Real Estate Appraisers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 13,000 real estate appraisers in the US estimate the fair market value of land and buildings, typically before properties are sold, mortgaged, taxed, insured, or developed. Large firms may offer related services, such as information or closing services. Independent appraisers may serve as expert witnesses.

Vulnerability to Trends in Housing Market

A key driver of financial performance in the real estate appraisal industry is the US housing market, which is sensitive to changes in economic conditions.

Competition from Alternative Valuation Models

Alternative valuation models (AVM), which are computerized models used by mortgage originators and secondary market issuers to determine property value, pose a significant threat to real estate appraisers.

Industry size & Structure

The average real estate appraiser employs 2-3 workers and generates about $638,000 annually.

    • The real estate appraisal industry consists of about 13,000 firms that employ 36,000 workers and generate $8.3 billion annually.
    • The industry is fragmented; the top 50 companies account for 40% of industry revenue.
    • About 39% of establishments generate between $100,000 and $249,999 annually; 23% generate less than $100,000 annually; and 20% generate between $250,000 and $499,999 annually.
    • Large appraisal management companies (AMC) include CoreLogic, Solidifi, and TSI Appraisal.
    • Nearly 42% of appraisers are employees within a firm and 46% are sole proprietors without employees, according to the Appraisal Institute.
                          Industry Forecast
                          Real Estate Appraisers Industry Growth
                          Source: Vertical IQ and Inforum

                          Recent Developments

                          May 20, 2024 - Industry to Return to Steady but Flat Growth
                          • The real estate appraisal industry is expected to see weaker sales growth this year, but demand is projected to improve in the following four years. The industry’s year-over-year sales increased by 11.8% in 2022 before dropping to 6.1% in 2023, according to Inforum and the Interindustry Economic Research Fund, Inc. Sales growth is projected to moderate further to about 3.8% in 2024, then rise to 6.2% in 2025. The industry will then see steady but mostly flat average annual growth of about 6.1% through 2028, according to Inforum and the Interindustry Economic Research Fund, Inc.
                          • More than 80% of consumers who bought a house in either 2023 or 2024 have regrets about their purchase, according to a recent homebuyer survey by Clever Real Estate. Among that group, 40% said they have had some difficulty making their mortgage payments on time or have taken on additional debt to maintain their standard of living. About a third of homebuyers said financial issues made buying a home more challenging than anticipated, and 47% said they feel over their heads since purchasing a home. High interest rates and a lack of affordable homes for sale have slowed the US housing market.
                          • As hopes that the Federal Reserve will cut interest rates before the end of the year dwindle, some commercial real estate owners may decide it’s time to sell and move on, according to The Wall Street Journal. About $929 billion in outstanding property loans is set to mature in 2024, up 41% compared to an earlier estimate by the Mortgage Bankers Association. The increase is due to many of the loans that were due in 2023 being extended into this year. Extending loans further could be costly for some property owners. To secure additional loan extensions, lenders are requiring owners to put in additional cash as a show of faith in their properties. Some commercial real estate owners may decide to turn the keys over to lenders and deploy their cash elsewhere.
                          • Fitch Ratings’ US CMBS delinquency rate rose by 14 basis points to 2.33% in April 2024 from 2.19 in March. A rise in office maturity delinquencies drove the April rise, as several large office properties defaulted at maturity. Commercial mortgage-backed securities (CMBS) are fixed-income investment products backed by mortgages on commercial properties rather than residential real estate. The delinquency rate is the percentage of commercial real estate loans that were 30 or more days past due or in foreclosure. A rising delinquency rate indicates that an increasing number of commercial property owners cannot pay the mortgages on those properties. Current and prior-month delinquency rates for April and March were: Retail: 3.96% (from 9.92% in March); Hotel: 3.36% (from 3.31%); Office: 4.27% (from 3.66%); Multifamily: 0.39% (from 0.33%); Industrial: 0.49% (from 0.53%); Mixed Use: 4.00% (from 3.99%); Self-storage: 0.00% (from 0.00%); and Other: 1.83% (from 2.04%).
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