The appraiser shortage, and what you can do about it
The Portland housing market has been unusually active for nearly two years now. With so many homebuyers competing for so few available homes, buyers have faced major difficulties closing on the homes they want. So far we have shared how prospective homebuyers can increase their chances of closing on the house they want to call home.
Traditionally, one of the critical steps to close on a home has been getting an appraisal (sometimes multiple appraisals, on the buying and selling sides). It hasn’t been easy in this environment. Appraisers are overloaded and heavily backlogged. In many cases today, a buyer is forced to wait months for an appraisal to be completed, leaving them with a lot of anxiety, uncertainty and a real possibility of missing their closing date.
To learn more about the situation and how we are helping members work through it, we interviewed Brad Goodenough, our Home Loan Expert at the Unitus Plaza Branch.
Brad, what have you heard from appraisers about this situation?
We are hearing that appraisers simply do not have the capacity to keep up. There are many reasons contributing to this situation including fewer appraisers, more appraisal orders, and more regulation. The number of appraisers has been declining, the average age of appraisers has been increasing, and as appraisers retire they are not being replaced with new appraisers. The barriers to become an appraiser are too high, making it difficult to attract new entrants into the field of work. This, combined with a high number of mortgage applications, has resulted in appraisers being assigned more orders than in years past. In addition to having more orders, appraisers are now required to comply with increased regulatory requirements and regulation resulting from the financial crisis. The consequence of all of this is we have a shortage in the supply of a service needed to close on a home loan.
Have they described any other effects of this overwhelming demand for appraisals?
Yes, we have seen an escalation in appraisal costs. Appraisers are in demand and orders with a higher fee are more attractive to an already overwhelmed appraiser. Many home buyers are having to pay rush fees in an attempt to get a quicker turn time to meet their close date. We have heard of home buyers paying in excess of $2,000 to expedite an appraisal.
What can members do to increase their odds of closing on the home they want?
Communication with the lender is critical. The lender plays a key role in communicating with all parties about what close dates are feasible given the current market conditions. We are here to help our members get to closing with an understanding of the market and all their options. Some of our members are willing to pay for a rush appraisal and others prefer to negotiate a late close date. Either way we are here to educate and assist. We are also very excited to offer a “No Appraisal Loan” program to members that qualify. This program takes appraisers out of the equation and allows us to close much sooner, giving our members an advantage in this competitive housing market.
What is the “No Appraisal Loan” program and how can it help members?
The “No Appraisal Loan” is like an express ticket through the closing process. It’s a new program offered by Unitus Mortgage which improves the appraisal process. For members that meet the program guidelines we now use an electronic valuation to determine the value of the home rather than a full walk through appraisal. The technology has improved to the point that these electronic valuations are dependable enough to no longer need an in-person appraiser. This is a huge time saver considering the delays in appraisals and is a major benefit for our members.
How can members take advantage of the program?
They can learn more about the program and eligibility by getting in touch with one of our Home Loan Experts.