In a recent survey conducted by the Appraisal Institute, the majority of real estate appraisers said they were optimistic about their future and that of the profession.
The 2013 Real Estate Appraisal Outlook found that demand for appraisal services has increased and that local markets were stronger than a year ago. However, while responses were generally positive when it came to overall business, the potential for training new professionals was slightly behind, with less than one-fifth of those surveyed saying they planned to add trainee appraisers to their staff.
For the profession to truly thrive, this improved-yet-cautious optimism must reach appraiser hiring in order to ensure a healthy future for the profession.
Having faced a challenging real estate market in recent years, the profession is now taking a positive turn, with an overwhelming majority of appraisers feeling positive about the future.
More than three-fourths of U.S. real estate appraisers are very or somewhat positive about the demand for their services over the next one to two years, according to the Appraisal Institute survey conducted earlier this year. Additionally, 80 percent of residential appraisers and 78 percent of commercial appraisers said they are upbeat about their future.
This upbeat outlook may be due in part to increased business and growth opportunities over the past year. According to the survey, 95 percent of residential appraisers and 49 percent of commercial appraisers said there is currently more demand for their services than a year ago. What's more, 32 percent of residential appraisers and 45 percent of commercial appraisers expect an increasing demand for their services during the next one to two years.
The optimism doesn't end there:
- Eighty-four percent of residential appraisers and 46 percent of commercial appraisers said their local real estate market is strong.
- Eighty-six percent of residential appraisers and 55 percent of commercial appraisers said they saw a strong demand for their services.
Because real estate trends are typically local in nature, it's a positive sign for the nation's economy as a whole that appraisers around the country reported increased demand for their services.
The Trainee Disconnect
Although appraisers' optimism in their markets and personal careers has improved, hiring of trainee appraisers has yet to catch up and will remain weak for the next one to two years, survey findings show.
It's unfortunate that too many appraisers apparently fail to appreciate the advantages of hiring trainees. At Borges & Borges Real Estate Advisors, my wife and business partner, LaVonne Borges, SRA, and I understand the benefits to an appraisal company's business. In fact, we have a future trainee taking his first Appraisal Institute education classes this month.
But only 21 percent of commercial appraisers said they would add full-time trainees, and just 9 percent of residential appraisers said they plan to do so. Commercial appraisers account for less than one-third of practicing U.S. appraisers.
According to the survey, 93 percent of the residential appraisers who employ trainees employ one to three; only 7 percent employ four or more. Comparatively, 21 percent of commercial appraisers who retain trainees employ four or more.
While trainee hiring may not be expanding, it is at least remaining steady, with 59 percent of commercial appraisers and 67 percent of residential appraisers saying the number of trainees retained in the next one to two years would not change.
Forty-nine percent of commercial appraisers and 29 percent of residential appraisers said they employed one or more full-time appraiser trainees in the past 12 months. The overwhelming majority – 75 percent of residential appraisers and 80 percent of commercial appraisers – said the number of trainees they retained in the past 12 months did not change. Meanwhile, 14 percent of commercial appraisers and only 5 percent of residential appraisers said the number of trainees retained increased over the past 12 months.
More than half of all commercial appraisers and more than two-thirds of residential appraisers surveyed said the number of trainees retained in the next one to two years would not change. Twenty percent of commercial appraisers said they would decrease or were not sure how the number of trainees would change, and 24 percent of residential appraisers were of the same opinion.
Recruiting the next generation of appraisers must remain a priority for the valuation profession. With more than half of appraisers approaching retirement age, the profession can't afford not to do so. The Appraisal Institute continues to enhance partnerships with six universities to offer credits toward an MAI designation, and encourages mentorship opportunities for up-and-coming appraisers.
Bridging the Gap
Veteran appraisers must harness that optimism for the future while truly considering the next generation of the valuation profession, and hiring trainee appraisers is crucial to doing so. In addition, young professionals, and those new to an appraisal career, should not be discouraged, as there are opportunities for future growth.
The Appraisal Institute survey asked appraisers to indicate areas of potential growth in the next one to two years. Overall, appraisers anticipate continued growth in mortgage lending appraisals as the real estate market recovery continues. This should provide some encouragement, as this represents the primary type of valuation service for a vast majority of real estate appraisers.
Appraisers also anticipate continued growth in specialized areas of consulting such as valuation analysis in support of litigation, marketability studies and market studies.
The online survey polled 591 real estate valuation professionals from May 31-June 17, 2013, and had a margin of error of +/- 4 percent.
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