### The Decline of Appraisers

##### By Isaac Peck, Editor

Every year, for the past eight years, the number of active real estate appraisers has declined. The Appraisal Institute estimates that the number of appraisal professionals is currently shrinking at three percent a year and warns that sharper decreases may be on the horizon as appraisers begin retiring en masse. And the problem is not simply that too many appraisers are retiring. Very few appraisers are entering the profession also. In Illinois, the drop in real estate appraiser trainee applications went from 1,231 in 2005 to only 55 in 2015. That’s an over 95 percent decline. This drastic reduction in new entrants is being seen in states across the country. Many appraisers welcome the shortage, which has already driven fees up in many areas. But many in the appraisal industry believe the celebration may be short sighted. Many appraisers and those in mortgage lending worry that a decline in the number of appraisers and a reduction of appraisal services threaten the integrity lending, undermine the stability of the real estate market and put the economy at risk of future bubbles. It also does not bode well for the appraisal profession. Many fear that lending interests are just itching to find a reason to replace appraisers where and when possible with big data and automated systems, should turn times become untenable. For appraisers, there is a lot at stake. At national conferences, company meetings, even around the family dinner table the debate rages: what to do about the declining number of real estate appraisers in the United States?

De Minimus Minimus Threatened Automated Valuation Models (AVMs) are becoming more sophisticated with huge stores of appraisal data being compiled and used to “estimate value” with an accuracy like never before. Lenders and risk managers are increasingly turning to (and demanding) more statistical and regression-based support for valuations. Perhaps most ominous of all, vocal stakeholders in the mortgage industry are calling to have the federal de minimus raised from $250,000 to $500,000- the threshold below which an appraisal is not required for a federally-related transaction. Just last year, the Federal Financial Institutions Examination Council, which includes the Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Federal Reserve System and the Consumer Financial Protection Bureau, indicated that the de minimus threshold of $250,000 is presently under review as part of a larger effort to identify “outdated, unnecessary, or unduly burdensome regulations.” The efforts to raise the de minimus are led by the American Banker’s Association (ABA) and a coalition of smaller regional banks which are more likely to experience a shortage of appraisers in rural markets. The ABA argues that appraisals are unnecessary costs that make it hard for small banks to compete. The Appraisal Institute, the American Society of Appraisers, the National Association of Independent Fee Appraisers, and many other organizations have vocally opposed the proposition, arguing that “increasing the appraisal threshold levels could have a negative impact on safe and sound real estate lending practices.” While it’s unlikely the de minimus will be raised in the immediate future, the fact