Practical Applications of Real Estate Appraisal (PAREA)----New idea from the AQB

[Julio E. Sune Jr. (FL)]

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["Background-----The Appraiser Qualifications Board (AQB) has been examining the need for an alternative to the traditional supervisor/trainee model for gaining appraisal experience. Persons wishing to enter the appraisal profession have consistently reported difficulties finding qualified certified appraisers willing to supervise them. The underlying reasons certified appraisers are unwilling are numerous and well documented; however, no matter the reason, the lack of an adequate supply of supervisory appraisers presents a significant challenge to entry into the appraisal profession". ]

 

[George Hatch]

Yes the current setup presents a significant barrier to entry, but no, that doesn't pose a problem for the appraisal profession. Not when we are facing the very real possibility of a large decline in the demand for appraisal services.

 

[CANative]

We need a $5 surcharge on USPAP books to fund a mentor program in each State.

 

[RCA]

Hmmmm. The problem, to my way of thinking, is that we have a restricted need for much more highly qualified appraisers with respect to statistical and computer skills. Almost none of the appraisers in the USA, are qualified to "supervise" such "trainees". We don't even have reviewers for them and what is enforcement going to do?

I remember my first commercial supervisor telling me the most important thing was to learn to do appraisals like everyone else. I thought "good grief". Well, actually, for commercial appraisal - you aren't that bad off. But for residential - "good grief"!

I think they are going to have to go through a period where they simply look at the advanced education, require some top notch beginning appraiser courses with challenging exams and then just license them and let them go.

Here's a suggestion (based on 3 term years, i.e. quarters)
CORE:
1. Math: 3 terms of calculus min, 2 terms of linear algebra, 2 terms of undergrad parametric statistics, 1 term non-parametric, 2 terms of grad level non-parametric statistics.
2. Computer Science: 3 terms college level, including programming, Python or C#
3. Data Mining & AI: 3 terms undergrad and/or grad covering real applications.
3. General Science: High school biology, chemistry and physics. A mixture of these courses at college level.
4. Logic - Classical: 1 term college level.
5. Economics: 2 terms, macro and micro.
6. Accounting; 2 terms
7. Systems Engineering, in particular UML related methods, TOGAF, SysML,
8. Law
9. Philosophy, English

REAL ESTATE - APPRAISAL (Grad level)
1. All the usual .... followed by challenging exams.

At the completion of the grad level RE/Appraisal courses, Masters Degree completion, - a Certified General Real Estate License is issued, allowing the student to work independently or for a company. Something will have to be done about insurance ... Well, some kind of special program will have to be set up for 1-2 years to monitor the guy or gal ... Maybe the University could do that. They likely won't find any qualified appraiser to do the job. Most of the ones out there, who think they know statistics, - don't know enough --- it's absolutely ridiculous!

Oh yes, small side note ... Anybody who goes through all those math and computer courses is going to want a six figure salary; so some big company with a lot of money is going to have to dangle some promising jobs for completion of the Masters Degree - or it ain't going to happen.

 

[Carnivore]

Bert I don't disagree much with your post above. Lets all face reality for a moment. The current residential appraiser business environment model does not and can not support your contention that we need more education. If the average CR was educated like you suggest, then under the current fee and turn time structure, AMC PhoneMonkey dot com interference, plus the seasonal cyclic nature of our business, CR like you describe above would rapidly exit to another line of work.

Right now the vast majority of AMC's WILL NOT ALLOW a trainee to inspect without the CR Supervisor accompanying the Trainee. Now some of these AMC's claim that this is a Lender/Client demand. I am not so sure about that one. Since AMC's control almost all lender appraisal need work flow you begin to see the problem. Their fastest and cheapest hunt slows up the process tremendously and they prefer Mr Bragadocious(45 reports a month super-appraiser) over a more qualified appraiser who complete 20 reports per month maximum.

These AMC's and Lenders claim we are to slow and to expensive. Have you looked at a settlement statement lately? We are not expensive, especially when you look at a Purchase money settlement closing cost and the two largest fees on that statement are the Realtor 6% and the Lenders 1-2% charges. Plus the Lender padding charges.
Slow? Then Refinance ..Woo Hoo all kinds of trumped up charges are all over that statement. Really...we are expensive! Ha!, not even close.

