Appraiser Shortage or Just Fed Up?


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Appraiser Shortage or Just Fed Up?
by Richard Hagar, SRA

There’s a lot of shouting and arm waving going on: there’s a shortage of appraisers! No there isn’t! Well which is it?

Let’s start off by acknowledging that there is a shortage of Tier 1 appraisers and appraisers working in many rural areas and small towns. However, a lot of what some perceive as a “shortage,” really isn’t; the appraiser endures.

Appraisers are fed up with being blasted with appraisal orders paying less than $400, scheduling the appointment within 24 hours, traveling 50+ miles to the subject and delivering the appraisal within 48 hours, in addition to a “you’d better be happy we are allowing you to work for us” sort of attitude by the lender/AMC.

What we really have is an ever shrinking pool of appraisers willing to be paid less than the equivalent of minimum wage, while being micromanaged by computers and undertrained employees of poorly run AMCs. The problem AMCs are really having…is that they can’t find appraisers willing to be treated less than professionally any longer.

Order Examples

In the past month we’ve received requests:

• To accept this order we’ll require your cell phone number (so that we can personally get a hold of you, when we feel like it, any time between 5:00 a.m. and 11:00 p.m.)
• For a property in Anchorage, Alaska (my office is in Seattle, 2,200 miles away); the AMC was willing to pay a whopping $350.
• For a property in a small town that would require the appraiser to drive two hours and take a ferry just to get to the subject; the fee offer- $250.
• For a duplex created from a corner grocery store built in the 1800s; the offered fee, $500.
• For a house in the midst of being remodeled (no walls). The client knew its condition and wanted an “as-is” value of the unfinished building; the fee offer, $450.

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We rejected all of these orders but continued to receive email blasts that went on for weeks. It seems as though few others were willing to work for these low fees but they kept on trying. In one instance, I knew the person who owned the property. The lender was telling them “There’s an appraiser shortage so finding an appraiser is taking some time.” Finding an appraiser wasn’t taking time, they had our email address; finding an appraiser willing to work for peanuts was the issue.

So, is it a shortage of appraisers or a shortage of appraisers willing to take less so AMCs can make their “low cost” business model work?

Now, before AMCs get their hackles up, I fully understand that there are many appraisers who are incompetent and have a bad attitude when being asked to answer simple questions. I know of a particular lender who has more than 8,000 appraisers on their “do not use” list and for good reasons (addressed in a different article).

In order to cut costs, the business model for many AMCs requires automating their processes. Appraisers are forced to deal with problem-plagued automated ordering, delivery and “review” systems. We are in an era of computerized micromanagement where the AMC computer is likely to message you saying:

• Now that you’ve accepted the order, which won’t be delivered for four weeks, have you called and set the inspection appointment for next month?
• It’s been six hours since you accepted the order and the homeowner hasn’t heard from you, please contact them immediately! (An automated message sent out every 12 hours.)
• Our AMC only charges a $10 upload fee for every appraisal you’ll deliver to us, please provide us with your credit card number.

Yes there are appraisers with bad business practices who need closer management. However there are also many appraisers who deliver services in a business-like manner. So is it a shortage of appraisers or a shortage of appraisers willing to pay an upload fee while being micromanaged by an annoying automated computer system?

Square Pegs, Square Holes and Weak Algorithms
An appraiser can’t deliver an appraisal to AMC clients unless it’s “reviewed” by software. As most of us know, even if the property is unusual with nothing more than a PO Box for an address, the software requires that the square peg must fit into a square hole before you can convert to XML. Every box on the appraisal must have information that fits what the software demands or you hit a roadblock. Every day I hear appraisers in the office banging their heads and other body parts against the desk frustrated with simply trying to get through this process.

After getting the appraisal through their internal “reviews,” appraisers must log into the AMC’s sporadically functioning web portal, use custom, ever-changing IDs and passwords, navigate to the non-intuitive “upload” section and sit around waiting for the AMC’s spiffy custom program to “review” the appraisal again. Often the program requires answers to foolish, time-wasting questions that are already explained in the addendum:

• The flood map number doesn’t match what we have on file, please check the number and make sure it’s accurate. Is it really accurate… Yes/No?
• One of your line item adjustments is more than 20%, did you make an appropriate comment… Yes/No?
• Within the box [_____________] please explain why it was necessary to make such large adjustments.

