How to avoid troublesome appraiser delays

While many areas of the real estate industry are moving at high speed, there is one area that continues to clog the system: appraisals.

The men and women who value homes are greatly depended on by mortgage companies, but their working numbers have begun to dwindle over the past few years, leaving many to wonder how to solve this growing problem. In some markets, where sales are up in high numbers from a year ago, the appraiser shortage means searching high and low for a reputable and available appraiser.

The shortage causes delays in closings, costs buyers and sellers extra money and, in some cases, can even cause deals to fall through. On-time closings dropped from 77 percent last year to an abysmal 64 percent this year for loans backed by Fannie Mae and Freddie Mac and appraisal related issues jumped up by 50 percent.

Brian Coester, CEO of Rockville, a national appraisal management company states: “The appraisal shortage is massive. You’re seeing significant delays, you’re seeing cost increases, you’re seeing rate (locks) expire.”

Home valuations are increasingly important, as home prices continue to go up, prices could change over the course of two or three months, which is the current delay time in some markets for gaining an appraisal. With mortgage rates starting to

climb, the appraisal delay can also make rate-locks more difficult, costing cash loss buyers and sellers alike.

Reasons for appraiser shortage

With the number of appraisers falling by 22 percent since 2007, it’s vital to learn the cause of the downturn. One reason could be the fact that appraisers as a whole are aging with over 60 percent of appraisers being over the age of 50 years old. Although, age isn’t necessarily a primary cause since appraisal professionals can work well into their golden years.

Perhaps a more obvious reason is largely due to the regulations established by Fannie Mae, Freddie Mac and the FHA in 2008. Designed to help protect both banks and borrowers, the regulations changed rules that allowed appraiser’s apprentices to work ahead on groundwork for appraisals. Under the new law, a licensed appraiser is required to be on-site for the full inspection. While having a licensed appraiser onsite makes sense on paper, it created a new circumstance wherein apprenticeships are no longer needed, as appraisers will be doing all of the groundwork themselves. Without an apprenticeship, an upcoming appraiser would not meet the hourly requirement of 2,500 hours spread across two or more years to get a license.

“The typical appraiser, (is) going to do approximately 10-15 appraisals a week. For him to be able to take a trainee, he needs the ability for the trainee to go ahead and inspect the property for him,” said Coester. “The rules have changed now, and you cannot do what you used to be able to do 10 years ago, which is hire three to four trainees and really have them go and inspect the properties, go and do work for you and really function as an apprentice. That market has been completely eliminated.”

Impact for real estate market

The appraiser shortage means higher costs and longer delays for home sellers and buyers. In some cities, like Seattle, for example, clients under the pressure of looming closing dates end up paying out $2,000 or more for an appraisal that typically costs around $600.

How home sellers can beat the delay

There are a two ways you can help beat the appraiser shortage delay and keep the sale of your home moving along smoothly.

Act Early: Contact your mortgage lender as early as possible and ask for an early appraiser request.

Get Ready: Don’t make your appraiser do all of the leg work. Gather all necessary documents ahead of time. For example, gather up deeds, surveys, HOA documents, plots, floor plans, inspection reports, recent property comps, remodels and costs, energy efficient upgrades and future plans for renovations.

Maureen Hughes is the Lead Listing Specialist of The Wayne Megill Real Estate Team of Keller Williams Brandywine Valley in West Chester. She can be reached at maureenhughes@kw.com or visit The Wayne Megill Team site at http://www. waynemegillteam.com.