Certified Residential vs Certified General

[Dale Floyd]

I spent a week in Sevier County, Tennessee and once again ended up in the middle of a discussion about the Sneetches in this business with stars on their bellies versus those who don’t. (Kudos to Dr Seuss). There are CGs in Tennessee who jump up on a stump and preach that a CR must never do an appraisal of an AirBNB because of the complexity or commercial aspect that requires the advanced brain of a CG. The HBU of all residential properties in Sevier County (Pigeon Forge, Gatlinburg, etc) is likely AirBNB everywhere because the market is driven by tourism due to Dollywood and Gatlinburg proper, with all the resort amenities.

There’s 3-4 CGs in that county and 25-30 CRs. I know of CRs up there that dance circles around many CGs in ability and intelligence, and doing an appraisal of an AirBNB is no big deal for them because they know that industry inside and out. If they are able to complete standard income producing rentals, then why pick out the short terms as being outside their wheelhouse? He pointed to education and the law. He had 4 years of experience in the area, and one CR up there dwarfs him by decades of experience.

I’ve said this a hundred times. Since a big swath of CGs were brought in prior to degrees and proof of competency beyond the CRs, why do we have this star on the belly requirement? Shouldn’t competency always rule the day? I always thought appraisers should have one license, just like an attorney, with their competency and expertise being the driver of what they are able to appraise.

My argument was a funny one with that CG who debated me about this. He asked if I felt competent to do them, and I told him I wasn’t in an area like Sevierville and we don’t see that many in my coverage area. But I asked him if he was competent to do a barndo on 40 acres near the Tennessee River with a barn and a guest house, and he had never heard of such a thing of course. Competence and complexity changes from area to area.

I know there are CGs out here that will get bent out of shape in having this discussion, but the whole licensing process ought to be different in my view. Let competency rule, as it was intended in the first place. One license - various specialties.

 

[J Grant]

One umbrella license would be better; however, it should be a higher-tier license that includes several commercial courses and tests to qualify. Dividing the license along res and commercial lines creates an underclass vs overclass reality economically by limiting the options on the residential side. That is how a large segment of res appraisers find themselves stuck in a humiliating cycle of low-bid/low-fee AMC work. The overlords would hate it if there was a step license that allowed limited commercial appraisal with additional education and tests , call it Jr. Commercial, would fill a need and some res appraisers could use their accrued knowledge and experience to take the tests and course, perhaps a PAREA like course to earn a Jr. Commercial license.

Going forward, abolish the res only license. (grandfather those who have it in, with opt-in to upgrade) In place min of a junior college requirement for all and a one license that includes commercial classes and statistics now that it counts more in all aspects of appraising. Limit the $ amount or type of commercial. A more specialized license, or equivalent certification, and perhaps college for SRA in res or higher level for MAI and complex properties in commercial.

There is one MD license, but then a doctor specializes - but they have to take the courses and tests and sometimes a residency to prove a base level of competency. There is one law degree but then they go on and specialize.

Just having a license does not mean one is competent or has an affinity for appraisal of all property types within that license.

 

[TerryRohrer]

The American way…when you choose not to pursue something for whatever reason, lobby to have the requirements to achieve that something to the point you already qualify by doing nothing. This is simply DEI with another name.

 

[Mark K]

There are CGs in Tennessee who jump up on a stump and preach that a CR must never do an appraisal of an AirBNB because of the complexity or commercial aspect that requires the advanced EGO of a CG.

Who cares what they think? What does the state say about it? I'm guessing its a "gray" area and the state is silent on it. In this case, the CRs should continue with the status quo and ignore the CGs who are whining that CRs are taking their business. That's all its about...CGs losing business to those they feel are professionally inferior to them.

Until either the state or the clients decide that CRs are unqualified and cease the orders, they should just continue business as usual. I once had a CG complain to the lender that I should not have appraised a rural SFR with typical pole barn where the owner was operating a small welding side-business. He told the bank that it was an industrial property. Moron.

 

[gregb]

I don't have a problem with a CR completing AirBNB assignments. To get my CG, I worked for an MAI for 4 years, gained experience, took off work for three weeks to take AI income classes, then passed the CG test in 1996. Versions of that path are still available to CR's seeking to upgrade their license. Would it be fair for a CR to bypass those sacrifices made?

