The 20 appraisal events that will surface, occur, or continue on into 2022 By Tim Andersen, MAI
Editor’s note: some of these are controversial! Please leave your comments, and read other appraisers’ comments, below.
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- No particular order. Some appraisers will discover desktop appraisals are not evil; they’re not the ruination of the industry. Thus, they’ll embrace them when it’s appropriate. Others, however, will choose differently.
- As markets slow down from their past torrid rates of increase, we’ll see an increase in the number of filings of state complaints and lawsuits against real estate appraisers.
- As a result of this market slowdown, the number of appraisers will continue to drop despite intense recruitment efforts, especially in rural and remote areas.
- Despite its current shortcomings, which are long established and long debated, the GSE’s current definition of market value, with all of its problems, will continue.
- Changes in technology and appraisal regulation at the federal level will postpone the new GSE appraisal reporting forms until at least 2024.
- So far, appraisers have not organized themselves to fight the bogus bias and discrimination charges against them. Despite the need for such pugilistic organization, however, the status quo won’t change.
- The GSE’s concepts of reliable, reproducible, and accurate will be what state appraisal boards look for in appraisals, not merely that an appraisal be credible. They’ll continue not looking at the value conclusions in the appraisal reports submitted to them because those remain exactly what they are: merely opinions.
- For good or ill, state appraisal coalitions will eclipse national appraisal societies as influencers to the real estate appraisal industry. This is simply because state coalitions are closer, thus more relevant to their members than national societies.
- More and more state appraisal and taxing authorities will recognize Fannie Mae’s move to use the ANSI measurement standards by adopting those standards themselves. While this is likely a positive step, it will result in another level of regulation and standards imposed on appraisers.
- State appraisal boards will continue their migration toward becoming consumer advocacy agencies; thus, their migration is away from their original purpose, the credentialing, educating, and disciplining of real estate appraisers.
- PAREA (Practical Applications of Real Estate Appraisal), training for new appraisers) is not dead, but the entrepreneurial enthusiasm there once was for it has cooled since its implementation is proving so challenging. Thus, while such a program is both a great idea and a necessity in real estate appraisal, the future remains unclear.
- Appraisal waivers will continue to be a practical alternative to appraisals for some borrowers. Their use will continue into the future and likely increase, especially in low loan-to-value borrowing situations.
- Because current appraisal models are antiquated, high-resolution digital photography and the use of artificial intelligence will become more prevalent. This will require appraisers to become more proficient in their analyses of properties and data as well as more persuasive in their writing and communications.
- First mortgage residential interest rates will increase. This will slow the demand for housing. This slowing for the demand for housing will slow the demand for appraisals. In turn, this will affect the demand for new appraisers.
- Without significant changes in the residential real estate appraisal model, residential real estate appraisals will remain a commodity, meaning one appraisal or one appraisal report is no more valuable than another. Therefore, price and turnaround time will remain the primary aims of those who purchase them.
- Given the political agenda of the White House Task Force on Property Appraisal and Valuation Equity, also known as PAVE, federal regulations on appraisers will increase, though the abuses PAVE addresses are mostly past lending abuses, not current appraisal practice.
- Big data will get only bigger, but the boots-on-the-ground appraisers will not have any more access to those data in the future than they have now. This lack of access to the boots-on-the-ground appraiser is a function of high frontend and high backend costs.
- Given technology, appraisers will divide into two groups: field contractors and desk analysts. Desk analysts will become more important because of improvements in technology and the need for deeper, faster analytics.
- The prominence and importance of AMCs will continue unabated into the future. This is simply because AMCs provide services to lenders that appraisers simply cannot and will not provide. Because the current AMC business model is successful for the AMCs and the lenders, it will also continue.
- Residential real estate appraisal will continue to bear the brunt of government scrutiny over past lending abuses. Appraisers may share some culpability, but no appraiser ever drew a red line around a neighborhood and said, “Don’t ever make any loans there.” This scrutiny will continue since appraisers don’t yet have a national advocate.
So those are my 20 predictions for 2022. Will they come true? Who knows? But thank you for reading this. I appreciate it very much.
Editor’s comment: This is a professional transcription of Tim’s recent podcast. Having a transcription is good as it is hard to scroll through a podcast looking for what you want to hear again!!
About the Author
I’m Tim Andersen, The Appraiser’s Advocate. If I can ever help you, please, get in touch with me Tim@TheAppraisersAdvocate.com. It’ll be a pleasure to know you; it’ll be an honor to work with you. Please let me extend to you a Happy New Year, and my best to you and your family. And, well, I’m not going to say, “We’re clear,” because we’re not. I am, however, going to ask, “Are your appraisal fees high enough?”
Tim Andersen, MAI, is a practicing Certified General real property appraiser in Florida. Mr. Andersen has written many articles on techniques for improving appraisal report quality. Additionally, he recently published a popular book on appraisal practice, How to Raise Appraisal Quality and Minimize Risk: The Appraisers Guide to a Defensible Work File.
He is a fee-based Consultant to his fellow Appraisers relative to USPAP, State Appraisal Board Charges and Complaints, and subpoenas. Available for USPAP compliance reviews, critiques of reports, Standards 3/4 reviews for court cases, forensic analyses of reports, as well as all other real estate appraisal matters.