to about 50,000. Today the number is well over 100,000. I think it is reasonable to predict that this number will fall below 100,000 in the near future and continue to contract for many years to come.
I believe the majority of Certified General Appraisers earn the majority of their income from doing residential appraisals, rather than commercial assignments. You have every right to disagree with me — but I think I am right. (If you disagree, please write to editor@revmag.com and we will print the best letters in our next issue.)
Back in the 1970s, before mandated state licensing, when I received my MAI designation, I was astonished to discover that my gross income doubled the first year although I didn’t do any additional work. The quality of the assignments I was offered was much better and the fees I was able to charge were much higher. One local banker told me with relief that he could finally offer me many assignments that were not open to me as an appraiser with a lesser designation.
There are two different types of General Appraisers. One group received their General Certification before the requirements were raised to their current level. Most are qualified to make good residential appraisals, even when the assignment involves more complex residential and mixed-use investment properties. Many can do an acceptable appraisal of some other types of property too. However, there are many properties, often the best appraisal assignments, which they really are not qualified to do.
There are a substantial number of appraisals purchased by customers who want help in making decisions for themselves and their clients concerning complex properties. These assignments are most often given to appraisers who have the MAI and SREA designations. It is these appraisers who buy and study the types of books that I have reviewed in this issue (The Valuation of Office Properties: A Contemporary Perspective; The Appraisal of Nursing Homes; and Shopping Center Appraisal and Analysis). They choose continuing education based not on the c.e. hours awarded, but rather for the subjects that are covered, which they believe will increase their skills. My guess is that less than 10,000 appraisers fit into this elite category.
I feel sorry for the many licensed appraisers who are going to leave our profession, but I won’t miss them. They have contributed substantially to the low esteem that lenders, Realtors and the general public now hold for appraisers. It is going to take a long time to undo the harm they have done to our profession.
HSH
