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 less than $500,000 annually.
- The real estate appraisal industry consists of about 12,600 firms that employ 31,800 workers and generate $6.5 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
Recent Developments
Mar 17, 2023 - Banking Jitters Push Mortgage Rates Lower
- Mortgage rates dipped slightly after the collapse of Silicon Valley Bank, but housing industry watchers are uncertain if lower rates will persist long enough to provide much relief from the affordability issues that have slowed the US housing market, according to Yahoo Finance. Some financial market watchers note that the banking sector's jitters could slow the Federal Reserve’s strategy of taming inflation with rate hikes. Redfin chief economist Daryl Fairweather told Yahoo Finance, “There's still a lot of uncertainty but in the near term, I do expect mortgage rates to drop. And I expect buyers to take advantage of those mortgage rates because we've seen buyers be incredibly sensitive to those interest rates.” However, some industry insiders suggest that rates would need to drop and stay low for a sustained period to lure more buyers into the market.
- The collapse of Silicon Valley Bank and Signature Bank is expected to put downward pressure on commercial real estate values and stifle dealmaking activity as credit tightens, according to Biznow. Even before the banking crisis, commercial property values were down 15% in February 2023 from their high point in March 2022, according to Green Street. By mid-March, the FTSE NAREIT Equity Index, which includes all US REITS, had fallen about 4.6% since the news of the crisis, while the S&P 500 was only off 3% over the same period. Some industry watchers expect the office market to be hit especially hard as it has still not recovered from the pandemic-related drop in occupancies. CBRE Global chief economist Richard Barkham said, “Real estate capital values, which had already been falling, will be further pressured by an even more tightly constrained credit market."
- Even before turmoil emerged in the US banking sector, The Wall Street Journal reported on several high-profile office landlords that had defaulted on their loans, suggesting the pandemic’s effect on office occupancy may be permanent. In late February, The Wall Street Journal cited data firm Trepp Inc. reporting that five to 10 office properties per month are at risk of defaulting due to low occupancy rates, maturing debt, or expiring leases. While there is still demand for high-quality office space in desirable locations, overall occupancy rates have stalled around 50% of pre-pandemic levels.
- Higher home prices and elevated interest rates are pricing many would-be homebuyers out of the market. According to priced-out data released by the National Association of Home Builders (NAHB) in March, more than 96 million households cannot afford a median-priced home because their incomes aren’t high enough to qualify for a mortgage. With a mortgage rate of 6.25%, the NAHB estimates that 72.9% of US households cannot afford a median-priced home. The states with the largest number of households priced out of the home-buying market are Florida, Texas, and California, mainly due to their large populations.
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