Very few expected the housing market to crash as the market boomed forward in 2007. But it did. And every sector of the housing industry had its role to play in the crisis that followed. Appraisers are no exception.
Many appraisers during that time found themselves giving in to pressure from lenders to ensure that homes were appraised at inflated values so that the sale would go through. When the market crashed, home prices plummeted and artificially inflated values made that drop even more catastrophic.
The government came down hard with regulations after it bailed out Fannie Mae and Freddie Mac and realized major reform was needed. Passing laws like the Dodd-Frank Act, it doubled down on regulating the industry.
But while all groups felt the impact of the regulations, they did not all feel it equally. For appraisers, one factor played a key role in the heat they received following the crisis – their representation.
Over the years, many appraisers have claimed they received the brunt of much of the blame for the financial crisis and from the Consumer Financial Protection Bureau and from other outlets of the housing industry.
And one reason appraisers claim they receive what they say is more than their fair share of the blame is the lack of representation they receive in Washington, D.C. Compared to lenders who are represented by the Mortgage Bankers Association or real estate agents represented by the National Association of Realtors, appraisers have a much smaller voice. And what’s more, that voice is fragmented.
A FRAGMENTED VOICE
There is no single clear trade group that represents appraisers. There are actually many trade groups that represent appraisers at both the local and national level. Some of those groups include the Appraisal Institute, the Appraisal Foundation, the American Society of Appraisers, the National Association of Real Estate Appraisers and many more. Even NAR has its own division that works specifically with appraisers.
But in this case, more representation doesn’t mean better. In fact, it divides the voice of appraisers across the U.S. It also divides membership numbers and funding possibilities, giving each association fewer resources to work with.
And this lack of a unified voice, according to one professional, is detrimental to the profession. Ryan Lundquist, a certified residential Appraiser in the Sacramento area, said he has yet to see unification among trade associations. Lundquist currently sits on the Strategic Planning and Finance Committee through the Sacramento Association of Realtors and is a board member of the Real Estate Appraisers Association of Sacramento.
“There’s no one unified voice for appraisers.”
Ryan Lundquist
“There are some voices, and I really appreciate what they’re trying to do, but one of the things that’s crippling to the profession is the lack of one main voice and one main advocate to stand up and be strong for the profession,” Lundquist said. “And that’s just not something that I’m seeing happen.”
Lundquist also explained that it is difficult for the industry to truly feel like they are part of the trade groups available to appraisers, saying membership barriers keep many appraisers out.
“We have a few trade groups and a lot of appraisers don’t feel connected to those groups,” he said. “And part of the problem is that you have to be a member of that organization or earn a designation, in order to belong to that group – it’s easy to not feel connected there.”
Another appraiser explained that the real estate appraisal profession is frequently represented in Washington, D.C. by the Appraisal Institute and the Appraisal Foundation who adequately represent appraiser interests. However, members of Congress often put more weight on what other lobbyists say due to their unfamiliarity with the profession.
“I suspect this lack of familiarity stems from the relatively modest lobby of the Appraisal Institute and Appraisal Foundation, both of which pale in comparison to the size and endeavors of Realtors, national lending institutions, data companies, etc. ,” Enlow Appraisal Certified Appraiser Brady Enlow said.
“It is evident appraisers do not have the vast breadth of national recognition or the influential voice of these powerful interest groups.”
Brady Enlow
But the reason for this lower lobby effort comes down to one main factor – numbers.The Appraisal Institute explained that in the U.S., there are about 78,000 licensed appraisers, and 17,000 of those are members of the Appraisal Institute.
By contrast, NAR boasts 1.36 million members. That not only gives it more resources, but also more weight with politicians due to the strong voting population behind it.
“We don’t have the political capital and we don’t have the monetary capital that the National Association of Realtors has, so we are always picking the most important things that we believe we can impact on for the benefit of the appraisal profession,” Appraisal Institute President Jeff Sherman said.
Another appraiser pointed out that one option is to partner with larger organizations such as NAR to push appraiser interests. Francois Gregoire, president of Gregoire and Gregoire and state certified residential real estate appraiser, explained that NAR has its own appraisal committee called the Real Property Evaluation Committee, which he chaired twice.
Gregoire explained that appraisers don’t always get what they want from NAR since the group is just one part of the trade association.
“However, when the appraiser members of NAR are able to convince the NAR board of directors that a particular appraisal-related policy is worthwhile, NAR treats the appraisers very well, and they don’t put us at the back of the bus,” Gregoire said. “They advance our public policy issues.”
But he agreed that the size of the appraisal industry remains a hinderance to seeing more change in Washington, D.C. And having a larger partner changes that dynamic.
“When the appraisers have NAR on their side, the chances of something meaningful happening are certainly a lot higher than when corporations were just doing it on their own,” Gregoire said.
CURRENT ISSUES
Of course, that’s not to say that trade associations aren’t making headway on key, meaningful issues.
“A recent congressional subcommittee meeting of the House Committee on Financial Services on Housing, Community Development and Insurance entitled ‘What’s Your Home Worth? A Review of the Appraisal’ comes to mind,” Enlow said. “Appraisers were well represented by the interest groups in question.”
