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Regulations, Retention and Recruitment Pressing Issues for Appraisal Industry

Friday, May 19 2017 10:12 AM
Categorized In REALTORS®

WASHINGTON (May 17, 2017) – Any perceived shortage of appraisers may be location specific and dependent on whom you ask, but there is universal agreement that more needs to be done to keep appraisers in the profession and attract new talent. That’s according to panelists yesterday at a property valuation forum at the 2017 REALTORS® Legislative Meetings & Trade Expo.

The conversation with property valuation experts comes at a time of numerous challenges within the industry. NAR’s Appraiser Trends Study released earlier this year underlined many of the ongoing issues in the profession, including regulatory burdens, insufficient compensation, and dissatisfaction in the work leading to what some say is a shortage of appraisers.            

Providing their insights on these issues and ways Realtors® can communicate more effectively with appraisers were David S. Bunton, president and CEO of The Appraisal Foundation; James Park, executive director at the Appraisal Subcommittee; and Jim Amorin, 2017 president at the Appraisal Institute. Susan Martins-Phipps, a Realtor® and certified residential appraiser, moderated the session.

Much of the discussion during the session focused on balancing the need for appropriate regulation without overly burdening the industry. Sharing their own experiences, Bunton and Amorin discussed how the multiple federal, state and international standards can conflict with each other at times and cause confusion, frustration and an inability to appropriately serve the needs of clients.

Citing NAR’s appraisal survey, Amorin said that excessive regulation is the number one reason appraisers are leaving the industry, along with decreased fees and increased expenses. While regulation serves its purpose, Amorin stressed the need for ‘appropriate updating’ given that technology and consumer preferences have changed over the past decade.  

“Appraisers are being crushed in the current regulatory environment and there are fewer people entering the profession,” said Amorin. “There are changes that can be put into place that make the process easier for everyone and not put added costs on the consumer.”

According to Park, public trust in the appraisal profession is important, and while there are certainly challenges in the industry, few of those challenges have to do with federal regulation. He also said outside of a few areas, he believes there is not a shortage of appraisal professionals. Citing the lower mortgage volume compared to the early 2000’s, Park said the number of active appraisers is proportionate to the current level of work in most of the country.

Amorin added that although the number of appraisers have declined around 23 percent since 2007, any actual shortages are primarily in some rural areas, and what some see as a shortage in quantity is actually just a dearth of appraisers willing to work for the low fees that have failed to keep up with inflation. However, Amorin did sound the alarm on what could be an inadequate number of appraisers in the future.

“The number of new entrants into the business is abysmally low, and a looming shortage is something we should be concerned about,” said Amorin. “The typical appraiser is in their mid-50s. We’ve got to find a way to make the profession more attractive and lucrative so that technology doesn’t completely take over the valuation process.”

Bunton agreed with Amorin and indicated he’s hopeful an improving housing market will bring more individuals, including millennials, to the industry. “If you’re a millennial, what’s not to like? You get to use technology, the hours are flexible and there’s always work,” he said.

The end of the session focused on bettering the appraisal process for the greater benefit of the real estate industry. While appraisers must maintain their independence, Amorin stressed the important role real estate agents can play in helping serve their clients and improve the work of appraisers. He said to applause from the crowd that it’s certainly fine for agents to talk to appraisers as long as they aren’t putting undo pressure on them.

“Regarding the relationship between appraisers and Realtors®, my message to Realtors® is to help them help you,” said Amorin.

To improve the overall appraisal experience, Bunton concluded that real estate agents should be more involved with The Appraisal Foundation and its boards to stay abreast of the issues. “Nearly half of Realtors® are on our boards, and we would certainly like to see that number even higher,” he said. “Less friction and more commonality on how to make the system more cohesive for everyone will ensure a better process.”

NAR submitted a letter late last year to the Appraiser Qualifications Board in response to their efforts to improve recruitment and retention of new appraisers. Knowing the integral part appraisers are to real estate transactions, NAR supports AQB’s revisions to some of the education and experience requirements to bring new appraisers to the industry.

For more information on NAR’s valuation activities and advocacy efforts, visit www.nar.realtor/appraisal.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

Tax Reform Could Deliver a Tax Hike for Homeowners: New Research

Friday, May 19 2017 10:11 AM
Categorized In Home Owners

WASHINGTON (May 18, 2017) – While tax reform proposals swirling around Washington, D.C., promise lower tax bills for American families, new estimates indicate that many middle-income homeowners may actually see a tax increase if those proposals go through.

The study, “Impact of Tax Reform Options on Owner-Occupied Housing,”(link is external) illustrates the effects of a tax plan that echoes certain elements of the “Better Way for Tax Reform(link is external)” or “Blueprint” proposal released last year, as well as the White House tax reform outline released in April, to which the National Association of Realtors® responded

While most individuals would see a tax decrease under such a proposal, the study estimates that many middle-class homeowners could in fact see a net average tax increase. Homeowners with adjusted gross incomes between $50,000 and $200,000 would see their taxes rise by an average of $815. The study also estimates that combined tax savings from claiming the mortgage interest deduction and real estate property tax deductions would drop 82 percent between the 2018 and 2027 period.

“Tax reform and lower rates are worthy goals, but only if we can achieve them in a fiscally responsible way,” said NAR president William E. Brown, a second-generation Realtor® from Alamo, California and founder of Investment Properties. “Balancing tax reform on the backs of homeowners isn’t an option.”

The study, which was commissioned by NAR and prepared by PwC (PricewaterhouseCoopers), estimates that this tax increase would result from the interaction of several provisions in the reforms under consideration. For many homeowners that currently benefit from the mortgage interest deduction, the elimination of other itemized deductions and personal exemptions would cause their taxes to rise, even if they elected to take the increased standard deduction. For others, the elimination of the state and local tax deduction alone would result in higher federal income taxes.

 In addition to increasing taxes on many middle-income homeowners, the report finds that such a proposal could cause home values to fall by an average of more than 10 percent in the near term. In areas with higher property taxes or state income taxes, the drop could be even greater. Although the study doesn’t directly analyze the “Better Way for Tax Reform” plan or the recent White House outline, it examines a proposal with many similar elements.

Those elements include lowering and consolidating marginal tax rates to only three rates, setting a top income tax rate of 33 percent, doubling the standard deduction, eliminating all itemized deductions (other than charitable contributions and mortgage interest) and personal exemptions, eliminating the alternative minimum tax, and capping the tax rate on pass-through business income at 25 percent.

PwC estimated that roughly 35 million households will claim the mortgage interest deduction in 2018, three quarters of which have incomes between $50,000 and $200,000. According to NAR, roughly 70 percent of those eligible for the MID claim it in a given tax year.

“A tax reform proposal that hikes taxes for homeowners is a raw deal, and consumers know it,” said Brown. “Leaders in Washington who are driving tax reform have shown every indication that they have the best of intentions, and we’re hopeful they’ll consider our study as this process plays out in the months ahead.”

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing over 1.2 million members involved in all aspects of the residential and commercial real estate industries.