Not only are appraisers providing the appraisal but now some AMCs require the appraiser to interface with the AMC’s program and review their own work…again! Oh I love this automated system, sign me up….. or shoot me now!

Email from the AMC/Client
“A copy of your E&O policy was not included in the appraisal report, please attach and re-upload the appraisal (to our $10 per upload web portal).” My answer was simple – No! We do not include a copy of our E&O or license with the appraisal report. So the AMC email comes back: “Within the body of the appraisal report, make a statement that “A copy of the E&O and license are not included in the appraisal” and then re-upload the new report through our web portal [that charges $10 per upload].” My reply: “A statement regarding E&O and our license has nothing to do with USPAP or appraising of real estate, therefore we will not alter the appraisal to include non-relevant text because you ‘feel’ it should be there.”

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For the vast majority of questions asked by the AMC’s computer or “reviewer” our response has been “It’s in there, page 9, paragraph 5, didn’t you read the addendum?” And of course most of us know the answer from the AMC…. “No the computer doesn’t provide us the addendum text. Please upload an addendum that tells us where in your appraisal we can find the text we didn’t look for.”

Supply vs Demand
Over the past decade, lenders and their AMC agents have relentlessly pursued lower appraisal fees. They use the excuse that they have to keep costs low. However, since the borrower pays for the appraisal, their excuse is disingenuous. They blast email orders to hundreds of appraisers looking for the cheapest appraiser, not the best. In many areas of the U.S. fees in 2016 were similar to what they were in 1995. Low fees result in many appraisers making less than $35,000 per year. Top tier appraisers, being underbid by cheaper, form filling appraisers, exit the business or seek superior clients willing to pay a reasonable fee for high quality work. The lending system, by failing to pay reasonable fees for quality work, has reduced the number of appraisers, slowed down the current lending process, reduced its profit and created a bigger problem; the supply and demand of appraisers is out of balance, a problem lenders and AMCs helped create.

Our firm won’t jump through the hoops I’ve described, deal with time-wasting questions, pay fees that enrich an AMC or tolerate micromanagement by computers. How well does our business model work? Our base fee is $800 for a residential 1004 appraisal and we are booked solid for the next four weeks (in Seattle area). Superior clients are willing to treat appraisers professionally and pay a reasonable fee; they are seeking and obtaining Tier 1 quality appraisals. Competent appraisers have a choice with whom they work.

Many AMCs depend on “cheap” form-filling appraisers; without them their business models fail. They are yelling about a “shortage” of appraisers because they need an over-supply to keep fees low and their profits high. As Fannie Mae’s Collateral Underwriter raises the standard for a minimally acceptable appraisal, it takes longer to appraise a property and fees are going up. With the higher standard, many appraisers can’t “cut it” and exit the business, while others improve the quality of their work and prosper. The “over-supply” of appraisers and low fees are rebalancing the industry in the appraiser’s favor.

As supply/demand rebalances, many AMCs, unable to find cheap appraisers, will cease to exist. The tide has turned to the appraiser’s advantage. Over time, higher fees will result in more appraisers entering the business. New appraisers will have superior skills, better understand how to support adjustments and will not be the “push-overs” that lenders & AMCs are used to. Lenders and AMC created the problem – now they have to deal with it!

The lending/AMC system needs to ask itself: is there really a shortage of appraisers or shortage of appraisers willing to be micromanaged by annoying computers and underpaid by poorly run clients? The correct answer will decide the fate of many AMCs. Are they ready to die or willing to adapt? Going forward, appraisers will decide their fate.

