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2008 is too late !

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Jason Barber

Thread Starter
Junior Member
Joined
Feb 16, 2006
Professional Status
Certified Residential Appraiser
State
Michigan
Now… before you all start judging me, I was once a very positive, upbeat and optimistic person, who always looked forward to educating myself and pushing my comfort zone to its limits. I’ve been fortunate enough to earn both a bachelor degree and MBA from Big Ten universities in the State of Michigan. I was intrigued by the real estate appraiser profession early on during my undergraduate studies and took a few classes here and there while finishing up my MBA from UofM. A few thousand hours of experience later and the formality of sitting for a couple unimposing three hour exams… and here I am.

Lately, I have been feeling rather negative and somewhat pessimistic regarding the flocks of appraisers who are upgrading from their limited lic to State Lic, Certified Res and even Certified Gen. I can hardly read this forum some days without shaking my head in utter disbelief that some of these posters are my peers. It seems that everyone and their brother has rushed to complete their hours of experience and education in the past few months and left in their wake a true understanding of the profession of appraising. By no means am I saying that I even come close to knowing everything about this profession, but I can assure you that we are seeing a significant drop-off of talented, educated and honest appraisers.

So how did this happen? There are several factors, but none more glaring than the overdue qualifications update. It is my opinion that The Appraisal Foundation has waited too long to implement these changes in upgrading the qualification criteria. The AQB adopted these changes FOUR years ago!!! The poor planning and implementation has led to a profession that is flooded with untrained, unskilled and sometimes incompetent form-filling appraisers. Add one greedy LO, one heartless RE agent and one of these amateur number-hitters… and its no wonder the housing market is collapsing before our eyes.

More and more I am embarrassed to be a part of this profession, but at the same time feel compelled to make it better… a daunting task to say the least, but a challenge nonetheless. I am blown away by the number of appraisers that have FAILED their licensure exam and continue to fail time and time again. I can remember final exams in High School that were more difficult than our own state licensure exams. For those of you that struggle with this exam, help me understand, is it that you’ve never taken exams before? Is it just a matter of not knowing how to study? Do you feel prepared when you sit for the exam, or are you hoping to just wing-it? And for the repeat offenders… how can this be? I am truly dumbfounded. How can an appraiser be expected to produce a quality report if they don’t even understand the context and content of it’s makeup? Maybe the market for quality reports just doesn’t exist or the client has lowered their standards… who knows. I’m sure the lack of higher education has a direct impact on ones ability to pass a mediocre test… and by “pass” I mean scoring a 75% or better... unbelievable.

I am also stunned by the level of incompetence displayed in this forum from time to time by my fellow appraisers and continue to watch that level sink lower and lower. I find myself constantly refraining from being too negative or too nit-picky in this forum, but I have finally succumbed in the grandest of fashion. This profession has been "dumbed down" for lack of a better term and most of that blame should be placed on The Appraisal Foundation and the AQB for not properly providing the educational roadmap for our success.

Is it too late to save our profession? Maybe… who knows, with the increasing reliability of AVM’s and the diminishing quality of our peers reports the writing may already be on the wall. It's no coincidence that our fees keep declining while more and more appraisers enter the business. When will our perceived value to the market hit bottom???

This is something that I have wanted to get off my chest for a loooong time and I am curious as to how many others out there have similar feelings. My guess is that there are a few, but the majority will probably attempt to flame me and feel threatened or personally offended by my rant. Be as it may... I am at peace with my words.
 

Randolph Kinney

Elite Member
Joined
Apr 7, 2005
Professional Status
Retired Appraiser
State
North Carolina
Jason, don't be so hard on yourself. Sure, we have incompetent appraisers and number hitters. The lending institutions, along with AMCs, not only tolerate it but demand it. If any appraiser wants to appraise for mortgage work, even with the new education requirements in effect, that won't change the basic nature of the business. It is all about fast and cheap with a minimum of competency.

I suspect with the continued falling volume of mortgages and falling home values, you will see more pressure on fees. Low fees are going to cause a number of appraisers to exit the business. And that is the good news.
 

Mztk1

Senior Member
Joined
Dec 3, 2006
Professional Status
Certified Residential Appraiser
State
Florida
Low fees are going to cause a number of appraisers to exit the business. And that is the good news.

Low fees are going to cause the good appraisers to leave the profession, not the hacks.

I got an order that took 12+ hours to complete and after handing the file in I consulted with the owner on his deed arrangement/subdivision for an added hour or two of my time - no charge. There was a lot to the house and the land and lot had to be explained in detail. Two appraisals were ordered. We were both paid the same. The other guy appraised the house 50% higher than me and when I read his report he omitted a lot of detail and used nothing but MLS photos for the comps AND made up concessions and conditions of the comps, never calling the agents. He never researched land sales and so made up his land value, and he also just made up his numbers in the cost approch, which was obvious. He probably had the report done in 3 hrs and the bulk of that was on the inspection.

