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 12,600 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 $675,000 annually.

    • The real estate appraisal industry consists of about 12,600 firms that employ 35,900 workers and generate $8.5 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

                          Mar 19, 2024 - Wages Rise, Prices Fall
                          • Producer prices charged by real estate appraisers decreased moderately in the fourth quarter of 2023 compared to Q4 2022, according to the Bureau of Labor Statistics (BLS). BLS data show that wages in the industry rose modestly over the same period. Weaker pricing power amid rising wages may suggest real estate appraisers are feeling some margin pressure from higher labor costs. In Q4 2023, industry employment declined significantly compared to a year earlier, according to the BLS.
                          • Turbulence in the office portion of the US commercial real estate market is creating opportunities and challenges for appraisers who specialize in offices, according to Bisnow. Amid aging office building stock, challenges in securing financing, and the flight to the newest Class-A properties, lower-tier properties have seen their values fall by as much as 70% since their last sale, according to Cushman & Wakefield. Even as office transactions have fallen, appraisers are kept busy as institutional investors and large property owners try to determine when the market has hit bottom, and sales might pick up again. Banks may require monthly valuations for office loans nearing default if they fear a property’s value may have slipped below the mortgage amount.
                          • Home sizes increased during the pandemic as families sought more space, and interest rates were near record lows. As interest rates have risen and homes have become less affordable, the trend is reversing, and homes are getting smaller, according to National Association of Home Builders (NAHB) analysis of Census Bureau data. In the fourth quarter of 2023, the median single-family home square footage was 2,156, which is the lowest since 2010. The NAHB suggests that smaller home sizes will likely persist amid continued affordability issues.
                          • In mid-March, the National Association of Realtors (NAR) reached a nationwide settlement of claims that the home sales industry artificially inflated agent commissions, according to The Wall Street Journal. The deal follows an October federal jury verdict in Missouri, which found that several large residential brokerages and the NAR conspired to keep home sale commissions artificially high. The jury awarded the plaintiffs – home buyers in several Midwestern states – about $1.8 billion in damages. As part of the $418 million settlement, the NAR agreed to abandon decades-old industry rules requiring most home-sale listings to include an upfront offer detailing buyer agent compensation. Pending approval in federal court, listings in most of the country will no longer include the upfront offers to buyers’ agents, freeing buyers to negotiate compensation details with their agents. The $418 million in settlement money will be distributed nationwide to consumers who’ve recently sold a home. Industry watchers suggest the ruling could reshape the industry, paring down Realtor ranks by half.
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