Silly me! Appraisal delays are NOT
only related to increasing sales.
Teri Robinson, of
Vision Appraisal Services, kindly educated me on some of the other factors that are affecting appraisal delays.
In summary....
- The housing collapse lead to new regulations on appraisers.
- Appraisal Management Companies were created as middlemen.
- Appraiser income dropped as AMC's took a cut of the appraisal fees.
- AMC's optimized for speed and cost, sometimes at the expense of competence.
- Optimization on price reduced overall appraisal fees.
- Lower income caused many appraisers to leave the profession.
- Further regulations increased appraisers' reporting requirements.
So, it's not just more than just more sales, more fully, it is....
More Sales + More Paperwork + Fewer Appraisers = Appraisal Delays
Still want to read more? Keep reading, from Teri....
Since the 2008 downturn and subsequent housing collapse, the turmoil in the financial industry created many burdensome regulations on the only Licensed/Certified person in the financial process (prior to Loan Officers having to be Licensed/registered).
Many Appraisers quit doing Residential work and many left the profession altogether, as the rise of the middleman (in the form of Appraisal Management Companies) took a significant cut of the Appraisers' fees and farmed out work to the lowest bidder and quickest turn time with no regard as to whether the Appraisers were qualified or competent. Many Appraisers who were either struggling to make ends meet or were too new to the profession to build a client base took whatever fees they could get from the AMCs and agreed to whatever terms the AMCs dictated. This "cheapest and quickest mentality" led to a significant reduction in the number of Appraisers overall, especially experienced competent ones.
Then FNMA and the Consumer Protection act heaped more burdensome time-consuming requirements to be included in the Appraisal reports- extending the time necessary to complete each report. The time an Appraiser spends at the individual property is a fraction of the hours it takes to complete the total appraisal process and report the property's opinion of value – the research, compilation, analysis, confirmation and reporting of the Subject property's, Comparable sales' and listings' data is the bulk of each report, which takes place out of the public eye. At the same time, Appraisers are expected to perform the hours of additional work to meet the increased regulations for the same or less fee per report as received in the 1990s. What other fees have decreased or stayed the same for 20 years when the work requirements have more than quadrupled?
So, the result of all of the above? Fewer Appraisers left standing to complete longer and longer reports with more and more requirements for a stagnant fee dictated by the current system, which equals greater delays when the volume increases. In addition, the requirements to become a Licensed/Certified Appraiser are such that a quick replenishment of the supply of Appraisers is impossible, in part, due to the low return on the required time investment versus the low fees currently dictated by the system put in place by Regulators after the downturn.
So -- I stand corrected since yesterday -- yes, higher sales volume is contributing to slower appraisal timelines -- but there are other big picture factors at work here as well.
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