Commerical And Industrial Vs Residential

[Jim Onderisin]

You may be right, Kyle. I don't know. Maybe my teacher was just trying to dissuade me from looking into the commercial appraising option. Who know what darkness lurks in the minds and hearts of men?

 

[Steve Owen]

the IRS doesn't recognize trainees as ICs, they are employees and your employer has to take out taxes for you, and pay social security, unemployment, worker's comp and disability on your behalf.

An instructor at a recent class told me that she knows of several appraisers in Missouri who were considering their trainees as independent contractors, have been audited by the IRS, and survived the audit intact. Therefore, a blanket statement that the IRS doesn't recognize trainees as IC's is apparently incorrect.

 

[Luzette Eaves]

My daughter, whom I mentor, also does sub-contracting for 2 other firms as an independant contractor. It gives her other opinions and insights, and has worked out very well for her. She has all of her own equipment, data, etc., and is free to decline a job assignment. My CPA does not have a problem with it.

 

[Steve Owen]

And now, back to the thread...

I hate to disagree with my competent peers, but they are not two different animals, no matter how much our Fannie Mae clients would like us to believe they are. The same basic principles apply to both residential and commercial appraising. It would be more accurate to say that every appraisal you do is a different animal... they all have some things in common, and all have some things that are different.

With that in mind, my advice is to try and start with a generalist, if possible. Start with a firm that does both residential and commercial work... then, try to be involved with as many different property types as possible. If, during your first three years you appraise SFR's, duplexes, apartments, office buildings, retail strips, properties under construction, convenience stores, manufactured homes, mobile home parks, subdivisions under development, various industrial buildings, multi-use properties, and several types of vacant land... then, by the time you are certified, you will know more about appraisal than many of your peers who have been in business for much longer.

There will be plenty of time to specialize later. If, that's what you decide you want to do.

 

[Smokey Bear]

An instructor at a recent class told me that she knows of several appraisers in Missouri who were considering their trainees as independent contractors, have been audited by the IRS, and survived the audit intact. Therefore, a blanket statement that the IRS doesn't recognize trainees as IC's is apparently incorrect.

I don't suppose she gave the Revenue Rulings on that? I'd love to read them.

 

[Steve Owen]

I don't suppose she gave the Revenue Rulings on that? I'd love to read them.

My understanding of it is that an audit does not necessarily create a ruling.

 

[Smokey Bear]

Were they audited specifically on that issue, or was it just part of an audit for another reason? If it's specifcally on that issue, it's because someone has filed an SS-8, which would result in a private letter ruling.

 

[xm4yb7]

IWith that in mind, my advice is to try and start with a generalist, if possible. Start with a firm that does both residential and commercial work... then, try to be involved with as many different property types as possible. If, during your first three years you appraise SFR's, duplexes, apartments, office buildings, retail strips, properties under construction, convenience stores, manufactured homes, mobile home parks, subdivisions under development, various industrial buildings, multi-use properties, and several types of vacant land... then, by the time you are certified, you will know more about appraisal than many of your peers who have been in business for much longer.

That is like saying "when you start off, appraise homes in every county of the state, then you will know more then most residential appraisers". I can't see how doing a few of every type property can make you truly competent in any of them. That is why people in most professions where competency is vital pick a general field when they begin (lawyers, doctors, professors, etc.).

 

[Steve Owen]

That is why people in most professions where competency is vital pick a general field when they begin (lawyers, doctors, professors, etc.).

Think so? Most of the lawyers I know (and I know a lot of them) have experience with just about every kind of beginning law you can name. They tend to specialize after passing the bar.

So... why do the universities that train doctors start them off in residency? So, they get a chance to see as many different kinds of medicine as possible.

Professors are an exception. But, only because their profession often requires a specific degree with a lot of expense involved in getting it. And, even though they are an exception, many professors start teaching as a second career. Their experiences are often quite varied and they usually make the best teachers.

The simple fact is, there is no such thing as experience that is not valuable if you use it right. My prior job as a cab driver (at age 22) helps me understand how to organize geographically. My prior experience as an insurance sales person helps me get a few of those jobs that start out with the free comp check request.

Of course a residential appraiser who appraised in multiple states would know more about it than one who stays in one area only. It's just not very practical to do that, so you don't see many in the residential field in multiple areas.

I've always appraised in the few counties near home and I know those counties like the back of my hand. But... I've no experience with a rapidly expanding market like Southern California. I don't know much about markets without available land sales, such as San Franicisco. And, I don't have a clue how to deal with gentrification... never had to.

 

[Fred]

I hate to disagree with my competent peers, but they are not two different animals, no matter how much our Fannie Mae clients would like us to believe they are. The same basic principles apply to both residential and commercial appraising. It would be more accurate to say that every appraisal you do is a different animal... they all have some things in common, and all have some things that are different.

I think what’s missing is the recognition the two “different animals” are 1) knowledge of valuation science and 2) knowledge of subject property type. By subject property, I mean that knowledge of real estate is easier to come by than knowledge of art, because we all grew up and live in buildings, but we all don’t live in museums. In terms of both types of knowledge, virtually everything needed for appraising residences, in terms of both valuation science and subject property knowledge is contained within commercial property.

I would not recommend anyone start with a goal being a residential mortgage appraiser. That's the work any of us can do. If you set your sights on the bottom rung on the ladder, there is not place else to get a foothold if you miss.