Appraisal Time to Closing Time
How many times as the Realtor, lender or home buyer have you been delayed due to an appraisal? I know I have, and so have my clients. We have all had that home buyer that due to the appraisal process taking six weeks, they lost their rate lock, and ended up in a hotel instead of moving into their new home, at no fault of their own or of their Realtor. Can we place the blame on the Appraiser? The appraisal was ordered, paid for by the home buyer and then it begins…..at no fault of the Appraiser, this appraisal endured more scrutiny in the analyzing of the transaction, then it fails in the Collateral Underwriter Department (CU), causing a desk review, then possibly triggering a field review. And, you wait.
So What is Slowing Things Down?
The Appraiser accepted the order in a timely fashion. The appointment was scheduled, and the home was inspected by the Certified Appraiser within 48-72 hours. Report was submitted to the Appraisal Management Company within 24-48 hours after the inspection. The Appraiser did his job. The problem is that Appraisers are almost handcuffed to the process, with the introduction of Dodd Frank, the Appraisal Management Companies, split fees and more stringent appraisal processes, and less people getting their appraisal certification from a real estate school.
Past Vs. Present
This was not a factor in the past, but certainly is one that the we see in today’s Real Estate Market, and the media is paying attention to. It can be attributed to a shortage of appraisers in many states, coupled with the impact of the Appraisal Management Companies. AMC’s are offering low fees to Appraisers, yet expecting more volume and higher standards. Appraisers turn them down, only to see the same order come back with a higher, more acceptable fee offer a week or two later.
The President of the National Association of Realtors (NAR), Tom Salone, was cited as reporting that Realtors are seeing appraisal complications more frequently as the reason home sales are being delayed. It is no secret to us in the industry that appraisal related contract issues have risen over the past year. Data shows that they were the root cause of over a quarter of delays in the closing process in just over the past three months.
The Numbers Do Not Lie
In regards to the shortage of appraisers, rising fees and stricter guidelines causing delays in home closings across the nation, we need to closely evaluate the plight of Certified Appraisers over the past fifteen years.
Many appraisers have not seen a rise in fees in over 15 years. I interviewed Kirk Breaux, President of Breaux & Associates Appraisal Company has blamed these longer turn times on workload, responsibilities, the scope of the work per assignment has continued to increase, the liabilities have grown and the number of trainees coming into the industry has declined. Mr. Breaux is in a market where his turn times are still low, but so are his fees. He works closely with Lenders and AMCs to provide fast turn times, but even with his best intentions, a deal can be randomly flagged for a stalling audit.
Also, rising home prices, and the refinance market is adding additional work to the number of practicing Appraisers already overworked. Realtors are closely monitoring this, and is yet another reason that home buyers and sellers will need the professional representation of a Realtor in today’s ever changing Real Estate Market.
Nationally, we are looking at turn times in some states that once were five to ten days, now four weeks in Flagstaff, Arizona, six to eight weeks in parts of Colorado, Oregon, Texas, Ohio, New York and the list goes on. There are still states that maintain the turn times of 2014-2015, but how long can these turn times last? That will certainly be determined by the influx of new trainees, fee adjustments for Certified Appraisers and some immediate solutions that could get back those turn times that got buyers into their homes faster.
IMMEDIATE SOLUTIONS COULD INCLUDE
There have been numerous conversations regarding “watering down” the qualification requirements to become a certified appraiser. Education in any of the fields involving real estate is critical. One of which is the removal of the Bachelor’s Degree, in lieu of an Associate’s Degree, lessening the restraints on qualified Trainees in the field, and in reporting data.
Lender could begin accepting Trainees under the supervision of a Certified Appraiser to do some or all of the following:
- Trainee doing solo property inspections in compliance with Uniform Standards of Professional Appraisal Practice (USPAP) Competency Rule and state appraisal rules
- Revise state statutes that prohibit Trainees from signing appraisal reports
- Congress revising FHA fee panel requirements to allow State Licensed Appraisers, not only Certified Appraisers
- Trainees signing reports, with a signature also from the supervising Certified Appraiser
All of us in the Real Estate Industry want to work together to provide the American Dream of Home Ownership. It is important not to just be aware of the changes and policies in our parts of the deal, but our partners in Lending, Appraising & Inspections also need to keep up with their education. A good team makes for a smooth transaction. Realtors know how to navigate and stay on top of the changes, using a Real Estate Professional is the best way to guarantee you will always be “in the know” on your home purchase, and walk away a happy homeowner.