Posts Tagged appraisal

AppraisalPort poll – retirement plans
Poll Results
www.appraisalport.com

Not considering Social Security, my Retirement Plan consists primarily of:

401k/IRA and savings 611 votes    14%
401k/IRA and investments 917 votes    20%
401K/IRA and pension 172 votes    16%
Savings, Investments and pension 412 votes 9%
401K/IRA alone 329 votes            7%
Investments alone 197 votes        4%
Pension alone 45 votes            1%
Savings alone 280 votes            9%
Income or other Property(s) 457 votes 10%
I need to start a plan 1,074 votes    24%

Total Votes: 4,494

My comment: Many active appraisers are getting older (as is our national population). With about half of appraisers 50 or older, many of us are thinking about retirement. The “old days” of retiring at 65 are declining fast. In the past, there was often mandatory retirement at 65 to allow new workers to enter the market. That is gone, except for a few occupations.

Last night I watched a new Frontline (PBS) documentary on retirement, focusing on mutual funds. I thought I was knowledgable, but I realized I was not. I had a company 401k when I worked in a corporate real estate job many years ago. I didn’t really analzye how my money was being invested. I cashed it out to start my appraisal business. I did not realize the high costs investors pay to mutual funds. Also, the severe impact on employees of the shift from pensions to 401ks as businesses quit offering pensions. One of my brothers had all his 401k invested in his company stock, which tanked and has never come back. I warned him, but the stock price was zooming then.

I will be 70 next month and starting to collect Social Security. Like many fee appraisers, I starting cutting back on appraisals several years ago. I don’t need as much money now as I did 10-20 years ago. I am no longer willing to work 7 days a week, 12 hours a day. As we get older, all of us are physically less able, which means no more 2-3 inspections per day plus hours and hours of driving, etc. for residential appraisals. Fortunately we can always do desk reviews, hire someone to drive us around and help with inspections, etc.

Stress is also a factor. I am no longer willing to put up with clients that are a real hassle. Unfortunately, the hassle factor keeps going up and up with AMCs.

I was surprised that only 10% answered real estate. The appraisers I know who retired early all invested in real estate. I only have one investment property, a duplex. But, rents go up over time in my area and are steady income. A much more steady income than stocks and bonds. My other source of retirement savings will be the sale of my publishing business some day. I have never planned on selling my appraisal business. It is possible, but I did not set up my business for future sale. Also, newsletter businesses sell for a lot more and there are plenty of buyers. One of the reasons I started my newsletter is that there is a very active market in selling business to business newsletters, like this one. I really like appraising and this newsletter, so I plan to continue both businesses. But, I will be cutting back more on appraising. Even if I am no longer writing appraisal reports, I will always be an appraiser!!

Certified Appraisers at All-time High, Opportunities Coming:
Appraisal Institute study

My comments: Licensed appraisers are dwindling as FHA and many lenders will not accept their appraisals. The AQB only determined certified appraiser qualifications. When licensing started, many states set up a licensed category because there were fears of an appraisal shortage as no one knew how many appraisers existed pre-licensing. Unfortunately, state licensing requirements varied widely, with some states (i.e., IL and OK) having very minimal requirements.

Appraisers are aging. That is true of many types of work, primarily due to the aging of the baby boomers. When I started my business in 1986, the AIREA (merged into the AI) survey said the average appraiser age of their members was in the early 50s (most were commercial appraisers). Few appraisers started appraising as their first career, so appraiser age has always been higher.

The positive spin is that there will be a shortage of appraisers in the future. This is nothing new as residential lender appraising has always been boom and bust. 70% of appraisers are residential. Another positive factor is that the post-licensing qualifications of  appraisers has gone up with more certified appraisers.

========================================================

Text of AI press release:

The percentage of appraisers with a state certification is at an all-time high, the nation’s largest professional association of real estate appraisers announced today. With more than half of U.S. appraisers aged 51 to 65, the Appraisal Institute anticipates opportunities for new appraisers.

The Appraisal Institute has analyzed the Appraisal Subcommittee National Registry data since 2006 using a consistent methodology, and the long-term trend is clear:

· The number of appraisers continues to decrease at a rate of about 3 percent per year;
· The appraiser population could decrease 25 to 35 percent over the next 10 years due to age attrition and fewer new entrants.

