Delays can frustrate buyers with mandated deadlines, and slow appraisals could be one of those frustrations due to too many requests and not enough appraisers.
ORLANDO, Fla. – For Fred Collins, owner of Orlando Appraisers, completing an entire home appraisal should take a full day, if not more.
“If I do one in the morning, and I don’t get distracted, there’s a good chance I can turn it around that day,” he said.
With 20 years’ experience in the field, Collins is keeping his workload to five appraisals a week, even if he could make more money getting more houses. “I’m turning down a dozen requests a week, because I just can’t physically do them all,” he said.
Last year, Orlando saw a record 45,572 home sales, and it’s on track to have a similar year in 2022. But an appraiser shortage that goes back years means appraisal companies are receiving more requests than they can fulfill in a timely fashion, which in turn can cause sale delays and add another problem for buyers struggling to land a home in this market.
On the one hand, high demand is great for business. “All of last year was amazing, let’s just put it that way,” said Billie Tomlinson, CEO of Ohio-based SAMCO Appraisal Management Co., which operates in Florida.
Appraisal management companies work with lenders and assign independent appraisers to homes in a region. An appraiser determines the value of a home not only by inspecting it, but also comparing it with other homes in the neighborhood.
In the past, that has meant looking at other active listings in the area. But Collins says that hasn’t been the case recently. “We can look at active and pending listings, but there aren’t many of them because they get snatched up right away,” he said. “We have to rely on closed sales.”
Banks need appraisals done to put a limit on the amount of money they will lend for the home purchase. Cash buyers, who have been increasingly prevalent in Orlando over the past year, also sometimes order appraisals as a negotiation tactic.
The uptick in requests, however, has a downside. When a home sale goes under contract, that begins a time limit to complete the appraisal before the contract is invalid. If it takes too long, interest rates can change, causing banks to want to redraw their paperwork.
And with prices rising so quickly, trying to get a new contract can mean negotiating all over again.
“If they’ve got 45 days to close, and the appraisers are out [on other calls] for 35 days, that’s a problem,” Tomlinson said. “They going to have to request an extension, or they’ll have to change their paperwork and the rate.”
The issue has become so severe that the Federal Housing Finance Agency (FHFA) announced in October that Fannie Mae and Freddie Mac would allow “desktop appraisals,” which means appraising based on available data with no in-person home or neighborhood survey.
County property appraisers don’t rely on individual appraisals. “We appraise en masse,” said Amy Mercado, Orange County Property Appraiser. Her office makes valuations based on data from a year’s worth of sales. Those numbers are used to help determine how much a property owner pays in taxes.
But Mercado said the strain on the system is apparent from her office. “The volume is there,” she said.
Experts say the hot housing market is just bringing to light a problem that has existed for years: not enough appraisers. Tomlinson points to a rigorous licensing procedure that turns many off of getting certified.
“The training time for the appraisal licensing, depending on the state you’re in, is very extensive,” she said.
Applicants in Florida must complete 100 hours of education just to become a registered trainee. After that, they need 200 more educational hours as well as 1,500 hours and 150 appraisal reports from the field under the direct supervision of a certified appraiser.
Collins says it’s the training requirement that “just pours cold water on the whole process.”
Most appraisers aren’t eager to spend their time supervising an apprentice for no extra money. “They only reason you do it is if it’s a family member or a really good friend.”
This is a problem that is growing worse, as many appraisers are aging out of the business without being replaced. Florida has 8,916 certified appraisers, according to the state’s Department of Business and Professional Regulation.
Last year added only 108 certified residential appraisers.
There are fewer than 35,000 appraisers working in the U.S. today and their average age is 50, according to employment data website Zippia.com.
“Through attrition, we are losing appraisers every year,” Collins said. “This affects more than just sales. This is divorce, probate, lots of reasons people need appraisals.”
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