Appraisers are the gatekeepers in real estate, and a shortage can create logjams in closing sales.
La Plata County, whose year-round recreational magnetism insulates it from many real estate upsets that burden other markets, appears to be short on appraisers, according to some in the industry.
Local appraisers and lenders say the market stressor, while partially tied to post-financial crisis federal safeguards, has become more noticeable in La Plata County in the past 12 to 18 months.
“I think it’s a combination of a lot of things,” said Greg Behn, regional president of Bank of Colorado. “In the economic downturn, there were just a lot of people that didn’t have jobs and had to find different ones. And I don’t think people have replaced appraisers that have gradually left the business. When you do find them, almost all the people are on overtime right now, and what happens is, closings get pushed further and further out.”
According to data from the Colorado Department of Regulatory Agencies, there are approximately 35 appraisers throughout La Plata County who obtained or renewed their licenses in the past two years. About 15 of those registered in 2016.
Denver is experiencing similar, if more severe, pressure on its appraisers, which is pushing back closing deadlines and increasing costs.
Most industry people in Durango blame the shortage on low interest rates spurring mortgage refinancings, coupled with the difficulty of recruiting and retaining new appraisers. The licensing rules, which formerly required experience and a high school diploma, has become more rigorous in recent years, requiring new general appraisers to earn bachelor’s degrees.
“It limits the population of people that even qualify to be appraisers,” said Joan Hanna of the Bayfield-based Action Appraisal. It also challenges certified appraisers trying to attract and train new employees. “The added burden has caused some to drop out, retire or take other careers. That has to tell you something.”
Some appraisers have said the workload is such that they’re backed up four weeks or more or they’re enticed with rush fees to shorten their timelines – putting pressure on the price of services. The typical residential appraisal takes about two days, said Vic Romano of Appraisal Solutions.
Romano, who’s been in the business 20 years, said his company of three appraisers, including himself, averages 20 to 30 residential appraisals and four to eight commercial appraisals a month.
He said it’s primarily an increase in real estate activity paired with other types of appraisal jobs that’s keeping appraisers handling heavier workloads than usual.
“I don’t know if there is a shortage in Durango as much as a high volume of activity, which is so far above normal that the existing base of appraisers aren’t able to handle the volume,” he said. Starting at the beginning of 2016, Romano said his appraisers were quoting more bids than they were able to do and began contracting more to other appraisers.
“Activity has picked up due to low interest rates and an uptick in building on top of other factors, including a high level of demand for other types of appraisals right now,” Romano said. “Finance companies are willing to pay rush fees on top of quote fees. When a carrot is dangled in front of us to do work on a shortened timeline, so rate locks don’t expire, that puts pressure on the fees.”
The average number of days on the market for residential properties in La Plata County – another gauge of a stressed appraisal climate – is staying stable or going down, not up. And local appraisers painted a picture of a more overworked industry right now than a dire one. But they said it’s another example of a known fact about La Plata County real estate: demand exceeds supply.
“I think we’re on the edge of ’05, ’06 again,” Behn said. “There are people making decisions in the market based on velocity of sales or absorption rate today that clearly isn’t sustainable for a long period of time. That’s an indicator that says it’s time to be careful. There’s a lot more demand than there is supply right now. That pushes prices, and if demand is impacted, we could see some pullback in the market.”
jpace@durangoherald.com
