Certified Residential vs Certified General

[J Grant]

If there was an expansion of licensing categories then adding multi-family up to a certain number of units would be a relatively easy transition into an intermediary license status. That would still require a rudimentary understanding of cap rates and how the income/expenses work. A majority of the CRs could pass such a course/test but it wouldn't be all of them. I saw that much when I wrote and taught the SL-to-CR transition course. I had a high passrate but it wasn't 100% and that wasn't because of my instruction. In my experience appraisers generally know what they do, but some appraisers do zero math outside of what their formsware automates.

I personally, at tail end of career, would not sign up for it, but Imo a "Junior Commercial license" should be available for cert res over 5 years experience to get, after they pass certain courses and a test, st. The expeirence of res appraisers could transfer very well for some. As noted, not all would have he aptitude for it but at least they would have the opporunity.
A PAREA-type learning module in lieu of needing a mentor. Limit the properties to vacant land or mid-size apartments with a cap rate and small ag properties or single-use commercial buildings under 10 million value or some other cut-off point.

The sad part is that res appraisers due to volume and the high prices of homes, could in a year appraise a far higher $ amount total of property value than many cert generals, yet the standards for res license have been lowered and of coure the horrible fees of the AMC's have driven a number of competent res license appraisesrs out of mortgage work or out of business. Because far more average Americans own houses then commercial properties, the health of the economy is more tied to it.

 

[George Hatch]

Not junior commercial because our scope of practice is so much wider than just a small-medium multi-family endorsement. After a certain number of units the complexity in multi-family really does blow up. And mixed use goes beyond that so I don't think that's wise.

Besides, "junior" anything is going to hit everyone wrong as if to trivialize what they're really doing. I'm not sure what nomenclature would succinctly summarize a CR with multi-family endorsement. CR-M, perhaps.

 

[J Grant]

Not junior commercial because our scope of practice is so much wider than just a small-medium multi-family endorsement. After a certain number of units the complexity in multi-family really does blow up. And mixed use goes beyond that so I don't think that's wise.

Besides, "junior" anything is going to hit everyone wrong as if to trivialize what they're really doing. I'm not sure what nomenclature would succinctly summarize a CR with multi-family endorsement. CR-M, perhaps.

Call it a different name then - the idea is a step commercial license that does limit the $ amount/complexity of commercial properties for the sep license. To appraise any and all properties, one would need to qualify for the existing cert gen license.

 

[George Hatch]

Expanded residential license with a limited number of multi-family units. Maybe maxing at 15 units or so. Definitely not 50 units. Not a commercial license.

Very limited development and application of direct capitalization, no rent absorption analysis, no DCF training, no leased fee or leasehold training, no irregular cash flow analysis, little/no additional HBU application, no billboards, cell tower, leased offsite parking. Etc.

Maybe 14hrs of additional QE and 250 hours of supervised experience. Not a lot but also not nothing.

 

[Dale Floyd]

I think another star on the belly of the Sneetch isn't what this industry needs. We already have three licensing levels, and that's just crazy.

If an appraiser can take steps to become competent, they must disclose how. Having another piece of paper on the wall means nothing, and in my view, that's part of the problem we are staring at right now. People call asking "can you appraise this property?" We must then figure out specifics having nothing to do with our expertise. What's the difference in who can appraise a 4 unit versus a 5 unit residence? The paper on the wall. What's the difference in who can appraise a farm that is worth $999,999 versus the one that's worth $1,001,000 in Tennessee? The paper on the wall. And that's even more crazy because we can't know what it's worth until after the analysis. It's just stupid.

I was taken to task in court by a CG who also authored a course with the AI a couple of years ago. He basked quite a bit in the glow of his credentials, but his arguments fell short, and the judge found my conclusions to be more credible and logical than his. That has happened more than once. I wasn't smarter than he was, but I was much more competent.

One license - Varying areas of expertise driving the competency provision of USPAP. That makes more sense.

 

[George Hatch]

It's not an either-or choice between *demonstrated* qualifications vs competency. It's both . And WRT multi-family one reason why its both is because 5+ properties are appraised differently than 4 unit properties, are underwritten differently and are financed differently. FIRREA-related vs Fannie related. With only very rare exceptions I generally can't even use 4un as a comparable for 5un and vice versa.

Look at the difference between the 2-4un form vs the older multi-family forms like the 71a/71b and the narratives. One difference is the SC grid itself. That isn't an adjustment grid on the 71a/71b (no adjustments in those grids), and the sales price itself is never used as the unit of comparison as is generally the case for 1-4s and SFR land.

I have never once seen an unsupervised/untrained CR or a CG who only appraises SFRs appraise a non-resd'l property the same way a CG w/ experience with that type property does it. Not because one is more difficult to appraise than the other but because they're done a bit differently. The same can be said for those CGs who never appraise 1-4s. They're not doing it the same way the residential specialists do it.

Learn as you go on live assignments is a terrible plan when it comes to accruing experience.

 

[Dale Floyd]

Doing an appraisal for a 4 unit, versus a 5 unit, is no different at all in expertise. That’s just silly. The competency isn’t about which form to use George, or even about Fan and Fred. If an appraiser, not a form filler, knows how to do a 4 unit - what additional competency would be needed for the 5 unit?

Same for that agricultural property I mentioned earlier. What moronic thought process was involved in deciding that a CG was a necessity to appraise the farm worth $1,001,000 but not for the one worth just a thousand less?

This is the kind of thing I’m talking about.

 

[George Hatch]

As I say, I've never yet seen a non-trained and unsupervised (WRT multi-family) CR do a 5-10 the same way as the apt-familiar CG would do it. What I have seen is CRs doing them like they do a 4-un, and they usually have interchanged the sales between residential vs banking reg-designated commercial as if they're the same. Perhaps you're just as good at it as any CG and if so that's great. But QE courses and licensing requirements are about what it takes the average individual to get to that point. Not what it takes for the highest performers to get there when operating past their scope of training and practice. If a CR is operating off label the standard for what they're supposed to do is established by the appraisers who normally do such work. Not by other CRs in the same situation.

And WRT the transaction value I completely understand the reasoning you're using, particularly in light of the point that $1M doesn't buy the same property everywhere. OTOH if a line has to be drawn somewhere there will always still be the argument you're making - that there's no huge difference between this side of the line vs that side of the line. Nevertheless if there is no line at all then that causes it's own problems.

FTR I won't appraise most Ag-type properties and meat-poultry producing properties and such because they're over my head. Not my thing, just like I avoid large scale hospitality and office properties. I make referrals. I have the license but not the competency.

 

[Dale Floyd]

.FTR I won't appraise most Ag-type properties and meat-poultry producing properties and such because they're over my head. Not my thing, just like I avoid large scale hospitality and office properties. I make referrals. I have the license but not the competency.

That is my point. You rightly stay within the bounds of your competency, regardless of your license level. That’s how USPAP was written.

Many CGs clutch desperately to their sacred cows, when they are simply dying off. The answer is opening the doors for other qualified appraisal professionals to be able to gain expertise and broaden their abilities.

Having a license to practice law doesn’t mean every attorney is able to argue in front of the SCOTUS, so this isn’t a new idea. Even they are able to excel in specific areas of their legal competency successfully.

BTW - The levels of licensing are not something that impacts me personally, as I only bring this up for the future of the profession. There had better be somebody thinking about the future of appraising beyond GSEs or the banking regulators.

 

[Dale Floyd]

Duplicate.