Oregon Appraiser Shortage and Appraisal Delay Became a Crisis
There is an appraisal crisis going on in Oregon. There just aren’t enough appraisers out there. If you have been involved in selling or buying a home in the last few years, you know there is a big delay with home appraisal in Oregon. In the Portland metro, the turnaround time for getting a home appraised is minimum 45 days from the date of acceptance of the contract. The average range is between six to eight weeks from the date of acceptance. In rural areas, the turnaround time can be as much as three to four months. If a buyer puts on the offer saying he/she can close in 30 days with a mortgage, it’s not going to happen. No matter how diligent the buyer is, it’s beyond their control. Listing agents should advise their sellers not to consider that as a bargaining chip when reviewing offers. There are also so many other problems due to this delay.
Why is there a shortage of appraisers in Oregon?
The shortage is happening nationally, but from state to state the seriousness of the situation varies depending on the state law governing the certification process of new appraisers. In Oregon, it is extremely difficult to get into the business because even if someone completes the minimum education, one cannot receive apprenticeship from an experienced appraiser because they are too swamped to mentor someone in this current shortage crisis. The existing pool of appraisers have been reduced significantly after the last recession in 2008.
Appraisal industry changed completely a few years ago when it became mandatory for lenders to hire an unbiased appraiser through an AMC (Appraisal Management Company). Prior to that, mortgage and real estate brokers had a business relationship with home appraisers just like inspectors to perform appraisal on the broker involved transactions. Somewhere along the line, there were fraudulent appraisals on home values arising out of the business relationships between the two professions. Consequently, Fannie Mae changed the rules and appraisal now goes through an AMC. The idea to hire an independent and unbiased appraiser is good but it did slow the process.
Appraisal delay causes monetary loss and makes home ownership difficult
On my latest deal, an appraisal was scheduled on the proposed closing day (45 days from acceptance) and the fee was around $575 for a $400K house. At one point, AMC (Appraisal Management Company) cancelled their appraisal appointment without any explanation causing a further delay. The property was appraised lower than the agreed price. At that time, my buyer clients had a few options including having me challenge the appraisal with comparable properties, or to concede to that figure and either pay for the difference or renegotiate the sales price. Because this happened so late in the game when everyone had already made their arrangements with their current or next living situation, buyers had no choice but to give up their right to challenge the appraised figure. If the appraisal was done way earlier in the transaction, it would not have put them in the situation to forcibly concede to their appraised value as they would have had enough time to fully exercise and work through their options. The shortage of appraisers not only take away the bargaining chips (fast closing) for real estate buyers, but force buyers in a strangled position where challenging is not an option. As a result, they are often forced to pay more (tens of thousands of dollars) or walk away from the transaction. With a housing crisis already happening in Oregon, this is unacceptable and negatively affects housing affordability in the state, making home ownership more difficult. It also makes it extremely difficult for home sellers to coordinate with buying their new home as they are selling their current one with delays on both sides. The appraisal delay costs at least 20-25 days of daily rental loss to either/both parties. Of course the loss is absorbed by home buyers and sellers.
Debra Gisriel, the president of Oregon Realtors Association made this appraisal issue a priority to advocate at the state and national level for solutions. This is great but I believe the problem should have been tackled earlier. 2015 and 2016 have been the hottest real estate years with lots of demand and we certainly could have used more appraisers.