Lately, we have seen spectacles from various groups of different professionals, complaining about not getting paid enough. This seems to have been mostly government workers who are members of labor unions. There have been marches, demonstrations, civil disobedience; you name it; all in the name of either increasing pay to various groups of workers or justifying existing pay levels and benefits. These are usually sanitation workers, policemen, firemen and teachers. These people usually get a number of weeks of paid vacation, liberal health-care benefits, lucrative retirement packages and sick leave. I generally applaud the efforts of these public servants and support their well-deserved right to a comfortable standard of living, excluding some who seem to position themselves to receive a disproportionate share of the taxpayers’ hard earned money.

There is another group of professionals who, in my mind without question, deserve more compensation than they receive. They typically get no health-care benefits, paid vacation, 401(k) programs or sick pay, and they have no labor union to negotiate on their behalf. These people are the real estate appraisers, who perform the service of evaluating homes land, and the many different types of commercial property.

While there is no source for which I am aware that provides statistics on the amount of compensation these people as individuals receive, there is much antidotal evidence that supports my contention. Please consider the following:

• My memory tells me that the going rate for a home appraisal 20 years ago in most areas was about $300. Today in many areas the going rate is still at or near this rate. After considering the cost of managing the appraisal process, many appraisers perform appraisals at rates that are much less than this.
• Younger people are not entering the appraisal business. According to the Appraisal Institute, among its membership, the average age of a designated appraiser is 60, and the average age of a non-designated appraiser is 53. The appraisal schools are generally void of students taking pre-licensing courses. The economic incentive is just not there, especially with the current recession. Obtaining a real-estate-appraisal license requires, on an average, three-to-four years for a residential appraiser and four-to-five years for commercial appraisers. During training, appraisers typically are paid apprentice rates, which are significantly lower that those paid experienced valuation professionals.

Some complain that appraisal management companies (AMCs) are the reason that appraisers are paid so little. As the owner of a non-bank-owned AMC, I disagree. I experience first-hand the very competitive nature of the business, especially for residential appraisals. The restricted rate that independent AMCs can charge, coupled with the overhead associated with increased regulation, leave them with even less to pay appraisers, not more. There is pressure from every angle, and those of us who want to pay appraisers more are not able to do so, due to the low fees we must charge in order to stay competitive.

Unless material changes are made soon to compensate appraisers fairly and equitably for their efforts, we will find a shortage of qualified people to perform the tasks of property evaluation. It is not inconceivable that, when the market turns around, it could take four-to-six weeks to obtain a residential appraisal and six-to-eight weeks to obtain a commercial appraisal.

What must happen to correct this problem? It is probably too late to avoid a shortage if the economy improves soon, as most of us would hope. It is not too late, however, to begin to correct the problem. This should be done immediately. Appraisal fees are controlled by the major banks. It has been estimated that 80 percent of all mortgages are originated by the four largest banks in the United States. The management of these banks control appraisal fees to the customer. We must encourage these institutions, along with all of the smaller banks, to raise appraisal fees, if they are to insure the availability of appraisals in a timely manner to underwrite their loans. These professionals are the banks only hope for accessing the collateral, which is the foundation of their mortgage investment.

Appraisal fees to the consumer must be increased soon to head off a critical shortage of professional appraisers. I suggest that, across the board, appraisal fees should increase by a minimum of 50 percent within the next year to avoid a critical shortage of qualified appraisers. This will not guarantee that a shortage will not occur, but it will be a step in the right direction. We must provide young people with an economic incentive to join our profession if we are to have a pool of qualified professionals to draw from. We deserve the best and brightest in our profession, and we will only get this if we pay our professionals fairly and competitively.