Surviving an Appraisal Apocalypse
by Administrator on Aug 2, 2016
I'm an appraiser and an optimist who survived the Savings & Loan crisis of the 1980's and 1990's and its fallout including the implementation of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) of 1989. It appears to me that the remaining banks have finally learned to stay away from making loans on vacant land, it only took them seventy years or so to learn that lesson.
If you were in the real estate appraisal business in 2007, and lived through the subprime mortgage crisis, then you have likely already survived one of the worst market blowouts that has ever occurred. Yes, you may have already survived what could reasonable be described as an appraisal apocalypse. Appraisal volumes plummeted in 2007 almost as fast as property values. Appraisal fees also fell, at least they did in the market that I am in, and they have never returned.
There are many who don't think that another financial crisis can happen. While there are always fear mongers, and it is unlikely that we will see another banking crisis in the sort-term, it's not out of the question and being prepared is not ridiculous. The fact of the matter is that there are always forces at work that can bring doom and gloom to the appraisal industry. It doesn't have to be another banking or stock market fiasco that will bring the appraisal industry to its knees. Something as "minor" as having the banks, real estate agents and builders involved in redefine appraisal regulations could do it. Can appraisers really influence the outcome of appraisal regulation hearings when influential groups looking out for themselves are at the table? I don't think so.
Would adopting appraisal regulations that make completing appraisal assignments impossible due to one or a number of added requirements be catastrophic? How hard hit would the appraisal industry be if bankers could decide for themselves if and when an appraisal is needed? I personally believe that appraisers should provide a valuable product, valuable enough that it is sought out and paid for by clients who want to better understand a market and need the accuracy that an appraisal brings, but many appraisals today are completed simply to meet government reporting requirements.
Of course the displacement of the dollar as the world’s premier petroleum backed reserve currency would in my opinion cause a true U.S. economic collapse, but the appraisal business may survive since tracking the adjusted value of real property would likely be in demand, at least for a while. It's not a scenario that I would like to see played out, but there is a lot of speculation about this possibility.
Appraisers may discover that a new apocalypse is just around the corner so why not think about what kind of business you can do over the long-term if the market tanks again. Some appraisers have added specialties like business appraisal and machinery & equipment appraisal as additional revenue sources. They have decided to broaden their business base. It's like adding property management to a real estate brokerage business, you may not enjoy being in certain segments of the appraisal business but if they can offer you a guaranteed monthly income, like property management for brokers, a steady income in turbulent times may be a valuable asset.
For more appraisal information contact Glenn J. Rigdon MA, MRICS, ASA is a Las Vegas / Henderson Nevada based appraiser who can be contacted via email or via his business website known as Appraiser Las Vegas (http://www.appraiserlasvegas.com), or you can also click on “Contact Us” on the home page of this website or visit my public profile at LinkedIn at http://www.linkedin.com/pub/glenn-rigdon-ma-mrics-asa/1a/30b/879/
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