EXCERPT: Does an outdated and sluggish appraisal system give an outsized advantage to cash buyers? A recent panel discussion sponsored by the Urban Institute (UI) led to that conclusion. Four experts gathered by UI concluded that “The real estate appraisal industry must streamline the appraisal process, reevaluate professional requirements for new appraisers, and embrace new technology to meet the demands of today’s housing market.”
A summary of the panel discussion was written for the Institute’s Urban Wire blog by Sheryl Pardo, Associate Director for Communications. Pardo says obtaining an appraisal, a necessity for a homebuyer who needs a mortgage, has become a longer process in recent years, creating a challenge for those who can’t afford to pay in cash.
The discussion, moderated by UI Housing Finance Policy Center codirector Laurie Goodman, featured Susan Allen, senior vice president, CoreLogic‘s Valuations Solutions Group; David Bunton, president, The Appraisal Foundation; Pete Carroll, executive vice president, Quicken Loans; and Zach Dawson, director, collateral policy and strategy, Fannie Mae.
The panelists pointed to some reasons why the process of obtaining an appraisal is so sluggish. Carroll pointed to “a long, outdated form” that appraisers must complete. Others said the volume of mortgage originations is highly variable while the size of the appraisal system is fixed. This leads to capacity constraints and, as Dawson pointed out, uneven income for appraisers. This, in turn, he said, makes appraiser’s income uneven and leads to “volatility in costs and turn times for lenders and borrowers.” The unevenness of appraiser income, along with increasing education and experience requirements also make it hard to become an appraiser or to recruit them into the system.
Bunton said the fees paid appraisers are not adequate to compensate them for the additional work they are required to do. He also pointed to the transition the industry has been undergoing, moving from a trade with apprenticeships to a true profession. Technology could smooth some of this process, he said, perhaps by removing the current requirement for oversight by a supervising appraiser.
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