Which one of us is more likely to have to leave the business due to economic hardship? The guy who completes a $700 assignment in 3 hrs and moves on to the next one, or the guy who puts 12 hours into it and remains available for an additional two hours to assist in deed research and clarification?

Which one is more likely to get less of the available work out there as it is? The one who claimed comp #1 was in fair condition and adjusted it up nearly $100K even though the sales agent reports it was in good condition, and also used comp #2, from another county, which was a subdividable tract of up to 140 units compared to the subject tract, without an adjustment, which can only be divided up to four times, and then used as comp #3 a virtual palace compared to the subject which was a standard ranch built in the 60s; or the guy who used three same vintange homes, in the same county, same zoning districts, same quality, same condition, who bracketed the subject in all areas of appeal, and added two listings and a pending equally as similar, and came in 50% lower?

Something tells me there is a reason the 3 hour appraisal is in high demand.
 

Steve Metz

Member
Joined
Jun 1, 2005
Professional Status
Licensed Appraiser
State
Georgia
Jason

Thanks for the great post I could not have said it better my self. I am doing a review today from a newly Certified appraiser and it is junk. I will be sending it in to the state but I do not think they will do anything about it. Nothing has been done to the last 20 I have sent in this year. ( They have to be really really bad for me to send them in.)

I have the course work and the hours but I will am waiting until 2008 to take my Certified test. I think that Certification after 2007 may be slightly more valuable in the market due to the increased qualifications.

The business model for residential appraising is seriously flawed and I do not know how to solve it. I do not think that banks or the goverment want to solve it either. The good old boy system that was in place before licensing was poor as well. I am not a big fan of ASA or AI and thier designations from the work that I see from MIA folks.
 

Tudor

Member
Joined
Aug 15, 2006
Professional Status
Certified Residential Appraiser
State
Arizona
I have felt the same for for quite a few years.

A handfull of years ago, I had my house appraised for a refinance with Country Wide. Someone came out to inspect my property, this person spent about an hour at my place and did not ask one question. I asked for their card right before they left, well, guess what, they were not licensed. A week later I received an appraisal with someone elses name on the report and no mention of the person that had actually done the inspection. It was at that time I realized why I was having a hard time meeting the short turn around times of my competition.

I don't receive much work these days because most people want a guarantee of value before I go out.

I have not been able to generate any review work, but occasionally some processor or LO will send me a copy of an appraisal on a property they want me to comp. (which I gladly accept, then tell them what they don't want to hear about comp checks) Looking over these appraisals just irritates me even more, the low quality of work (all comp. photo's coming from MLS, external obsolescence not mentioned, not clearly defining the amenities of the subject or comparable, etc....) and the canned verbiage that means absolutely nothing.

In this market, how can I compete against people like that. I don't believe you can mix business, appraisal and ethics all together with what is demanded of appraisers. Until the lending profession demands real appraisals the ethical appraiser will not be in demand.
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
Education had to wait

Jason,

When it became apparent that licensing was going to be required, The Appraisal Foundation as well as others proposed, prior to FIRREA in 1989, that appraisers meet what essentially back then was the same requirements that are going into effect in 2008. How do I know that? I was on a appraisal committee of the Real Estate Educators Association that was asked, along with others, to look at the proposed requirements for both education and experience. the requirements for education were almost exactly what will be required in 2008. However, the experience requirements were for a minimum of 5 years experience. The committe I was on, as well as other organizations said that it just would not work at that time, and would cause a shortage of appraisers in most states. They were right. I taught many local appraisers, many who had been in the business for many years. Most had never had a basic appraisal course. Long time, seasoned appraisers did not know many of the basics of real estate appraisal. Just to give you one example....I was discussing in the class room, the GRM for residential income analysis, and how it worked. As I was explaining how to develop a GRM from market data, one appraiser with over 20 years in the business spoke up and said..."Oh, that's how you do it". I asked hime how he had done the income approach. He stated, "Well, I always used 115 as the GRM". But, we also had many appraisers who did belong to appraisal organizations, were designated, and well educated. The problem was that they only represented about 20% of all appraisers or those who thought they were appraisers prior to 1989. How do I know? Well, a study was done at the time, I believe it was by the NAR. The study showed that there were about 300,000 people in the U.S. who were doing appraisal, some full time, some just once in awhile. Out of that group only about 20% belonged to any appraisal organization. Licensing was supposed to become mandatory in July 1991. It did not become mandatory, in most states, until January 1993. Why? Many states simply were not ready and had not been successful in having their state regulations and procedures approved by the ASC prior to late 1992. And, even then, 1 or more states were granted a waiver for at least another year.

Don't be mislead by what you read on this forum. There are many well educated real estate appraisers in this business. Out of about 80,000+- appraisers in the country, this forum, as large as it is, only represents a small portion of all appraisers. I earned a degree in Real Estate in January 1979, and not only took may appraisal courses prior to licensing, but taught those courses as well as real estate courses prior to licensing.

