How the Appraiser Shortage Harms Rural Communities and Young Farmers

The latest episode of the ABA Banking Journal Podcast tackles the shortage of qualified appraisers -- especially in rural areas, where lenders are seeing delays of several months in getting appraisals for commercial real estate and agricultural transactions. Shan Hanes, president and CEO of Heartland Tri-State Bank in Elkhart, Kan., discusses how high demand for appraisals from only five or six appraisers in his area means that his clients face long waits. "I haven't seen one done in less than 90 days for several years," he says. In addition to the opportunity cost of delayed investment, he explains, it also harms younger agricultural borrowers. Sellers might sell for a lower price to "an older farmer who's got the cash," Hanes says, while young and beginning farmers with greater credit needs get left out while waiting on an appraisal.
The barriers to entry of occupational licensing as a potential new appraiser are also draining talent out of rural communities, Hanes notes. He shares a story of a young family farmer in his area who wanted to supplement his farm income as an appraiser but could not persuade any local appraisers to take him on as a trainee. The result, Hanes said, was that the young man accepted a job in seed sales that took him out his home area -- continuing the rural exodus.
ABA's Sharon Whitaker outlines some of the efforts the American Bankers Association has taken to address the appraiser shortage and minimize its negative effects, including successful advocacy for the Appraisal Qualifications Board to reduce the minimum requirements in a way that does not affect appraisal quality but lowers barriers for new appraisers to join the field. Whitaker also discusses a pending proposal by the banking agencies to raise the de minimis threshold for commercial transactions not requiring an appraisal from $250,000 to $400,000 -- an approach ABA supports.