The Appraiser Qualifications Board, the national organization that governs the Real Property Appraiser Qualification Criteria, is rolling back a requirement that appraisers must have four-year college degrees. Idaho real estate professionals hope that will make it easier to get timely appraisals completed.
The degree requirement, initiated in 2015, didn’t apply to existing appraisers, who were grandfathered in, said Scott Calhoun, a Boise-based certified general appraiser and a member of the Idaho Real Estate Appraisal Board. As of May 1, there will be alternative qualification methods available for appraisers, based on experience.
The college degree requirement made it harder for new people to enter the profession nationwide, because becoming an appraiser required not only the degree but also two to three years apprenticing with an existing appraiser, said Andrew Boespflug, president of the southern Idaho chapter of the Appraisal Institute, an industry trade group.
“Usually it’s either but not both,” said Boespflug, a senior valuation services director for Colliers International in Boise.
This was a problem because appraisers are aging, with half over 45.
“We definitely have seen a drastic reduction of people getting into the industry,” Boespflug said.
Appraisers don’t always have the time or inclination to take on an apprentice, which reduces the pipeline of future appraisers. A hopeful sign is that according to state board statistics, Idaho has 53 registered trainees, up a few from the 46 in 2017.
“If you have a lot of poise and someone thinks you’re a good fit, you may not have a problem,” said Calhoun, who said he doesn’t have any trainees. “If you don’t know any appraisers and you don’t present well, it might be harder to find someone.”
New rules were also created as part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act due to the perception that appraiser overvaluation contributed to the recession, said Raphael Barta, president of the Idaho Realtors and a residential and commercial broker in Sandpoint. Banks now have to choose an appraiser randomly drawn from a pool rather than selecting a specific appraiser, he said. “That means in Sandpoint you could have an appraiser from out of our area, which means they’re not going to appreciate the nuances of this market,” he says.
Consequently, in rural areas it takes more time and costs more money to get an appraisal, which in turn delays real estate sales. “We’re being told we’re seeing longer time frames to get appraisals completed, and costs are going up,” said Toni Nielsen, region president for western Idaho for Zions Bank, in Boise. “When we inquire, we’re being told that we don’t seem to have as many appraisers.” While she didn’t have specific numbers, anecdotally she had heard such reports from western Treasure Valley cities such as Fruitland, New Plymouth, and Weiser, and north Idaho cities such as Moscow and Lewiston.
However, whether there actually are fewer appraisers depends on whom you ask. REA statistics showed mostly flat numbers since 2014. On a nationwide basis, there’s a three to four percent decline annually, said Boespflug.
“There are more appraisers based in larger communities with more dynamic real estate markets,” acknowledged Calhoun. “Otherwise you starve, right? If there aren’t enough transactions to provide a deep enough need for appraisers, then it’s onerous to live in that place.”
Appraisers who cover rural areas typically drive there from urban areas, he said. “The requirement is to have a ‘geographic competency’ in the area you’re working, but just because you live in Boise doesn’t mean you couldn’t work in Challis or Weiser or Orofino or whatever,” he said. “Your license is good for the state.”
Because the change was announced February 1, the appraisal board will consider a temporary rule to accommodate the new standards, which will then be reviewed by the Legislature at the beginning of the next legislative session, Calhoun said. The board, which typically meets in Boise every other month, intends to take up the issue at its next board meeting in April for implementation by May 1, he said.
How much do appraisers make?
Some appraisers nationwide have complained about their pay, which makes it harder to attract new people to the industry.
“You’d think in most arenas if you had a supply decrease, you’d increase the price and eventually it would balance out,” said Andrew Boespflug, president of the southern Idaho chapter of the Appraisal Institute, an industry trade group, and a senior valuation services director for Colliers International, in Boise. “But there’s been real pushback for any increase in fees. Until that does happen, there’s very little incentive for more people to get into the industry.”
“I know anecdotally from other appraisers here in Idaho that they are basically making the same amount they were in 2000,” said Scott Calhoun, a Boise-based certified general appraiser and chair of the Idaho Real Estate Appraisal Board. But there’s no set fee, he said. “If a bank needs an appraisal on a property in Mackie, maybe they’ll have to pay double to get someone to do it,” he said. “If you expect to get that done for the same price as an appraisal ten miles from the appraiser’s house, that’s unreasonable.”
How will big data help the appraisal industry?
Appraisers are increasingly turning to technology to help them do appraisals more quickly. “There’s more reliance on Automated Valuation Modeling (AVM), which is basically an algorithm,” said Raphael Barta, president of the Idaho Realtors and a residential and commercial broker in Sandpoint. “You get the grunt work parameters done by AVM, and then an appraiser makes the nuances. AVM may or may not pick up the railroad tracks or the pig farm nearby, but it will tell you, ‘Here’s the last 50 properties sold in that category,’ which could get you within 10 percent, plus or minus.”
”Big data is going to start doing some of the work that appraisers do now,” agreed Andrew Boespflug, president of the southern Idaho chapter of the Appraisal Institute, an industry trade group, and a senior valuation services director for Colliers International, in Boise. “It works, until the big data misses something. There’s absolutely no replacement for a human set of eyes, and judgment to catch errors and make assumptions.”
And technology only goes so far, Boespflug added. “If the number of appraisers goes down three to four percent a year, productivity is not going up five percent a year,” he said. “It’s not making up for the reduction in the number of appraisers.”