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 Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, 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
                          Source: Vertical IQ and Inforum

                          Coronavirus Update

                          Apr 7, 2022 - Construction Spending Expected To Remain Strong In 2022
                          • Spending in the construction industry remains about 14% above pre-pandemic levels, but the pandemic has the industry in uncharted territory. Specific sectors of the industry have seen booms, others have seen busts, and this will likely continue for some time, according to construction industry payment processing firm Levelset. Non-residential projects, for instance, have historically dominated the spending mix at around $800 billion per year. In 2021, however, residential spending — which normally sat around $500 billion per year — increased nearly 60% to match nonresidential spending for the first time. Low mortgage rates and more people working from home significantly increased demand for homes. The $1.2 trillion Infrastructure Investment and Jobs Act signed into law in late 2021 is expected to boost public projects.
                          • Appraisal gaps will increase in 2022, according to many industry experts. Increasing residential real estate values, appraiser shortages, and pandemic-related delays in appraisal completion times will be key drivers of growing appraisal gaps. The market will stay this way for up to five years, according to Milford Adams, Denver Metro Association of Realtors 2022 chairman of the board. Expect to see people getting certifications to move into their homes despite the fact their homes may not have cabinets for six months or a garage door because those and other items will be on the dock somewhere due to supply chain disruption.
                          • A pre-pandemic shortage of real estate appraisers became a central pain point as home sales increased during the pandemic. According to the Appraiser Institute, more than 10,000 appraisers (13%) have left the industry since 2013. The talent drain is compounded by the fact that, of the appraisers remaining in the industry, 20% are over 66 years old, and more than half are approaching retirement age. The current strong housing market has demand for appraisers outstripping the reduced supply, which is pushing up fees and delaying appraisal completion times.
                          • Virtual real estate appraisals, which the Federal Housing Finance Agency allowed earlier in the pandemic to expedite loan transactions, became a permanent policy change in March 2022. A virtual appraisal occurs when a home appraiser assesses the value of a home by looking at it online. Banks, buyers, and sellers don’t seem to be consistently happy with this practice, according to Realtor.com, as important details can easily be missed. Others, including some lawmakers and real estate professionals, suggest desktop appraisals can be useful in reducing inequalities in appraisals that can stem from conscious or unconscious appraiser biases.
                          • Concern is increasing about hybrid appraisal methods developed during the coronavirus pandemic. The Federal Housing Finance Agency (FHFA) began easing standards on property appraisals at the beginning of the pandemic, allowing "hybrid" drive-by and desktop valuations in certain circumstances. It was the first step that the FHFA took in combatting the pandemic as it pertained to appraisers. The FHFA has noted that hybrid appraisals are expedited and typically cheaper, but they add a layer of third-party involvement that could complicate matters. FHFA also notes that a uniform set of standards does not currently exist at both the state and federal levels that hold non-appraisers accountable for their appraisals.
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