To Slow, Look at purchase money listing Pending dates and compare that to the order date of your assignment. Just another Blame the appraiser, to cover the inefficiencies of the Lender/AMC.

Sorry for the soap box comments but back to your more intensive educational point! Yes i like it, but no it won't work.

 

[Dale Floyd]

PAREA - That rhymes with something that is just on the edge of my tongue, but I can't remember what it is... Anyway, I digress..

Although most appraisers I've met in life are pessimistic, I have never been a pessimist - or an optimist for that matter. I am truly a realist in every aspect of that word's definition. "It is what it is" has been my motto for many years.

But my opinion of the PAREA concept is tainted with skepticism that is perched upon present facts that all of us are now facing. It isn't pessimistic to point out how much the appraisal industry is under the gun for changes that will include elimination in many instances. It appears the appraisers who will soon be retiring in the next few years, won't be replaced at the same levels they leave - yet again.

And since money is the true driving force behind anything involving business of any profession, one wonders how a PAREA facilitation process can survive the long term. Pragmatically, I fail to see enough evidence that adopting PAREA will cause scores to hand hundreds or thousands of dollars to get into a business being carved by cheaper, faster, and waiver piranhas. I do see that it will dramatically shut off any motivation for a certified appraiser to train anybody for licensing purposes. That will likely come back to bite us later.

Once the new has worn off, and there aren't enough new people wanting to get into a profession that is being dramatically reduced in need, and current appraisers no longer have any momentum to train new ones, I suppose we will all be tossed back in front of Congress to hear complaints about the lack of us once again.

But those of us who have chosen this path, knew why this profession was important. Hopefully the outer forces who only view us as an obstacle will learn from the error of their ways eventually. Until then, "It is what it is" I suppose.

 

[Renee Healion]

Bert, a modest proposal

English composition, if nothing else
Economics intro
Building Science
Contract Law intro
I like your idea of Logic
You know you're not even getting this much, right?

 

[Elliott]

That AQB is concerned about the current system is commendable. I think doing a Demonstration Report which would qualify for a substantial amount of experience is a good idea. The VR glasses seem to be a gimmick, but a couple of classes equivalent to another amount of substantial experience might be a good substitute.

The issue that AQB isn't addressing is that a new CR can't go out and appraise for lenders, AMCs, or GSE's, because they basically say, "We see that you don't have 5-years of experience doing lender work?" And the applicant says, "Then, how do I get experience if I can't do reports for lenders?" Maybe AQB should be asking young appraisers how they made the jump and what alternatives could be developed.

 

[Joe Flacco]

3 terms of calculus?

You need three things to be a good appraiser.

1) Very good local market knowledge that allows the appraiser to identify the factors that impact value for the subject property.
2) Strong grasp of high school level algebra that allows the appraiser to find those answers using the data available.
3) Basic ability to communicate the findings.

You don't teach these things in a practicum course. Everything else process related can be taught in a practicum course or in VR or whatever.

 

[George Hatch]

Where practicum courses should come into play is at the QE level, not the experience level. As in, at all levels of the QE syllabus in order to illustrate that material. It's the way we teach appraising that desperately needs the overhaul, not the way trainees accrue experience with navigating all the aspects of working in a group of appraisers, dealing with users and learning how their markets operate.

These are going to be contrived appraisal problems, not live examples in your local that will contribute to your understanding of how your markets are reacting to these variables. Somebody who is going to be working in (for example) the Las Vegas metro area isn't going to be "experiencing" anything useful in a VR example that's set in Manhattan or San Diego or Detroit, and vice-versa. They need those thousands of hours with the appraisal problems and the then-current trends occurring in their local area.

The AQB has no evidence that the appraiser community will not take on trainees if/when an area actually runs into the prospects of a long term shortage of appraisers. I don't see any reason to believe that the same people who were running trainees back during the 2001-2008 boom won't return to the same behavior (even if only limited to 3/time) when the market for appraisal services improves to the point that the fees increase.