Now, I believe you may have a misconception as to who your "Peers" are. Appraisers on this forum are not necessarily your peers. USPAP defines an appraisers peers as...."other appraisers who have expertise and competency in the same or similar type of an assignment". In a FAQ, it is further emphasised that ....."Therefore, appraiser's peers may vary. An appraiser whose practice includes primarily urban single family residences will have different peers than one who specializes in dairy farms".

While I have some concern as to what will happen to the profession in the short term, I believe that we will be just fine in the long term. Even those that we sometimes call "Skippy" cannot last forever by doing appraisal for such low fees that they cannot survive financially. Although my business is slow, and my actual number of appraisals completed this year to date are about 50% of what they were last year at this time, I am surviving. I am doing a lot of teaching of both appraisal as well as real estate courses. That extra income is a good supplement to doing appraisal work. But, I am also at the age and in a position where I could retire if I wished to. My problem is, I don't golf, drink, gamble, and rarely go fishing anymore. But since I do like to eat, I guess I could open a hot dog stand or some similar venture. But, that business is over crowded around here as well. :laugh:

Guess I will just have to hang around a while longer and see how things work out.:shrug:
 

Dutchman

Member
Joined
Jul 11, 2007
Professional Status
Certified Residential Appraiser
State
Washington
Jason,

I fully agree with what you said. I have been appraising for almost 15 years and have seen the quality of appraising go down almost exponentially. As my contribution to improving the profession, I now do a lot of review work and the crud that passes for appraisals is geting worse and worse. I have given up sending these to the state simply because the slap on the wrist that fraudulent appraisers get from the state is laughable. I mean laughable as all the way to the bank. I am now concentrating on working to get the offenders on "do not use lists" with ample documentation going to the offenders.
I would like to see as minimum qualifications a 2 year associate degree in RE appraising to become a trainee and a 4 year degree in RE (all discipllines from investing to sales) with a major in Appraising along with 2 years of experience as a trainee to become licensed.
 

Mark K

Senior Member
Joined
Jan 27, 2004
Professional Status
Certified Residential Appraiser
State
Indiana
Jason,

Your well written "rant" mirrors the feelings of many of us. I'm in complete agreement and also feel the changes are far too little and far too late. I don't believe for a minute that they will have any significant positive effect on the overall quality of the appraisal profession. This will have to come from strict enforcement of the existing laws, not from the addition of new ones. The ASB and others are taking a page from the gun control lobby in their efforts to improve appraising quality. They pass more laws to control the law-abiding individuals and expend far too little effort controlling the criminals.

Requiring more education or experience isn't the answer (although it won't hurt). The appraisal criminals are not stupid; they can pass these tests all day long. They always have and will. Additional education requirements may help weed out some of the ignorant wannabe's but most of the problems today are due to intentional fraud and criminal activity, not incompetence.

The entire real estate industry will take a hit from this current fiasco. Good and bad appraisers will leave the profession. As will good and bad realtors, mortgage brokers, and other related parties.

The Fannie/Freddie form filling world is going to take the biggest hit but outside of the their world, there continues to be a demand for appraisers capable of writing a good appraisal report. If you can survive the temporary crash, with your background, I think you will likely be one of the survivors (in spite of the U of M handicap; go Spartans) :).
 
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David Wimpelberg

Moderator
Staff member
Moderator
Joined
Mar 30, 2005
Professional Status
Certified General Appraiser
State
New York
I'm a very upbeat appraiser, and I view appraising as a profession.

There's plenty of complaining and criticism going on. But I don't let that get me down. Why? Because I saw the train coming and got off the tracks.

This profession is split into two very distinct segments; residential lending and everything else.

If you're dealing with the residential lending segment, chances are you're dealing with AMCs, MBs, and LOs that are going to bust yer arse until the cows come home, and do it as cheap as they can. My opinion is that if one is a professional, they should be treated as one. That includes they way one is treated and the manner in which they are compensated. Since these folks are not professionals, they don't know how to treat an appraiser like one. That's fine with me...because there's more to appraising than dealing with these folks.

It is my opinion that because of your background, you should be working toward your general license. Many general certs don't even work for lenders (only a small fraction of my work is for commercial lenders). You'll be amazed at your difference in you perspective once you get out of the jungle known as res lending.
 

James Micozzi

Member
Joined
Jan 13, 2005
Professional Status
Certified Residential Appraiser
State
New York
Jason

Thanks for the great post I could not have said it better my self. I am doing a review today from a newly Certified appraiser and it is junk. I will be sending it in to the state but I do not think they will do anything about it. Nothing has been done to the last 20 I have sent in this year. ( They have to be really really bad for me to send them in.)

I have the course work and the hours but I will am waiting until 2008 to take my Certified test. I think that Certification after 2007 may be slightly more valuable in the market due to the increased qualifications.

QUOTE]

Steve

Unfortunately, the state probably will not take action soley because your license level is "lower" than the appraiser you are reviewing. I had the same problem here in NY. The boobs at the state level think that a "higher" license level automatically equates to being more competent. We both know that is not the case.

Jim
 
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