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About the Author
Richard Hagar, SRA is an educator, author and owner of a busy appraisal office in the state of Washington. Hagar now offers his legendary adjustments course for CE credit in over 30 states through The new 7-hour online CE course How to Support and Prove Your Adjustments shows appraisers proven methods for supporting adjustments. Learn how to improve the quality of your reports and defend your adjustments! OREP members save on this approved coursework. Sign up today at

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Comments (16)

  1. Right on point with this article. I’m glad I don’t have to deal with AMC’s if I don’t want to because I have built a solid rep and a proven work track record. Companies with these types of practices belittle our industry and rob our families of a good income. Hopefully we’ll continue to stick together for our greater good.

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  2. Good article, 100% agreement about the fabricated shortage. There could be a shortage in some areas, but not many. This is an attempt to push the agenda of the AMCs on training the next generation. Thanks for writing.

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  3. Great article Richard. The problem is that there are still appraisers out there that pick up all the bottom feeder $250 appraisals for who knows what reason. That’s why it’s best to stick to the private lenders and other work. Although I wasn’t appraising 20 years ago, my understanding is that the fees have hardly gone up at all, which that in itself presents a huge problem.

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  4. When I first began appraising, and underwriters lived in the territories in which they worked. Consequently, very few of my appraisals were questioned since the underwriters were familiar with property values in specific market areas. Centralized underwriting led to the establishment of AMCs. AMCs, being nothing more than middle men, wants a cut of the profits, and since they pay their “underwriters” almost minimum wage, the AMCs and/or banks are constantly having to train new underwriters. I retired early because of all the red tape and redundant, superfullis government and bank regulations in addition to the low fees. I’m just making ends meet, but I’m happy and not stressed out all the time.

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  5. Great article Richard. Honestly, I have to say that I quit doing work for the kind of companies you describe years ago. I have found that these types of companies seem to be dwindling as they cannot get appraisers to work for them. I think over the last year or two appraisers have become more united and communicate with each other more via social media, etc. We can only take back our profession by working together since we are stronger that way.

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  6. Great article. You nailed most of the issues. Everyone needs to be very aware that these AMCs have way more political power than appraisers and are currently trying to drastically lower the standards so that literally you might never have to do a single appraisal, yet still get your certification. In short because of HVCC the economics don’t work with the traditional hire a trainee, teach him to be a professional over a minimum of three years of close supervision , and then expect him to work for you over a number of years so that you can get paid back and possibly make a profit for all of your upfront effort. Simple changes as little as approving an office or supervisory appraiser, who would have many years of experience, and not every single appraiser in the office, would raise the bar and give the business owner more confidence that his effort would be rewarded. Also not requiring the trainee to be accompanied by a certified appraiser would also greatly improve the business model. These changes are obvious and would ensure the long term health of the industry. AMCs only want a quick fix which is more appraisers. As for me, I am taking my experience to the sales side where at least I have the opportunity to earn what I am worth. Another professional checking out.
    Please make sure to comment on the Appraisal Foundation’s exposure draft

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  7. by Marcella Rodgers

    Great article and so true. I have been deluged with offers from AMCs that require 1-2 hours of my time to input my info and fees only to be email blasted with requests for fees and turn times, then they will take the fastest and cheapest. Not wasting my time any more, I will just stick to the clients I have and try to hang on til retirement in 10 years.

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  8. Everything you have said is a true and fair description of the current state of the typical residential appraisal office. Money can’t solve every problem but it sure can fix this one. Pay appraisers a fair and reasonable fee, and we will hire and train the next generation. Every real estate agent and their dog thinks they know what we do, and many would be glad to try. However, starve us, treat us like children who need constant supervision, and demand ridiculous deadlines, and you get appraisers who ignore the calls of Amc’s and their bottom fishing lender clients.

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  9. This is a very good article. This nailed my last 4-5 years as I started to value myself, my time and my sanity more. I have raised my fee every year since 2010. I also work in a high-fee area in Northern Colorado and I understand that my experience might be different than others.

    Last year, I probably got 40-50 invites to join new panels. Of course, they all say that they pay the best and want the best, but this was nowhere near being true. These companies were just looking for cheap appraisers since the ones that they had were starting to have more of a sense of self worth and would not work for so cheap anymore. I cannot believe that somehow they think that there is a secret stash of good appraisers out there willing to work for very little that nobody else knows about. I got to where I told them my standard fee and turn time (which was only two weeks) and asked them not to sign me up until they were in this range.

