It seems everything these days is going digital. Regardless of how basic or complex the task, tech-savvy entrepreneurs and business owners are finding a way to utilize technology to improve efficiency, lower cost, and reduce overhead. Tasks like hailing a cab or getting an offer for your home have been updated to 21st century standards, and soon, ordering an appraisal will be on this list.
Regulators are making some dramatic changes to real estate valuations and appraisals, leaving room for questions about the demand for appraisers as well as what the job will look like in the future.
Prior to October 2019, mortgages valued at $250,000 or more were required to have an appraisal. However, a recent change in the law increased the value to mortgages on properties of $400,000 or more, reducing the number of appraisals that would be needed.
Additionally, in 2019, Fannie Mae announced they are testing alternatives to formal appraisals and inspections using Property Data Collection (PDC), which allows alternative, non-licensed appraisers to gather pertinent information about the property. The information gathered from the PDC will tell the lender if:
- The loan needs an appraisal at all,
- an automated or hybrid valuation such as a desktop appraisal will suffice,
- or if a formal appraisal is needed.
Companies like Pro Teck and ServiceLink are already offering hybrid valuations and desktop appraisals as an alternative solution for a formal appraisal, lowering the cost for the lender, servicer, or real estate professionals.
With this being said, there is still a demand for appraisers in the current market, and the U.S. Bureau of Labor Statistics expects the employment of appraisers to grow 7% over the next decade. However, what an appraiser does and how the appraisal is done may change dramatically in that period.
In the future, it's likely an appraiser will spend less time at a property using their expertise in the field and more time behind a desk finalizing a property valuation using data gathered by other professionals, such as Realtors or property inspectors. Having more parties involved and licensed appraisers spending less time on a single appraisal suggests the pay-by-hour method will become a more popular payment system than the current pay-per-appraisal method.
Change isn't always a bad thing, but resisting the change -- especially when it's inevitable -- typically is. Current appraisers need to stay informed on revisions to the industry, including new regulations and technologies, adapting to these changes as best as possible while advocating for the industry as a whole.
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