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
Recent Developments
Jul 19, 2024 - HUD Reaches Agreement with The Appraisal Foundation
- In July, the US Department of Housing and Urban Development (HUD) reached an agreement with The Appraisal Foundation (TAF), an organization that sets standards and qualifications for real estate appraisers. The agreement stems from a HUD complaint and subsequent investigation that began in late 2021, which alleged that some of TAF’s policies may have led to disparities of opportunity in the appraisal industry. According to US Bureau of Labor Statistics 2023 data, nearly 95% of property appraisers are white. HUD alleged that a TAF licensure policy that relied heavily on an already-licensed friend or family member to supervise on-the-job training hours may contribute to a lack of diversity. Under the agreement, TAF will create a $1.22 million scholarship fund to pay for new appraisers to receive training. During the HUD investigation and before it, TAF took steps to address diversity, and the July agreement came with no official findings.
- In July, a group of federal regulators finalized a set of guidelines for how banks and other lenders should handle home appraisal do-overs – or a reconsideration of value (ROV), according to National Mortgage News. While consumers have always been entitled to challenge home valuations, the new guidance clarifies which circumstances warrant an ROV. The guidance was adopted jointly by the Federal Reserve, Federal Deposit Insurance Corp, Office of the Comptroller of the Currency, Consumer Financial Protection Bureau, and National Credit Union Administration. Issues that could trigger an ROV include discrimination based on color, race, sex, religion, country of origin, disability, or family status. However, the most significant change in guidance is that ROVs are "limited to real estate-related financial transactions that are secured by a single one-to-four family residential property."
- The health of the US commercial real estate market is mostly solid, except for the beleaguered office sector and a minor slowdown in industrial property demand, according to a July report by Moody’s. In multifamily, a large wave of new supply cooled rent growth in the second quarter, but demand seems to be catching up to the flush of fresh inventory while vacancy rates remained mostly unchanged year-over-year. The office sector continues to face significant headwinds as hybrid work models weigh on demand. Office vacancies in Q2 2024 hit a record-setting 20.1%, marking the third consecutive quarter that vacancies hit new all-time highs. Despite signs that consumers may be pulling back on spending, the retail vacancy rate in Q2 held steady compared to the same period in 2023, and asking rents saw a slight increase. The market for industrial space has softened compared to the pandemic years when warehouse construction boomed. Industrial vacancies increased about 1.2% in Q2 2024 compared to Q2 2023, but asking rents have remained steady.
- 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.
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