    I highly recommend that each appraiser find out what the VA pays in your area and start to raise your fee to that level – this is easily available online. Keep in mind that you will always have more requirements from lenders and AMCs than the VA has, but at least it is a starting place. If you are good at what you do, by turning in quality reports and never being late, you can get to this level or even beyond.

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  10. Good article and valid. As an appraiser in rural Colorado, I can not make items “fit in the box” for AMCs and therefore, have turned down a substantial amount of work.
    There are no model homes here. None. I can not “bracket” everything necessary to comply with most AMC requirements or provide a good substantial report.

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  11. I have a gripe and wonder if I have a legitimate complaint? One of my lender clients recently turned over their appraisal billing to the AMC so now, instead of me paying the AMC for the appraisal order then now also deduct a service fee from the appraisal fee and the check I now receive from the AMC is minus both the portal fee and the billing expense fee so now my fee absorbs the lenders expense of cutting the checks. I am in effect paying for an expense that was once the lender’s and the fee paid is less that the invoiced appraisal fee, It really screws up my cash basic accounting for tax purposes because the check cutting fee is hidden in balance I an paid. Not only does it really get my goat; I’m really resent that I am now paying for what was once the lender’s liability. Is this even legal and what can I do about it without losing my client? Otherwise, the lender pays a market fee and gives me very little hassle once the report is completed and delivered.

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  12. Right now there is high demand for appraisal reports (interest rates low, recession ending, REO’s still high). It is like going to Wendy’s at noon – jam packed – that is where we are now as appraisers. But soon it will be like it was 2 years ago – and everything will be back to normal – and there will be no appraisal shortage. Do we build another Wendy’s next to the current one just because at noon it is packed and you have to wait 10 minutes to order? Of course not – that is just part of the supply and demand of business – I hope the powers that be don’t lower standards just because there is a rush of orders currently – soon it will be a trickle again.

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  13. Love the article on shortage of appraiser’s. You really hit the nail on the head with this one. Unfortunately The powers that be, those same powers that are there to “support” and “look out ” for appraiser’s are now considering education and licensure requirements that will lower the standard of any new appraiser’s. Why, well to help out with the “shortage problem”. This in turn means more sub-standard appraiser’s willing to work for those fee’s while being micromanaged. What has happened to the mind set of strengthening the profession and those entering into it?

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  14. The appraisal industry has not made a persuasive argument that it adds more value to the lending process than it costs – that is, that it prevents more loss, on average, than its fees. It did not prevent the housing boom or collapse – indeed, as currently constituted, it couldn’t, even if every appraisal had been performed ethically and competently. Perhaps a drive-by third-party inspection and AVM will tell lenders “enough” about a transaction – that the roof and siding are intact, that the buyer and seller aren’t colluding to set an outrageous price, or that the buyer isn’t wildly overpaying.

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  15. You are on the right track as far as I’m concerned Richard. Peel the onion one more layer with respect to appraiser relationships with residential mortgage lenders and we find that appraisers have been appointed to be speed bumps or gate keepers that are neither wanted or respected by the residential mortgage lenders and real estate brokers. The thing that boggles my mind is that as we try to perform a valuable economic service to the consuming public the residential mortgage end of the business of appraising depends on the very people we are policing to pay us. That is just nuts!!! More power to you for holding your ground, but I think the majority of residential mortgage appraisers are just stuck trying to make enough to live on. The choice is do it fast and cheap or do something else. No wonder the answer to the problem of value (er price) in purchase and sale mortgage assignment is found right there in the contract.

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  16. No shortage. If you ever took a course in marketing, your professor should have mentioned “sampling”. Take this year’s election. You couldn’t get a better example. All the pools had Mrs. Clinton. What happened? Its who you ask, If you ask the AMCs , the supply of appraisers is low. Why? They aren’t getting participants to work for peanuts anymore. There are just as many appraisers listed in my city’s Yellow Pages as there were in 1990!

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