As the CEO and co-founder of Valcre, I have the privilege of engaging with a wide range of professionals across the appraisal industry—whether they are Valcre customers, prospective clients, conference attendees, or the next generation of appraisers at our educational courses. These conversations offer invaluable insights into the challenges and opportunities shaping our field.
With 2024 drawing to a close and 2025 just days away, I find myself reflecting on this past year—a year marked by uncertainty and rapid change. At the same time, I’m looking ahead to a new year that holds significant opportunities for valuation professionals who are prepared to adapt and seize them.
I wanted to take this moment to share my reflections on 2024 and invite leading voices in our industry to weigh in on the most promising opportunities and key risks appraisers should be aware of in 2025. In this article you’ll hear varying perspectives from key appraisal leaders:
- Erick J. Mazzoni, MAI, CRE, MRICS, Executive Managing Director, U.S. Lead, Valuation & Advisory, Cushman & Wakefield
- Jacinto Munoz, MAI, SRA, AI-GRS, AI-RRS, Managing Director, Partner, Cogito Realty Partners
- Lauren Migliore, Valuation Manager, CohnReznick
- Matthew McWatters, AACI, P.App, Principal, Managing Director & Canadian Leader, Valuation, Advisory & Property Tax Services, Avison Young
- Mike O’Brien, President, O’Brien Right of Way Valuation
- Patrick Craig, MAI, MRICS, Executive Managing Director, Real Estate Valuation Group, Marshall & Stevens
- Scott Tew, MAI, Executive Managing Director, Partner, Valtrust
As we prepare to step into the new year, one sentiment rises above all others: practical optimism. The opportunities are there – ready to be captured by teams who are poised and well-prepared to meet them.
Enjoy!
2024: Reflections on a transitional year
For many appraisers, 2024 was underwhelming, marked by slow starts and a tough operating environment. Earlier in the year, mortgage rates were at pre-Great Recession highs and transaction volumes were down as much as 51 percent. Appraisers were forced to deal with unstabilized assets, negative absorption, increased vacancy, dwindling demand and struggling banks. Not the recovery we were hoping for when we entered the year.
But as the year progressed, there have been a few emerging bright spots. Activity appears to have picked up as certain loans entered workouts and portfolio sales also took place. Inflation has eased and the Fed has started lowering interest rates with the expectation of more to come. As we close the year out, these developments have served to introduce some motion into what was largely a frozen transactional market for commercial real estate assets, resulting in tentative optimism among appraisers.
There was more good news for appraisers who prioritized technology investments. Technology, including appraisal software, enabled teams to deliver reports more quickly, meeting client demands for faster turnaround times. Tech also paved the way for teams to diversify into other appraisal specialties, such as eminent domain and right of way, tax protest, and valuation for financial reporting, assuming the relevant competencies were present. Such adaptability helped teams better position themselves to retain revenue, secure headcount and lower their reliance on business and interest rate cycles, resulting in increased stability – a key differentiator in an otherwise tepid market.
2025: A mixed but hopeful picture
Looking forward to the year ahead, it’s sure to be a ride. The impact of the incoming Trump administration and its economic agenda has many appraisers holding their breath – will pressure on the Fed see interest rates cut more rapidly, giving the CRE industry the major kickstart that it needs? Possibly. There’s also several trends we’re seeing already playing out that paint a mixed but hopeful picture for the appraisal industry.
A surge in appraisal volume?
Generally, appraisers expect to be busy in 2025, thanks to recent decreases in interest rates and expectations of increased transaction volumes. Another major market force that cannot be ignored is the staggering incoming wave of maturing commercial mortgages. According to S&P Global, there is an estimated $998B in maturing debt in 2025, with an additional $1T annually in 2026 and 2027, when it is set to peak. The CRE financing world needs to brace for a “Judgement Day”, where debt restructuring and refinancing are inevitable.
Appraisals will be needed for the wave of refinancing transactions, as well as for distressed sales to mark to market, or loan workouts to reshape debt and equity positions and repayment schedules. Additionally, given continued market uncertainty, appraisers expect to see a greater level of scrutiny for many new and existing loans. These forces underscore the need for higher quality, timely appraisals that are “right the first time.”
Hear from the experts:
-> Erick M. Mazzoni, Cushman & Wakefield
Uncertainty around interest rates and impact on transaction and lending volume. That’s the million dollar question. The market appears to be stabilizing in terms of interest rates and related transactions, and lending has opened up during the second half of 2024. 2025 should produce more certainty around interest rates (hopefully lower) as well as a higher volume of transaction activity, all of which will be good for the appraisal industry.
–> Jacinto Munoz, Cogito Realty Partners
With a wave of maturing commercial real estate debt on the horizon, appraisers will face heightened demand for their services. Firms that have the ability to leverage technology to handle this influx through the use of learning models and data-driven platforms will have a significant competitive advantage. The ability to process complex commercial appraisals quickly and accurately will be crucial.