“In spite of a higher level of appraiser qualification overall, the lack of career prospects for trainees and few new people entering the profession are legitimate and serious issues, yet opportunities do exist to reach the next generation and employment options will, in fact, likely be enhanced in the coming years,” said Appraisal Institute President Richard L. Borges II, MAI, SRA.

Broader analysis suggests this is primarily due to:
· A sharp and long-term decline in the number of new people entering the field;
· A high rate of future retirements due to the high mean age of appraisers;
· Individuals leaving the profession due to challenging business conditions;
· Increasing government regulation;
· Wider use of alternative valuation technologies displacing some appraisers (especially in the residential sector); and
· A potential oversupply of residential appraisers. (Nearly 70 percent of all appraisers focus primarily on residential appraisals.)

While the overall number of appraisers is decreasing, the number of certified general and residential appraisers is on the upswing.

The analysis shows there were nearly 6,000 more certified general and residential appraisers on Dec. 31, 2012 than there were at year-end 2006. For the same period, there was a decline of nearly 16,000 licensed appraisers. About a third of the decline is because appraisers achieved certified status. A large majority of appraisers who left the profession in the past three years were licensed-only appraisers who were either relatively new to the profession or did not pursue certification.

The proportion of certified appraisers to total appraisers was 72 percent at year-end 2006. As of year-end 2012, the proportion was 87 percent; therefore, the proportion of appraisers with a certification is higher than it has ever been. While the total number of appraisers has decreased 15 percent since 2007, the data indicates that the appraiser population is more qualified overall.

Commercial, non-traditional (non-point-in-time) valuations appear to be a growth opportunity for individuals with advanced analytical, financial and mathematical skills, Borges said. He said that key growth markets might be working with accountants, financial analysts, investors and others on real estate portfolio management/analysis, purchase, lease and investment packaging. He also noted that additional areas of real estate valuation – right of way, conservation easement, taxation issues and litigation support (expert witness testimony) – could provide opportunities for professionals looking to enter the valuation profession.

Link to 2 page Fact Sheet of stats and graphs:

Real Estate Appraisal in the US: Market Research Report
Thanks to Appraisalscoop.com for this Most Interesting info!!

My comment: Unfortunately, the report costs $825. I’m not sure who would buy it, but below are some interesting excerpts. It does confirm that 75% of appraisers do not have any employees.

I did a surveys in 1992, just as licensing was beginning. At that time, relatively few appraisers worked solo (22%). 25% had 2-3 appraisers, 25% had 4-6 appraisers, and 27% had 7+ appraisers. The average was 5.4 appraisers per company. Number of years of experience of The business owners had 5-10 years of experience. I had three appraisers.

Around 1995 came a big crash, and many of us downsized to one appraiser. Few of us went back up to the old days. Newer appraisers in the mid-2000s hired lots of trainees to increase firm size. Most of them have gone back to one appraiser. Same Old Cycle. Nothing New.

Excerpts from report:

The top five firms in the Real  Estate Appraisal industry account for less than 15.0% of industry revenue  with the largest having a market share of just 6.2%. The larger participants in  the industry are generally subdivisions of large multinational property,  brokerage, and global real estate service firms. The vast majority of companies  operating in the industry are small, independent firms with few employees or  single-owner operators.

According to the US Census and IBISWorld estimates, 75.3% of establishments are nonemployers. From 2008 to 2010, the total number of  establishments in the industry was decreasing. The number of nonemployer  establishments was decreasing at a faster rate than employer firms. This trend, however, has reversed recently.

Click here to read more and post your comments at www.appraisalscoop.com .

http://appraisalnewsonline.typepad.com/appraisal_news_for_real_e/2013/03/real-estate-appraisal-in-the-us-industry-market-research-report-from-ibisworld-has-been-updated.html

————–

Excerpt from press release
Over the past two years, however, IBISWorld expects that industry revenue has recovered substantially, and estimates it will grow 6.7% in 2013 as the volume of real estate transactions increases and property values continue to recover from recessionary lows

Link to press release with more info:
http://www.prweb.com/releases/2013/3/prweb10545179.htm