Rounds, Thune Send Letter to Appraisal Foundation Chair Regarding Decrease in Real Estate Appraisers

WASHINGTON—U.S. Senators Mike Rounds (R-S.D.) and John Thune (R-S.D.) today sent a letter to the Appraisal Foundation Board of Trustees Chair, Anthony Aaron, regarding the decreasing number of real estate appraisers in the United States.

“Real estate appraisers play a significant role in the process of purchasing a home and more broadly in the housing market.  It is critical that the growth and development of this increasingly important profession remains a priority,” the senators wrote.  “We are concerned that this decrease in real estate appraisers will primarily impact homeowners and prospective homebuyers in rural and underserved areas making it more difficult to buy or sell a home.”

Full text of the letter:

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Mr. Anthony Aaron

Board of Trustees Chair

The Appraisal Foundation

1155 15th St. NW

Suite 1111

Washington, DC 20005

Dear Mr. Aaron:

Real estate appraisers play a significant role in the process of purchasing a home and more broadly in the housing market.  It is critical that the growth and development of this increasingly important profession remains a priority.  According to the Appraisal Institute, the number of residential appraisers declined nearly 19 percent between 2007 and 2014.  Surveys of former appraisers point to several reasons for this decline, including increasing regulatory burdens and volatile business climate that make it infeasible and unattractive to take on the added risk of trainees.  As a result, young people do not see many job opportunities as appraisers today.[1]

We are concerned that this decrease in real estate appraisers will primarily impact homeowners and prospective homebuyers in rural and underserved areas making it more difficult to buy or sell a home.  For example, in South Dakota, 65 percent of appraisers are 51 or older.  According to the Appraisal Institute, the average age for an appraiser in the United States is 55 years old.  A lack of new appraisers coupled with aging professionals in the industry poses risks to both the appraisal industry and the housing market. 

The Appraisal Foundation was authorized by Congress to set minimum appraisal licensing standards which could then be enhanced by state licensing entities.  As one of the entities, including state governments, authorized by Congress as a source of standards and qualifications, it is critical for Congress to make certain that the Foundation is properly fulfilling its role.  To examine this issue, please answer the following questions and provide the documents requested:

• The Appraisal Foundation recently promulgated standards requiring a bachelor’s degree for an individual to obtain State Certified Residential or State Certified General credentials.  This regulation completely discounts practical experience.  For example, a real estate professional may have over thirty years of experience with real property but under these new standards this individual will be considered unqualified.  By contrast, a recent college graduate with a degree in a field unconnected to the appraisal industry and with no appraisal experience would be considered qualified to apply to become an appraiser. 

Did the Appraisal Foundation consider real world experience in crafting this rule?  If so, why did the Foundation opt not to create a pathway for membership based on practical real-world experience?  If not, why not?

• The Appraisal Foundation also created a trainee program for applicants requiring them to work for a certified appraiser.  To become a certified appraiser, a trainee must complete 3,000 hours of experience in less than two and a half years including 1,500 hours of non-residential work.  Many appraisers, particularly in rural areas, are hesitant to train a future competitor and the shortened time window makes it difficult for trainees who work part time.  As a result, we are concerned that the trainee program is responsible for creating an artificial appraiser shortage. 

What efforts has the Foundation made to create alternate paths to certification for trainees who are unable to find an apprenticeship or unable to complete the hour requirement in the time allotted?

 

• If an applicant is unable to find a certified appraiser willing to train them within their home community, what options are available to them if they would like to become an appraiser?

 

• Part of the Appraisal Foundation’s mission is to certify continuing education classes for the appraisal community.  These certifications are made through the Foundation’s Appraiser Qualifications Board (AQB). 

 

To meet what the Foundation termed a lack of continuing education options, the Foundation recently created a separate non-profit arm to provide continuing education to the appraisal community.  When this association, the Alliance for Valuation Education (AVE), was created, the Foundation pledged it would be an independent entity to avoid conflicts of interest. 

 

However, in 2014 the AQB’s Administrator of Qualifications, who also serves as the AVE’s Staff Executive, applied to herself at the AQB in order to have one of her classes certified.  Her application was approved. 

 

Does AVE’s continuing relationship with AQB raise conflict of interest concerns?  If so, what steps is the Foundation taking to make certain that these conflicts of interest are addressed?  If not, why not?

 

• For certified appraisers, what is the average cost per year for continuing education?

 

• Please provide the total number of licensed appraisers and the average age of the appraiser population nationally and in each individual state.

 

• Please provide the total number of individuals who became licensed appraisers in each year from 2010 to 2014.

 

We agree that high quality standards in this industry must continue to be a priority.  At the same time, we believe it is important to assess appraiser education and training requirements, standards, and qualifications to make certain we strike the appropriate balance to make certain rigorous standards exist while making the profession attractive and accessible for individuals interested in the field. 

 

Thank you for your attention to this matter.  Please provide a response by July XX, 2015.  If you have any questions, please contact Chris Lucas at 202-224-5842 for Senator Rounds and Jessica McBride for Senator Thune at 202-228-5429 if you have any questions.

 

Sincerely,

                                               

M. Michael Rounds                                                                 John Thune

U.S. Senator                                                                            U.S. Senator

 

Cc: The Appraisal Subcommittee