Residential Appraising: Changes and Challenges Ahead‪.‬

This edition of "Residential Appraising" looks at the changes and challenges that appraisers will face in 2006 and beyond. A number of significant changes have occurred in residential appraising in a relatively short period. Residential appraisers are now dealing with the new format of residential appraisal reports, an upgrade in the licensure and certification requirements, and conversion of some professional appraisal assignments to automated valuation model (AVM) appraisals. Change is not new to the appraisal profession, but the convergence of these significant, new requirements will make it more challenging for appraisers to adapt. As always, some appraisers will view these changes with dismay, while others will convert them into opportunities. Many residential appraisers are worried about how their practices will weather the changes; however, this is not the first time that the appraisal profession has confronted significant change. The 1970s were a period of turmoil and challenge for appraisers because of runaway inflation. Appraisers worried about how to keep up with the market when the market was changing so fast. The 1980s were challenging for appraisers because very high mortgage interest rates caused real estate prices to decline; appraisers were faced with developing value opinions that could be very incorrect a year later. Also, because of the lack of work, many appraisers left the field. In the 1990s, Congress enacted legislation requiring state licensing or certification of appraisers. This created a new standard of practice. Many appraisers found that they had new competition and that some of this competition was competing based on valuation conclusions. Also in the 1990s, lending shifted from local banks and savings and loans to mortgage companies and small mortgage brokerage firms. The profession met all of these challenges and adjusted to the market.