My New Blog

Why does it take so long to complete an appraisal report nowadays? While the US housing market might be experiencing a healthy rebound, the road to home ownership is being hampered by the growing "shortage of real estate appraisers".  According to the latest Campbell/Inside Mortgage Finance Housing Pulse Tracking Survey, the share of home purchases that close on time has declined significantly from 76.6% in April to 63.6% in August.  The end result has been a long list of frustrated home buyers and sellers who often have to wait weeks or months before properties are appraised.

Why are Appraisal Management Companies (AMCs) having trouble finding appraisers to provide appraisal services? Why are some areas (including Washington state) experiencing longer wait times? Why is there a perception of an appraiser shortage? The truth is that there is no shortage of appraiser - only shortage of appraisers willing to do the work for a low fee with quick turn time. Consequently - there is an artificial shortage of appraisers willing to do work for an Appraisal Management Company.

Appraiser's compensation is a big factor in contributing to this  "appraiser shortage".  If appraisers were being compensated at a rate Pre-2010 levels then there would be no discussion about an appraiser shortage. However, what has happened since July 2010 is Dodd-Frank Act has caused an additional expense to the appraisal process by adding a middle man (AMCs) taking a portion (sometimes more than 50%) of what the bank has collected from the borrower for the appraisal as their service fee.  Dodd-Frank Act created AMC which was intended to free appraisers from undue influence of appraised value from loan originators. However, mortgage officers were nothing compared to what the AMCs are doing to the appraisers.