Michelle Czekalski Bradley, past chair of NAR’s Real Property Valuation Committee, and a Pennsylvania Realtor®, recently testified in front of Congress about the lack of home appraisers in rural areas.
Last month, the House Veterans Affairs subcommittee listened as Bradley discussed how veterans in rural areas were struggling to have home appraisals done for the VA home loan program.
“It was a big honor,” said Bradley, on giving her testimony. “Several veterans in rural markets were complaining to their congressmen that it was taking so long to get a VA appraisal done in rural areas. It is a national concern.” So, Bradley, on behalf of NAR, went to discuss how veterans, and other homebuyers, are being impacted by it.
Bradley said there is a “perception” that there is an appraiser shortage. “A lot of conventional lenders are complaining that appraiser turnaround is taking longer and fees are being quoted as higher, particularly in rural markets,” she said. “It’s not a shortage of appraisers. It’s a shortage of appraisers willing to work for the fees being offered.”
Bradley said appraisers are under heavy regulations from Fannie Mae, HUD and VA, and because of the fees and complexity, it is not always cost-effective to accept every appraisal, particularly in rural markets. Many appraisers are screening appraisals prior to accepting them.
“We have a perfect storm of conditions now. We have historically low interest rates, and pent-up demand of buyers from the housing collapse. We have pent-up demand for housing because buyers who were terrified to buy in the early years after the crash, are now out there in full force. We have appreciating property values in many markets with huge demand from buyers and refinancing homeowners” said Bradley. “Appraisers must have a minimum of a bachelor’s degree and two-year apprenticeship, and compensation for assignments is being split with appraisal management companies for many assignments. This makes many appraisers simply chose to limit the assignments they accept or quote higher fees. It is simply supply and demand factors at work. When interest rates start to edge up, things will slow down. This perception of a shortage is going to dissipate as soon as interest rates go up. Appraisers have more work than they can take. But that will change.”
So, what’s next? Bradley plans to work with the VA and NAR to find a solution.