–> Matthew McWatters, Avison Young
The past few years have been challenging due to market uncertainty, a lack of transactions, and rising interest rates. However, as we move into 2025, there is a strong sense of optimism. Recent decreases in interest rates, the return of institutional investors, and a resurgence in capital markets activity are all positive signs. These factors are expected to lead to increased volume and opportunities across the country, particularly for asset classes that have been less active in recent years.
Maintaining a focus on exploring technology solutions that enhance workflow efficiency and seamlessness is crucial. In this rapidly changing environment, deadlines are becoming tighter, and having robust technological support will enable appraisers to meet client expectations. Innovations such as AI, data robotics, AVMs, and advanced appraisal platforms like Valcre are key factors in attracting high performers and helping our existing team members reach new heights.
–> Patrick Craig, Marshall & Stevens
There will be several challenges shaping the appraisal industry in 2025. The year will start off with a lack of comparable sale data, emanating from the prolonged high-interest rate environment that began in 2023. The lack of financing, high interest rates, and inflationary environment made it difficult to transact. Hence, transaction volume was down significantly in 2024. Another critical issue will be price discovery. There remains a wide gap between asking and selling prices, causing investors to face a crisis of confidence. A third issue will be investor enthusiasm. Which type of investor will step up first? Will it be the local domestic investors, foreign investors or another group? I don’t think institutional investors will be active early in 2025.
–> Scott Tew, Valtrust
Demand for appraisals (and appraisal fees) should begin to see meaningful improvement in 2025. The rising tide should be experienced across most aspects of the commercial real estate appraisal industry, but early signs are that demand may be most pronounced amongst clients seeking higher-quality analysis on more complex assignments. For example, complex and/or higher-risk new loans, existing loan workouts and litigation assignments.
Due to continued economic uncertainty many new and existing loans will be scrutinized more closely than ever in the coming year; how these clients will balance the increasing need for higher-quality valuations with their desire to utilize the most “cost effective” vendors will be interesting to watch play out.
Intensifying client demands
Client demands for faster appraisal turnaround times are already pressing, and deadlines will only tighten more in 2025. Clients also expect higher-quality data, from a larger number of data sources, to support appraisal values that stand up to scrutiny.
These accelerated timelines and quality thresholds must be met (without raising fees), or else appraisers risk losing the trust and business of their clients. Robust databases and appraisal software will be critical tools for appraisers in 2025 and beyond to be able to increase their internal efficiency and deliver on these demands.
The expert perspective:
–> Jacinto Munoz, Cogito Realty Partners
Client expectations for faster turnaround times and higher-quality reports are intensifying. Advanced technology solutions, such as AI-powered analytics, machine learning, and cloud-based platforms, will be essential to meet these demands. These tools can streamline data collection, enhance market analysis, and ensure report consistency, positioning tech-savvy firms as industry leaders. Further, with the democratization of data, firms employing technology will enable their clients to make better decisions faster!
Artificial Intelligence (AI) rises to the top of the agenda but do appraisers know how to move forward?
As we look to the future of appraising, it’s impossible to ignore technology – AI in particular. While often thrown around flippantly, AI techniques including automation, machine learning, large language models (LLMs), predictive analytics, and natural language processing are no longer buzzwords – they have very real applications for appraisers, helping them navigate vast quantities of data and slash report turnaround times.
Having the right digital tools in place is the only way appraisers will be able to deliver the quality of report, at the pace demanded by clients, and take advantage of the volume of work coming down the pipe. Excitingly, those who have prioritized their digital strategy are already experiencing substantial benefits – including:
- Increased efficiency and turnaround times: a leading appraisal firm implemented a digital workflow management system, enabling their team to reduce appraisal turnaround times by 40% – from a week to 2-3 days. This improved client satisfaction by 25% and enabled them to handle 30% more projects annually.
- Improved data accuracy and quality: a national appraisal firm transitioned to a cloud-based data management system which helped them consolidate and clean their data. They reported a 50% reduction in report errors, translating to a 10% increase in repeat business as clients gained trust in the accuracy of their work.
- Cost savings: a mid-sized appraisal company adopted a digital approach, automating repetitive tasks and reducing manual data entry. This reduced operational costs by 20% over the first year, and a 15% increase in profitability.
Benefits aside, a real concern going into 2025 is that while on the whole appraisers understand the benefits, the practical first steps of enacting a digital strategy are perceived to be very hard, with many appraisers unsure of the first steps that need to be taken. This is definitely not the case, with countless examples of appraisal firms rolling out appraisal software like Valcre and their teams getting trained and up to speed quickly.
It’s clear that we at Valcre and others in the appraisal and CRE technology space need to do a better job of education in this area to ease the path for appraisal teams who may not be as familiar or comfortable with technology to ensure they’re taking advantage of the tools available that will help them leverage upcoming market opportunities.
In any event, 2025 will be a critical turning point for appraisal teams that haven’t yet thoughtfully considered their technology strategy. Appraisers who embrace and integrate AI and other technologies into their appraisal workflow will be well-positioned to compete and capitalize on advantageous conditions. Unfortunately, those who fail to do so risk being left behind.
