Appraisal waivers. Hybrid appraisals. $500,000 CRE appraisal thresholds. Evaluations. These topics suggest a growing trend to diminish appraisers’ participation in valuations. A recent US House of Representatives bill virtually eliminates appraisal requirements for SBA’s two largest loan programs. The National Credit Union Administration recently proposed an appraisal threshold level increase for non-residential loans to $1 million.
If you’re a fee appraiser, this trend might make you feel like David Bowie’s song Space Oddity – the story of a fictional astronaut, Major Tom, who cuts off communication with the Earth and floats away in space. I believe most chief appraisers and chief credit officers are aligned with fee appraisers, wanting to provide the best analysis for prudent risk management. Problem is, these two groups aren’t really communicating (complaining that you need more work isn’t helpful). Seek to truly understand what chief appraisers’ want and need.
I think the following National Mortgage News video goes a bit too far, “The future has no real estate appraiser.” Mr. Matt Rider, CIO at Franklin American Mortgage blames us, “Appraisers did it to themselves.” Appraisers are an aging workforce and not a lot of the younger generations are coming into the field. He concludes that aggregating historical property centric data will result in, “The future is without an appraiser and that’s what’s really exciting.” Ironically adjacent to the video is an Appraisal Institute ad (with a stock photo of a young woman), “Raise your expectations for excellence.”
I think our industry could use a huge dose of new branding focusing on professionalism, productivity and relationships. PPR (weak acronym, sorry) could start a new cohesive message, participating in the narrative. Mr. Rider suggests, “Re-envisioning the entire landscape will get younger generations excited to come into the business.” Who better than appraisers to talk about the “why” and give them technology tools to operate. Instead of USPAP classes every two years, how about mandatory PPR seminars? Include “happy hour” networking for us to reconnect as a collective group.
Most lawmakers and some real estate professionals don’t truly understand the distinction between residential and commercial appraising. They also forget what we both bring to the valuation table, market stability. I recently was working with a developer who said, “Wow, I forgot how knowledgeable you appraisers are but you’re a dying breed.”
“Ground Control to Major Tom (10, 9, 8, 7, 6). Commencing countdown, engines on (5, 4, 3). Check ignition and may God’s love be with you (2, 1, liftoff).” Are these trends disturbing enough for a call to action? Mr. Bowie’s Ashes to Ashes suggests that Major Tom survived re-entry and re-established communication with Earth. As real estate appraiser professionals, I think we should talk to ground control and not float away.