If you are currently in the process of buying or selling your home, you may have run into a big surprise on how quickly (or more accurately, slowly) the process would take. In just a short few months, our market has gone from relatively timely appraisals with a turn around time of about 10-14 days to averaging 20-30 days.
In addition, the prices are starting to skyrocket, especially with those buyers who are willing to pay a lot extra to get a guaranteed turn around time. Where just six months ago, the normal appraisal price (paid for by the borrower) was about $500-700. We are now seeing the prices start at about $900 and have even heard of people paying up to $3000 for a faster turn around time. Ultimately what this means, besides a higher cost for the loans, is that both buyers and sellers should start expecting close times of about 60 days from the time you reach mutual acceptance.
So how did this happen? Basically it’s a long delayed response to the Dodd Frank regulations that were agreed on in 2011. The Appraisal Qualification Board created a new list of requirements for Licensed and Certified appraisers in December 2011, which went into effect in January 2015. Some of these requirements are creating a barrier to entry into the field of appraising. The main criterion that is causing problems is the requirement of a 4-year college degree in order to become a Certified Appraiser. Since almost all loans require an appraisal by a Certified Appraiser, and not a Licensed Appraiser, this limits the ability for an entry-level appraiser to move up in the industry without a college degree.
There are also some extreme hourly requirements as an apprentice, that have to be monitored by a mentor, resulting in having two people doing the same job at the same time. Given that the average age of the current appraisers is 57, and those that stayed in the business following the Great Recession are now looking towards retirement, we are facing an even larger shortage moving forward.
There has been some pushback to the Appraisal Qualification Board, and they are supposedly reviewing the outcomes of the new requirements. However, any change that may come from them will take years to incorporate.
Looks like our new reality for transaction timelines, when a loan is being acquired, will be a minimum of 60 days. More time to think about what colors you want to paint and where you want to place your furniture!