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Appraising Appraiser Diversity

Editor's Note: This feature originally appeared in the September issue of MReport, out now.

Real estate appraisers are a critical but sometimes overlooked cog in the mortgage machine. Every step of the mortgage process, from origination to loan completion or possible default, depends on data—the more, the better, and the more accurate, the better. Appraisers add a crucial human element into all the flow of that data, using a mixture of experience and insight to provide accurate valuations for pieces of property. Those valuations will be relied upon as the various other mortgage cogs grind on, and if that valuation isn’t solid, the machine can begin to break down. But there’s a problem in the appraisal world, and it doesn’t have to do with getting the numbers wrong.

Instead, it has to do with an entirely different number—the average age of professional appraisers. That number is at 55 years old, according to Clearbox, a supplier of vendor management tools for the valuation and mortgage process. As with other segments of the mortgage and housing industry, the appraiser workforce is aging up and while also falling behind modern standards when it comes to diversity in the areas of gender and ethnicity. Recruiting new blood is going to require a game plan.

Thankfully, Altisource, Fannie Mae, and the National Urban League have just such a plan, working together to launch a new Appraiser Pipeline diversity initiative designed to both replenish and diversify the field.

“The residential appraisal field is in transformation,” said Rachel Beam-Jares, Valuation Field Manager, Fannie Mae. “There are opportunities for a more diverse workforce that will strengthen the mortgage process and better reflect our country.”

Supply, Demand, and Retirement

According to statistics derived from Appraisal Institute studies and the U.S. Appraisal Subcommittee (ASC) National Registry as of December 31, 2017, 49 percent of the U.S. appraiser population is aged between 51 and 65. Another 28 percent is aged 36 to 50, and 13 percent is aged 66 or older. Only 10 percent of appraisers are aged 35 or below, so it doesn’t take a crystal ball to forecast trouble on the horizon.

Charmaine Brown, Director, External Outreach and Engagement, Office of Minority and Women Inclusion, Fannie Mae, told MReport, “The appraisal industry lacks a pipeline to satisfy future demand. The profession is not attracting new entrants, and the industry lacks diversity. As the U.S. demographics and household formation grow increasingly more diverse, we need to proactively address the dearth of appraisers.”

Data from the Appraisal Institute and ASC National Registry also confirm that fewer people are entering the profession overall. More than half of appraisers surveyed—52 percent—have been in the profession for 20 years or more. Eleven percent say they’ve been doing the job for 15 to 19 years, and 19 percent for 10 to 14 years. A problem emerges on the other end of the spectrum, however. Three percent of those surveyed said they had less than a year’s experience on the job, with the “1 to 2 years” and “3 to 4 years” categories both sitting at four percent each. For “5 to 9 years,” the numbers creep all the way up to 7 percent.

The appraisal profession also demonstrates a lack of diversity in other areas. The field is overwhelmingly white and male. According to Appraisal Institute data, the field is 75 percent male and 87 percent white, with Hispanic/Latino being the closest runner-up at only 4 percent.

Advancing technology also threatens to render some parts of an appraiser’s job obsolete, even as it simultaneously opens up new opportunities. However, even though there are strong advantages to retaining the human factor, first you have to figure out how to attract more—and more diverse— humans to the field.

Bringing in New Blood

To tackle the problem and tend to the lack of a replenishing appraisal workforce, Fannie Mae has teamed up with both Altisource and the National Urban League, a nonpartisan civil rights organization based out of New York City. The three organizations will be launching their Appraiser Pipeline Initiative pilot in Q4 2018 and Q1 2019 via a series of “Entrepreneurship Centers” to be hosted in Baltimore and Philadelphia.

Kirk Willison, SVP, Government, and Industry Relations, Altisource, told MReport, “We hope that our partnership will spark other players in the mortgage industry to undertake their own diversity-increasing initiatives. Step by step, we can help transform our industry into one that looks more like the customers we will be serving in the coming decades. That makes both cultural and business sense.

“The Appraiser Pipeline Diversity Initiative not only will create an opportunity for people in underserved communities to secure stable, family-sustaining jobs, it will enhance and strengthen the entire industry by promoting diversity,” NUL President and CEO Marc H. Morial said. “We’re grateful for our partnership with Fannie Mae and proud that they recognize our Entrepreneurship Centers as the ideal setting for this new program. We’re looking forward to a productive partnership and a dynamic new generation of appraisal professionals.”

In addition to informational workshops providing ground-level introductions to the profession and beginner resource packets, the Entrepreneurship Centers will also provide educational resources, skill-development workshops (including actual time spent in the field), and guidance from Fannie Mae staff appraisers.

“The industry is not unlike many careers in financial services,” Brown said. “If you are not intentional and proactive about expanding recruitment and outreach to include diverse segments, it’s not a natural outcome. Additionally, many underserved communities are not aware of career opportunities in residential appraisals, so awareness is key. You can’t be what you can’t see— visibility is important.”

And there are plenty of areas where the potential for education is abundant. It’s not just Fannie Mae that’s been working to solve this problem. Brown told MReport that industry leaders have been working to revise the entry requirements to the appraisal profession so they adequately reflect current market needs. This approach involves modifying education and experience requirements; proactively increasing education and outreach to diverse, talented candidates; and providing resources to help interested candidates figure out the best way to begin building their careers as appraisers.

In February 2018, the Appraiser Qualifications Board voted to reduce the education requirements for becoming an appraiser, dropping the need for a college degree— previously, candidates needed at least 30 semester credit hours or an associate degree. The training requirements were also scaled back, dropping from 2,000 hours in 12 or more months down to 1,000 hours in six or more months.

Brown emphasized that the appraisal profession offers plenty of elements that could appeal to younger workers, single mothers, or others in need of sustainable careers with flexible scheduling. It’s the sort of job that lends itself to setting your schedule, so long as the appraiser in question continues to get the job done and meet their commitments. The profession also exposes appraisers to all manner of emerging technologies.

The appraisal profession also both demands and strengthens skills that lend themselves to multiple possible career paths, letting potential appraisers polish their analytical skills and customer service chops, as well as honing organizational, problem-solving and time-management skill sets.

According to December 2017 research by Tom Seidenstein and Sarah Shahdad, Market Insights Researchers for Fannie Mae’s Economic and Strategic Research Group, an estimated one-fifth of American adults have provided a service through the so-called “gig economy.” In this modern and evolving landscape, the appraisal field could be a valid and viable option that many have simply not considered.

When asked what she hopes the new Appraiser Pipeline Initiative Pilot will accomplish, Brown told MReport, “We hope to raise awareness of career opportunities in the industry and provide a roadmap for individuals to pursue the profession by leveraging the League’s business model and brand and equipping the Entrepreneur Centers with the tools and resources needed to conduct outreach and education.”

About Author: David Wharton

David Wharton, Editor-in-Chief at the Five Star Institute, is a graduate of the University of Texas at Arlington, where he received his B.A. in English and minored in Journalism. Wharton has nearly 20 years' experience in journalism and previously worked at Thomson Reuters, a multinational mass media and information firm, as Associate Content Editor, focusing on producing media content related to tax and accounting principles and government rules and regulations for accounting professionals. Wharton has an extensive and diversified portfolio of freelance material, with published contributions in both online and print media publications. He can be reached at David.Wharton@thefivestar.com.

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