Another example is the lobbying against the recent passage of the final rule that raised the appraisal threshold from $250,000 to $400,000. The Appraisal Institute continues to lobby and meet with key players on this issue.
“Well, this decision decreases the number of appraisals that are required for residential loans, and we really strongly disagree with the regulator’s decision to increasing this threshold,” Sherman said. “We have spoken in opposition to this in a number of different ways. We led a coalition last year that sent a comment letter to them; we’ve met with members of Congress, and the Consumer Financial Protection Bureau; and we also met with the Senate Banking Committee’s Ranking Member Sherrod Brown and his staff on these issues.”
And Sherman pointed out that despite the smaller size of the appraisal population, the Appraisal Institute is still sought out for advice and guidance on key issues by legislative bodies and even entities such as Freddie Mac, which called on the trade group to educate appraisers on its next-generation manufactured housing initiative. But for many appraisers, that isn’t enough.
When asked if he felt appraisers are getting enough representation in Washington, D.C., Lundquist’s answer was simple: “No.”
WHAT APPRAISERS CAN DO
In 2018 Anthony Casa, who was president of Garden State Home Loans at the time, started making noise about practices hurting mortgage brokers that he thought needed to brought to light. This movement was called “Brokers Rallying Against ‘Whole-tail’ Lenders’ or BRAWL.
And apparently many brokers agreed with him, because the movement spread like wildfire.
“I didn’t start BRAWL thinking it would be a full-fledged movement,” Casa said later. “I just wanted to do something to draw attention to the negative things that lenders were doing, and make it stop.”
Casa may not have meant to start a movement, but he did. And it grew. Eventually it led the way to a whole new trade association: Association of Independent Mortgage Experts. This association started off providing guidance, education and tools to mortgage brokers, but now it’s going beyond that. In 2019, AIME announced it will also begin lobbying efforts. AIME has a larger population of brokers than the appraisal industry. It also has access to large companies which will to be generous in funding. Even with the higher number of mortgage brokers, it is still nowhere near the millions of real estate agents NAR has behind it, yet AIME has still made significant changes just since it arose about two years ago.
Appraisers will not be able to unite their voice if each individual doesn’t decide to come together and join a cause.
“Individual appraisers could join their state coalition, they can join local associations, they can support the national organizations that are saying something, and even if appraisers don’t necessarily agree with everything an organization stands for, I still think it’s important to at least stand with someone or some organization,” Lundquist said.
He went on to explain that complaints without action do nothing.
“Complaining without feet does very little,” he said. “It’s important to have critique, but at some point we have to also show support and hopefully find a unified voice to advocate for certain issues and to speak against things that happen to the profession.”
Another appraiser agreed that those in the profession need to step up, and said they can do so by increasing education and awareness.
“I believe that individual appraisers can unify our voice and increase levels of representation in D.C. by simply raising awareness about the profession,” Enlow said. “Every person should know what an appraisal is and how they affect society, from the purchase of a single-family home all the way up to the U.S. economy as a whole.”
“If people realize the core of the appraisal profession is to promote and preserve public trust, the single line item of a closing statement mentality that is so common may begin to change,” he said.
Gregoire explained that appraisers can partner with others with a larger impact, such as NAR, in order to increase their influence.
“What can appraisers do? Appraisers have been asking that question ever since I’ve been appraising since 1977,” he said. “And their basic problem is the size of the group. It’s just their size is so small they don’t have the clout to have any real impact politically. “It’s not like you hear politicians that are running for office say, ‘I need the support of the appraisers.’”
THE FUTURE OF THE APPRAISER
With so many changes at stake for appraisers, they now more than ever need to unify their voice.
With the rise of technology and valuation tools and the move toward faster, easier, more digitized mortgages, the appraisal industry needs to innovate and evolve to the changing times, and come together to fight for what they want with a unified voice.
Appraisers must also unite to secure the future of talent recruiment among their profession. Today, many would-be appraisers struggle with high levels of education and training requirements. And seasoned appraisers struggle to hire and train that new talent due to regulations preventing them from handing off any real assignments. Once again, the industry must unite behind the issue.
The Appraisal Institute explained it is very interested in the topic and is currently working with the Standards Board at the Appraisal Foundation about reevaluating the requirements.
“They’ve been investigating the idea of classroom based experience rather than having to go work for another appraiser for 30 months, or whatever the requirement is, to be able to go to a classroom on an intensive basis and acquire experience through appropriate classroom techniques,” Sherman said of the Appraisal Foundation. “So they’re thinking about that.”
“We’ve actually provided them some ideas about how we think we can help with that,” he continued. “I think the profession would benefit by some classroom experience, whether that’s 50% of the requirements or whatever the percentage is, it would definitely help to ease that particular bottleneck that exists today.”
But in order for any of these changes to reach fulfillment, or if there is hope for a better future for the appraisal industry, individual appraisers will need to unite.They need to get involved, enlist allies, educate the public and come together under one united front for the good of the industry.
As it stands today, the appraiser voice is fragmented. It’s time for appraisers to step up and unite, create a vision, create a voice, and see it fulfilled.
