Omni Realty Group, Inc.
Gregory G. Johnson, MAI, SR/WA
State-certified General Real Estate Appraiser No. RZ778
Licensed Real Estate Broker
Survey - THE STATE OF THE APPRAISAL INDUSTRY
Survey and Report Background:
In the 2008-2010 period of appraisal operations, we began to notice significant changes in the way real estate appraisal services were being processed and recognized that if these processes were not reversed, the professional appraisal community (the protectors of value) could potentially "forever" lose control of not only their direct relationships with clients, but also, the ability to manage the appraisal process as well.
My observations indicated that the pace of moving the appraisal process from a professional service into the realm of a commodity was being moved along at a staggering pace, predominantly due to demand by the lending community to supplement standards and create their own appraisal requirements. Most often, these appraisal requirements were and are not consistent with the USPAP which forms the legal foundation for all appraisal services in the U.S.; however, these standards have once again been set aside for the primary purposes of driving fee volume to these lenders. I say "once again" set aside, because these conditions are the same conditions that led us into the sub-prime morass and the failures of financial institutions practicing them. Ironically, they are the same circumstances that led the U.S. into the Great Depression. The simple truth is, professional appraisers need to manage the appraisal process.
To further consider this, my staff and I prepared a survey to attempt to identify the major issues affecting our profession. Some of these were glaring, but most of the issues were predominantly related to the fragmented nature of how appraisal companies and services were organized. As a result of fragmentation, no coalition of actual professional appraisal service providers was available to counter the significant banking and other lobbying groups that pushed so strongly for their version of the final bill we now know as the Dodd/Frank bill (see http://en.wikipedia.org/wiki/Dodd%E2%80%93FrankWallStreetReformandConsumerProtectionAct )
Now that it's here, what are the effects and how should professional appraisers respond. First, we needed to know the impacts. To measure these accurately would take many surveys; however, the questions and responses to the State of the Appraisal Industry survey helped bring about a glimpse of the major issues. The survey was conducted among 3,910 designated members of the Appraisal Institute®. The questions were supported by a large number of pointed comments provided by the respondents which were integrated into the survey.
We hope your readers gain some insight from the report. We anticipate updating the survey in late 2011 and would like to share one important conclusion that was indicated by the survey results. Appraisers need to collaborate (work together) if we are to save the profession. Without it, soon there will be no appraisal professionals, except at the highest echelons and those, if they decide to endure, will, in time, become part of the larger accounting profession. Independence and true valuation professionalism will become a memory. We must prepare to modify our standing and the only way this can be accomplished is through client and public education in a collaborative effort by real estate valuation professionals that know the true value of what they do. Appraisal professionals bring significant value to the table. It will only be recognized when we begin to regain control over the process. This can only be done by working together to educate our clients and the public we serve.
By this e-mail, you have permission to post this in the California Coalition of Appraisal Professionals website.
Here is the State of the Appraisal Industry Survey and Report link: Designated Appraiser Forum