Here’s what the experts think:
–> Lauren Migliore, CohnReznick
Appraisal writing software and database tools are the name of the game right now for appraisers to ensure accuracy and use their skills more effectively. Appraisers cannot fully rely on AI, all AI outputs need to be confirmed for accuracy. For example, we can use AI to ask for a link to a zoning map, but AI is not at the point of reliability to ask for the zoning of a specific site without checking for accuracy. We can ask AI for a market analysis, however, it will not be able to replace conversations with market participants or on-the-ground research. I believe AI is a long way from taking appraisers’ jobs. However, it is clear that appraisal firms that embrace AI have a competitive advantage over those who resist adaptation.
–> Mike O’Brien, O’Brien Right of Way Valuation
AI is poised to revolutionize appraising by introducing intelligent automation and advanced analytical capabilities. Technologies like natural language processing, automated data extraction, smart form-filling, and image analysis will streamline workflows, enabling appraisers to focus on high-value strategic assessments while maintaining professional judgment. In addition, investment in geospatial technologies will allow appraisers to make better and quicker decision making on data analytics and selection.
–> Jacinto Munoz, Cogito Realty Partners
Ultimately, technology will be the driving force in the future of commercial real estate appraisal. Firms that invest in advanced tools and digital transformation will not only meet rising demands but also attract top talent and set new industry standards. Those that fail to adapt risk falling behind in an increasingly competitive and tech-driven landscape.
An aging workforce and appraisal talent shortage
Finally, one issue that continues to simmer in the industry is the aging appraiser workforce. While it may be a slow burn rather than an impending crisis, this shift could pose a challenge if demand spikes significantly. Compounding the problem is a lengthy and time intensive certification process that has hindered the entry of new talent into the field.
There is a real need to support and incentivize the next generation of appraisal talent to join the industry. Both education and technology will play a major role in attracting a new, diverse group of appraisers and ensure they’re trained in the most up-to-date, tech-enabled approaches. Not only will this ensure their individual success, but also fill the critical talent gaps as the older generation of appraisers retire.
Experts weigh in:
–> Erick M. Mazzoni, Cushman & Wakefield
This is a big challenge for the industry, and we see it within C&W. A handful of our top professionals are retiring or semi-retiring on a annual basis. Backfilling this talent will continue to be a top priority for us and the industry.
–> Lauren Migliore, CohnReznick
I believe that many in younger generation cohorts place high value on work-life balance over career progression or enhanced salary. Many of us in the profession work long hours to provide high-quality products to our clients. I believe this can be discouraging for those entering the industry, particularly females who are often juggling the needs of young children and aging parents. I expect firms will need to increase the number of their staff to accommodate the desire for work-life balance goals. Also, mentorship is key for new appraisers. Industry leaders will often talk about their entrance to the industry being guided by a mentor. Ensuring new talent in the industry have committed mentors is crucial.
–> Mike O’Brien, O’Brien Right of Way Valuation
We believe the best way to attract new talent efficiently is to initiate communication with colleges/universities that offer accreditation towards a general state appraisal certification. Once we identify those schools, we can then offer an in-person presentation to students in real estate programs that focuses on appraisal and the benefits of working for a large firm like O’Brien. We would highlight commission based compensation (meritocracy) and the ability to grow into the space with alacrity. There is no other real estate space that offers such upward mobility by leveraging time, education, and experience – grow at your own pace!
In addition, Matt Browne on our team was recently appointed by the International Executive Committee (IEC) of IRWA via the International Valuation Council (IVC) to represent the IRWA on The Appraisal Foundation Advisory Council (TAFAC). Matt will provide ROW industry guidance to The Appraisal Foundation and its various boards like the Appraisal Standards Board (ASB), Appraisal Qualifications Board (AGQB), and Board of Trustees (BOT).
–> Patrick Craig, Marshall & Stevens
The real estate appraisal profession is small in comparison to accounting, finance, legal, medical and other professions. It is also shrinking, and the membership is aging. It would be nice to see improvement in a) the delivery of appraisal education and b) a more efficient licensing process across all states, and c) overall improvement in technology. Technology evolution is coming fast and furious, and the industry remains behind the curve. It would be nice to see some improvement that would help appraisers of all ages, and companies of all sizes.
Conclusion: 2025 – a year for embracing change to survive and thrive
As we close out 2024 and prepare for the opportunities and challenges that 2025 will bring, one thing is clear: while economic conditions can create hurdles, they also present opportunities for innovation and growth—particularly through the adoption of technology.
The trends shaping 2025, from rising appraisal demand to intensifying client expectations and the rapid evolution of AI, underscore the importance of adapting to and embracing change. Appraisers who invest in digital tools, streamline their workflows, and prioritize efficiency will be better positioned to meet these demands and remain competitive. Meanwhile, addressing the talent shortage by nurturing the next generation of appraisers will ensure the industry is prepared for long-term success.
While uncertainties remain, the combination of emerging technologies, evolving skillsets, and a proactive approach provides plenty of reasons to be optimistic going into 2025.
Valcre would like to extend a big thank you to each of the appraisal professionals who contributed their valuable commentary to this piece. We’d also love to wish our entire community a happy and safe holiday season. See you next year!
