According to an article published in MarketWatch written by Amy Hoak, the number of real estate appraisers is falling. This is not good news for the real estate industry or anyone purchasing a home.
As condemnation lawyers, we rely heavily on real estate appraisers to prove the appropriate amount of just compensation. According to Ms. Hoak, the ranks of real estate appraisers stand to shrink substantially over the next five years, which will mean longer waits, higher fees and even lower-quality appraisals as more appraisers cross state lines to value properties.
The statistics provided by the Appraisal Institute are not sanguine, there are 78,500 real estate appraisers working in the United States in 2015 which is 20% less than existed in 2007. In addition, as the number of appraisers is falling, the age of appraisers is increasing with only 13% being 35 or younger.
Fewer appraisers mean longer waits for a real estate closing. A shortage of appraisers also means appraisals will likely cost more. Then, as the article points out, “there is a quality issue, too. In some areas, appraisers come in from other states to value homes.”***”They could miss subtleties in the market.”
In the trial of a condemnation claim, it is absolutely necessary to use the best appraiser available for the case. We have always carefully selected extremely knowledgeable appraisers to testify at trial. But that is the key; it is not enough that the appraiser be well qualified and experienced in valuing the subject property. The appraiser also must be a good expert witness. Direct testimony is extremely important to convince the trier of the facts of the proper value of the property. A good appraiser will also be able to formulate a trial plan as to how to establish the highest and best use of the property. As important as the appraiser’s direct testimony is, cross-examination is equally important.
Cross examination is the test of the expert’s opinion. Does the appraiser’s opinion withstand the rigors of cross-examination? Can the comparable sales utilized be defended? How does the appraiser’s credibility stand after questioning?
In an eminent domain trial, the law is well established that the trial court’s selection of comparable sales will generally not be reviewed on appeal as it is a matter of resting within the court’s sound discretion. Matter of M.T.A. (Collegiate Church), 86 AD3d 314 (1st Dept 2011).
Therefore it is very important to proceed to trial with the very best appraiser.
The MarketWatch article is available here: http://www.marketwatch.com/story/the-number-of-real-estate-appraisers-is-falling-heres-why-you-should-care-2015-11-18