How to Make a Profession Disappear

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Rules making difficult to become a state certified appraiser

…You can see how difficult to become a state certified appraiser.

We are fairly near the end of the continuing education cycle for appraisers in my home state of Pennsylvania. Among other topics, I’ve been presenting changes to laws and regulations, which include the new Appraisal Qualifications Board (AQB) standards that go into effect in January 2015. You can find the regulations here.

The overwhelming response from existing appraisers is: “Do they just want to make us go away?”

The new requirements will include a bachelor’s degree, as well as — in most states — 2,000 hours of experience under a state certified appraiser (the number of hours varies, but the requirement to gain experience under a state certified appraiser is found in all states), plus another 75 hours of specific appraisal classes, including the 15-hour basic Uniform Standards of Professional Appraisal Practice (USPAP) course.

Most state laws require the supervisory appraiser to be present at the inspections, supervise the trainee, and basically do the appraisal. Pennsylvania regulations can appear somewhat contradictory: You can find this language: “Accompany the assistant during the physical inspection of the property until the assistant has logged 300 hours of appraisal experience or until the supervising appraiser determines the assistant is competent under USPAP to perform the physical inspection unaccompanied, whichever is the longer period,” as well a statement that the assistant “may not arrive at an independent determination of value.” Source.

Couple this with the reluctance of some lenders to allow trainees to work at all on appraisals, and you can see how difficult it will be to become a state certified appraiser.

Now let’s talk about the inspiration for this blog: the money side of things.

I’ve had trainees in the past. I could not afford to pay them much because when you’re doing something you know how to do inside out but taking time to explain to another person what you are doing, why you are doing it, and how it fits into the big picture, well, it takes at least twice as long. If you have children, think about training them to tie the laces on shoes. It’s the same idea. You can do it much more quickly by just doing it yourself. You take the time to show your kids how to do it because (1) it’s a skill they need and (2) you love them. On the other side of the appraisal equation, appraisal management companies (AMCs) want appraisals faster and cheaper than ever before. Working appraisers who have already had to cut their fees have little, if any, money left to pay an assistant. Under the new standards, assistants will be college graduates. Can we agree college graduates expect more than minimum wage? After all, they spent four (maybe more) years in school and probably have the student loans to prove it!

Now, assuming a good-hearted state certified appraiser takes in a trainee and scrapes together some funds to pay the person. (Some trainees are coming from the brokerage side of the business, and continue to list and sell. That complicates the appraiser’s schedule, but that’s a whole other headache.) At the end of the time period, that trainee takes (and hopefully passes) the state exam. The appraiser has just created a new competitor. Some appraisers work from offices, but many of my students — if they do not have a brokerage or work in one — are working from a spare bedroom or den. They don’t need a place to meet with clients. They just need Internet, computers, printers (rarely), and fax machines. So, having completed the education, they don’t have a significant outlay for an office and equipment; in fact, many people already have all those things in a home office. It’s easy to set up your own business and simply say bye-bye to that appraiser who trained you.

With one exception, the only appraisers I’ve encountered who train others are training family members. It’s part of a succession plan. And typically, it is not just exclusively appraisal — because the money isn’t as good as it used to be. I’ve said this in class, and I’ll say it here: “I have two kids, both of whom have college degrees. If either one of them expressed a desire to get into appraising, I’d suggest brokerage instead because I see more stability of income there in the future.”

My kids might think about real estate appraisal as a career because I’m second generation in real estate. How many other kids will they look at a job that requires a two-year apprenticeship — at next to no pay and, typically, with no benefits — and decide that this is a viable career path for them?

By Melanie McLane ABR, CRB, RAA, owner of McLane Solutions, a real estate education and training company in Jersey Shore, PA; also a state certified residential appraiser and an associate broker with Jackson Real Estate in Jersey Shore. Source Appraisal Insight

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5 Responses

  1. Bryan J. Trenholm says:

    Melanie – eloquently put but you missed one importatnt point. Let’s say after all of that you pay them 50% plus license fees, E&O and CE fees. They can still take AMC work on their own and make more thus feeding the low fee low experience base everyone is complaining about! The entire plan is flawed. No compete clauses would be required here unless they buy my company first!!

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  2. Retired Appraiser Retired Appraiser says:

    The Answer: Yes, they want this “pseudo profession” to disappear. ***It doesn’t take a genius to figure that one out***

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  3. Kevin Keck says:

    I just read your article. I guess I may be the exception. My mother who has been an Appraiser for over 25 years fully supported my decision to become an appraiser. While still finishing my BA i began my course work and training process. Once I completed my 2 years I easily passed the National Exam. If you cant pass it the first time, you really shouldn’t be appraising. All i truly see for me is a great opportunity in the next 10-20 years in the field. Day after day I continue to read that appraisers are only getting older and older, Education Requirements are rising (Making Entry into the field harder), and very few new trainees. What this shows me is that my competition will be fewer and far between as I come into my peak earning years as more and more appraiser exit the field.

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  4. Appraising 26 years says:

    I agree with all that’s been said. There really isn’t anything left to draw a person into appraising… flexible hours? maybe, only I seem to be taking longer to complete one assignment than I did five years ago. My fees are finally starting to go up, but when you figure my ability to do less with more hours, it’s a wash… UAD and automated reviewing have made it a nightmare to complete anything. AMCs? really? has it helped the industry get better? Has frank/dodd made our appraisals more accurate? I can’t say I’ve experience anything that makes my appraised value more accurate… So, really I have had a great ride, and still enjoy the process, but suggesting to anyone getting out of college to consider appraising… I don’t think so…

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    • bubba jay bubba jay says:

      you forgot one more point. things like AMC’s, numerous wasteful revisions, work creep, endless commentary, Frank/Dodd, etc, whatever, still hasnt made borrowers stronger or risk-free either.

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How to Make a Profession Disappear

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