Shortage of appraisers spells long but lucrative work hours

If you call an appraiser lately, they can sound like they’re plugging a finger into the dam. Sometimes they are on speakerphone, driving, and their rushed voices are barely discernible over commotion in the background.

“Can’t talk right now,” they say. “Another time, maybe. When works for you? I can get back to you … the last week of November.”

Housing demands have risen rapidly in Clark County and across the United States, and the ever-shrinking ranks of real estate appraisers are juggling an increased workload. Appraisal costs are rising — and lenders, real estate agents and potential homeowners find themselves caught in a bottleneck.

“It’s been getting increasingly worse,” said Terry Wollam, a real estate agent who said he felt pending sales have bloated from a two-week wait to more than a month in recent years.

Under estimation

Larry White, 45, gets up at 3 a.m. three times a week to get an early jump on emails and paperwork. He pays a neighbor to help, too, so he can spend more time for on-site visits, of which he makes about a dozen per week. He charges about $500 per appraisal.

He and his business, White’s Appraisals, are busier than ever. He and his colleagues in the world of appraising are thriving in a sweet spot of high demand and fewer competitors. He’s one of 153 appraisers working in Clark County, according to the National Appraiser Roster. He’s a certified appraiser, which has more relaxed requirements than a licensed appraiser, but he’s still booked out into November.

“I like being busy. I like feeling like I’m accomplishing something. It’s better than the alternative of not being busy,” he said.

According to the Appraisal Institute, an industry association, the number of appraisers has shrunk by 22 percent since the housing downturn of 2007.

White remembers when it was slow. After a stint in the U.S. Marine Corps and working as an electrician, the Texas native became an appraiser right before the market downturn. It was tough then, he said. An appraiser’s pace is a weatherglass for the housing market: when the housing market froze, appraisals went glacial. Times are good now, and he hates that he has to turn work away.

“We try not to give anybody preference or any companies that we’ve worked for 10 years preference. If we can do it, we can do it. If we can’t, we can’t,” he said.

Other appraisers will book out for months. Some are booked into the new year, and that may be stringing along deals that are all but closed. Real estate analyst group Campbell/Inside Mortgage Finance wrote in a recent study that the number of housing deals that closed on time dropped from 77 percent to April 2015 to 64 percent this September, when examining loans backed by Fannie Mae and Freddie Mac.

How did we get here?

In 2008, there were 3,322 appraisers in the state of Washington. As of September, there are 2,641.

Many say there are fewer appraisers today due to safeguards put in place after the market downturn in 2008. Before, some lenders might collude with appraisers to value properties so they could structure loans to their own advantage. The Federal Housing Finance Agency established appraisal management companies to act as a go-between and sever bad influences.

The agency also raised requirements for the appraisers it would do business with through Fannie Mae and Freddie Mac. The stricter requirements and the new appraisal management companies, which get a cut of appraisal fees, frustrated many, according to White.

“When this whole bubble happened and the government came in and mandated the middle man, and with these middle men giving us fees that are 40 to 50 percent of what we used to get paid, a lot of the old guys got out,” he said. “That created a vacuum. And they made it harder to become an appraiser — so now what?”

The scarcity is partly by choice, too. Hopeful appraisers must apprentice under an established appraiser, but established appraisers aren’t as willing any more to train people who will quickly become their competition.

‘Shake-my-head moment’

With a glut of housing deals and fewer appraisers, rush fees to jump the line are becoming more enticing — and more expensive. Deals could usually close within 30 days, but without a rush, lenders say it’s not uncommon for deals to take 60 days.

Leslie Girard, a loan officer and branch manager of Evergreen Home Loan, said she sometimes asks an appraisal management company for a $600 appraisal, only to hear back that a swamped appraiser might squeeze it in for a rush fee worth a few hundred more dollars.

“It has started to become the norm that if you want anything in a timely fashion, they want to know how much you were willing to pay for it,” she said. “It makes it very difficult for closing, as far as making sure you can meet your deadlines.”

Sometimes the lenders pay the fee, sometimes it’s passed onto the customer. Sometimes the customer will say they don’t want to pay extra for a rush, but then they could be vulnerable to a higher rate if the deal doesn’t close within an agreed-upon window. Girard said they have adjusted by curbing some clients’ expectations.

“We’ve had clients say we want to close in three weeks and it’s a shake-my-head moment,” she said. “Some of the buyers say yeah, I’m willing to pay it, but the people who are disadvantaged are the first-time homebuyers who are pinching pennies anyway.”

‘Make hay’

Lenders like Girard aren’t too caught off-guard by the development, because appraisals have cost about the same for decades, typically hovering around the $450 to $600 range that White and other appraisers still offer. Lenders, Girard said, understand as well as anyone the way market forces are creating this environment, and they will have to weather it.

“I know they are popular right now. They are independent contractors, I get it,” she said. “It’s just an unfortunate storm, so to speak.”

For White, who said he hasn’t raised rates, it may not always be this way. The market is hard to predict. Some appraisers, as with any business, will take advantage, but he said he hopes to build clients; jacking up rates wouldn’t exactly endear himself to them. But he agrees it’s a good time to be an appraiser.

“I think there are those appraisers who do take advantage,” he said. “The way I look at it, there’s bad times and there’s good times and we’re riding the good times. When it’s nice out, you make hay.”