Appraiser Supply and Demand
By Jeff Schurman
September 30, 2009
Here's an interesting chart showing the relationship between mortgage originations and the number of certified and licensed appraisers in the U.S. The mortgage origination figures come from the Mortgage Bankers Association; the appraiser statistics from the Appraisal Subcommittee Registry.
The results suggest that the current issue with appraisal fees, the distances some appraisers travel to complete appraisals, and the decision of some appraisers to exit the business may be as much a reflection of the current supply of appraisers as it is other causes.
Among the most cited of these "other causes" has been the appraisal management industry, which has been accused of causing all three of these factors. Recently though some very credible and experienced appraisers have stepped up to dispute that AMCs pay unreasonable fees and explain why it makes little or no economic sense to spend 2-4 hours in the car for less than a premium fee. They and others continue to make the case for working -- or at least considering working -- with AMCs. Send me an email (firstname.lastname@example.org) and I'll send you a list of TAVMA's AMC members for you to check out on your own.
And, although I've not written an article on the topic, I'd say that the HVCC has to some extent forced some good appraisers – and bad and in-between appraisers too to be fair – out of the market. My theory about where HVCC may play a role involves appraisers who built their marketing strategy around direct-orders from mortgage brokers and Realtors. Banning broker- and Realtor-ordered appraisals abruptly severed these appraisers’ direct marketing ties to some long-time clients. Some were able to acquire new clients and join one or several AMC fee panels. However, it is likely that others lost their traditional client base (i.e. brokers) without an immediate alternative or perhaps the business development acumen to sustain the business.
Yet if demand for appraisers has dropped by half over the past 6 years as measured by mortgage originations, and the number of certified and licensed appraisers has trended upward during that time frame, wouldn't it make sense that there'd be shakeout in the ranks of appraisers?
# # #