A Sunset Seminar with CoreLogic and the Urban Institute
In April, CoreLogic partnered with the Urban Institute to co-host an evening seminar focused on the future of home appraisals. The event was the 11th in the Sunset Seminar series, sponsored by CoreLogic and the Urban Institute and focused on public policy thought leadership relevant to the mortgage market. The series brings together policymakers, practitioners and analysts for lively, data-driven discussions on topics of current importance.
The panel was led by Laurie Goodman, co-director of the Housing Finance Policy Center at the Urban Institute, and included the following appraisal industry experts:
- Susan Allen – Senior Vice President of the Valuations Solutions Group, CoreLogic
- David Bunton – President, The Appraisal Foundation
- Pete Carroll – Executive Vice President, Quicken Loans
- Zach Dawson – Director of Collateral Policy and Strategy, Fannie Mae
Pete Carroll opened the discussion by providing a lender perspective on the appraisal process. He identified numerous problems currently facing the industry and offered both short-term and long-term solutions. In the immediate future, he suggests increasing the appraiser population by removing the college education requirement and shortening relevant experience requirements. Additionally, joint appraisal forms need to be simplified to focus on the relevant data, which could help decrease completion time. Long-term, Pete promoted the use of big data within the industry – advocating for a centralized database of market- and property-level appraisal data. He also suggested relaxing rules surrounding property evaluations so that non-appraisers, including home inspectors, could be used to perform such duties.
David Bunton focused on the current ‘appraiser shortage’ debate, noting that the past decade has seen relatively little change in the number of Certified General and Certified Residential appraisers, but there has been a steep decline in the number of State Licensed appraisers. (Figure 1) However, the perception of a broader, industry-wide shortage remains, which he addressed by noting three different factors. The first is economic – demands have gone up but compensation has not, so while the number of residential appraisers remains strong, there may be a shortage of appraisers willing to accept assignments below a certain fee threshold. Second, appraisers are not uniformly dispersed, which has a larger impact on those seeking appraisals in rural markets. Finally, many lenders do not want licensed residential or trainee appraisers involved in the performance of residential appraisals, despite this being perfectly legal – Mr. Bunton refers to this as a ‘user education’ issue. Moving forward, The Appraisal Foundation is looking at allowing individuals to gain experience through computer simulated properties or by taking an advanced test which contains practical applications. In his view, technology can perform quite well with homogeneous housing stock, yet there will continue to be a need for highly-qualified people to pair with these new technologies/analytics.
Susan Allen opened her presentation by demonstrating the tools available to appraisers participating in CoreLogic’s Valuation Consortium. After importing a sample appraisal from the consortium database, she walked the audience through an incredible amount of information on the selected property, displaying aerial images taken from a drone flyover and even presenting a virtual reality view of the interior. (Figure 2) Picking up where David Bunton left off, Susan then spoke to the need for “smart modernization” – developing technology that is use-case specific, implementable on a large scale, cost-effective, and contains minimal acceptable errors. This technology could even improve the scheduling of appraisers, which, according to Susan, is the biggest contributor to slow appraisal turn times. By implementing time-use studies and creating a more transparent view into the valuation process, we can enhance stakeholder communication and improve the overall appraisal experience for the consumer.
Zach Dawson struck a very optimistic tone, claiming that he has seen more activity in the appraisal industry over the past six months than at any other point in his career. He pushed back on the concerns that an appraiser shortage exists, claiming that this is just a supply-and-demand issue. While the supply of appraisers remains relatively steady, month-to-month demand for appraisals can fluctuate greatly, depending upon numerous conditions affecting both the local and national housing markets. A certain area, he claimed, could go from having a shortage of appraisers to having a surplus from one month to the next. In lieu of discussing ways to increase the number of appraisers, he finished by highlighting some alternatives to the traditional appraisal that could be considered, including automated valuation models (AVMs) and desktop appraisal software.
A summary of the event is available online, as well as a copy of the event agenda, speaker biographies, and speaker presentations. CoreLogic and the Urban Institute are currently in the early stages of planning the 12th installment of the Sunset Seminar series, and more information will be released in the months ahead.
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