 

[Zoe]

I spent a week in Sevier County, Tennessee and once again ended up in the middle of a discussion about the Sneetches in this business with stars on their bellies versus those who don’t. (Kudos to Dr Seuss). There are CGs in Tennessee who jump up on a stump and preach that a CR must never do an appraisal of an AirBNB because of the complexity or commercial aspect that requires the advanced brain of a CG. The HBU of all residential properties in Sevier County (Pigeon Forge, Gatlinburg, etc) is likely AirBNB everywhere because the market is driven by tourism due to Dollywood and Gatlinburg proper, with all the resort amenities.

There’s 3-4 CGs in that county and 25-30 CRs. I know of CRs up there that dance circles around many CGs in ability and intelligence, and doing an appraisal of an AirBNB is no big deal for them because they know that industry inside and out. If they are able to complete standard income producing rentals, then why pick out the short terms as being outside their wheelhouse? He pointed to education and the law. He had 4 years of experience in the area, and one CR up there dwarfs him by decades of experience.

I’ve said this a hundred times. Since a big swath of CGs were brought in prior to degrees and proof of competency beyond the CRs, why do we have this star on the belly requirement? Shouldn’t competency always rule the day? I always thought appraisers should have one license, just like an attorney, with their competency and expertise being the driver of what they are able to appraise.

My argument was a funny one with that CG who debated me about this. He asked if I felt competent to do them, and I told him I wasn’t in an area like Sevierville and we don’t see that many in my coverage area. But I asked him if he was competent to do a barndo on 40 acres near the Tennessee River with a barn and a guest house, and he had never heard of such a thing of course. Competence and complexity changes from area to area.

I know there are CGs out here that will get bent out of shape in having this discussion, but the whole licensing process ought to be different in my view. Let competency rule, as it was intended in the first place. One license - various specialties.

HaHa. I am not one of them. I guarantee you many CRs are capable and more than capable of doing an Air BNB. Depending on value estimated at time of assignment, they are capable of appraising many multifamily assignments. If you can do a duplex, 4 plex or 8 plex or whatever, you can do an Air BNB.

I think it is focusing on the property rights that some may not consider. If you focus on what you are appraising is the real property rights, you can do it. Some appraisers can't see the forest for the trees or vice versa. You have to focus on the real property rights.

If much personal property is involved the lender can get a lien on the personal property and record in public records in TN just like a real property mortgage. The personal property lien can even be recorded in the mortgage and in separate location on personal property. It is a/k/a known as furniture, fixtures and equipment in a personal property lien on a loan.

 

[JTip]

Air B&B is a fancy name for a hotel room.

CR is not qualified to do hotels (business) by the certification. 1-4 family with no cap on value, that's it. You can assign a value to the real estate but not the business.

It's black and white.

 

[Zoe]

Air B&B is a fancy name for a hotel room.

CR is not qualified to do hotels (business) by the certification. 1-4 family with no cap on value, that's it. You can assign a value to the real estate but not the business.

It's black and white.

I would not give a business value. I am not doing that on a 400 unit apartment complex. I am appraising the real property rights on the income stream relative to MV definition with H&B use considered.

I don't appraise personal property. Many appraisers can do personal property appraisals.

I don't.

A certified public accountant is needed most of the time on a business valuation.

 

[gregb]

I am not doing that on a 400 unit apartment complex.

So, are you considering the level of property management when you value a 400 unit apartment complex?

 

[George Hatch]

I'm a CG and I only appraise the realty rights. I exclude the non-realty rights, which a lender is never going to get in a foreclosure anyway.

A house is just a house, even if they are renting by the bed or operating a marijuana grow in the garage or basement. Here today, gone tomorrow - house remains the same.

I don't value liquor licenses or inventory when appraising a liquor store, I don't value the restaurant business itself when appraising a restaurant, and I don't value motel businesses when appraising small motels or bed-n-breakfast SFRs. Not for mortgage related appraisals. If there's a lease then that speaks to the realty interest.

As an aside, if a CR or CG is valuing a non-realty business interest I'd argue the appraisal board has no jurisdiction over that portion of a valuation.