The Appraising Industry

[Brian Kauke]

Just a couple questions I have regarding the Real Estate/Appraising industry. I'm considering getting licensed as a Real Estate Appraiser or Real Estate Agent simply because I've always been interested in the Real Estate Field. I'm in the process of doing some research to decide what is the best path to take. That's why I thought I'd post some questions here.

I've read a bunch of posts and articles about how the demand for Appraisers is declining and the industry will be much different in the near future due to technology. I guess I'm a little confused on how technology will hurt the appraising industry? I'm in advertising and when the internet started taking revenue away from other media vehicles we all got nervous, but rather than just accept that our business is declining we took a more innovative approach and used the internet/technology to our advantage. Can't the same be done in appraising. There's always going to be more houses/properties being built than torn down in a single day so I can't see how demand will drop significantly. If an appraiser takes an innovative approach and uses technology to their advantage to show lenders/agents how quick and seamless the appraising process has become, don't you think they increase their chance at success? I understand there has been an influx of appraisers entering the field due to the real estate boom and low interest rates so I can understand how this may make starting out in this field difficult, but I don't understand the technology problem.

Also, is it true the majority of professionals in this industry hate what they do and wish they can do it all over again so they can pick a different career? I almost felt like I was on some "Janitorial" website with a bunch of people trying to convince you to get a degree so you can get a good job and not end up like them.

If anyone can shed some light on this intriguing industry I would really appreciate it.

Thanks,
Brian

 

[wyecoyote]

Brian,

As far as the technology goes banks/lenders have AVM's (Automated Valuation Method). Which the banks/lenders belive is going to get rid of the appraiser. There are several arguments to this. The AVM does not see the property consider improvements/updating and/or the many items of obsolecensce. So in part it is flawed in that respect. The AVM may be manipulated by whoever inputs the figures to come up with a number that alows the loan. The loan can be closed sooner creating more money for the bank and more commision for the Loan officer. The lenders also have several "bad" appraisals where the appraiser went out and found whatever value they needed and required. So there argument is that if appraisers do this why not just have an AVM spit out a number and go.

The flaw to the Banks/Lenders argument is that if the Loan Officer was taken out of the Loop on ordering the appraisal and did not inflict undue pressure on appraisers to come up with a value we would not have "bad" appraisers. The other argument is that if these "bad" appraisers would grow a backbone and say no or grow some morals we would not be in this position.

That being said my personal idea's is that AVM's may be around for some time possibly for ever. The loss of work, downturn in the economy, and several banks losing to much in foreclosures will get rid of some of the "bad" appraisers that are in the industry. Because when the economy goes sour most banks will tighten up there lending practices and want honest values. That is my IMHO so take it for what it is.

So now as to do I hate my profession no. Sometimes people come in here to vent from the day. Some appraisers on here work in small appraisal offices with a couple of appraisers, you can only vent so long to the couple of people there. Some apprasiers have there own office and work out of home can't vent to much to the significant other. Then there is still some apprasiers who have a larger office but have employees and they can't vent to them. And most vent simply to see that there are others having the same feelings across the country with common problems.

As far as would I personally do it all again. Probably not I had a very good paying job but I hated it. But my situation was that I was at the final point where I was looking for something new or going back to college. Doing it again I would have chosen to go to college.

The biggest thing in the Appraisal Industry is that you have to have a very tough skin. People will yell at you one week cursing you because the value of the homeowners house is not what they needed to make there commision. The next week you will walk on water because some homeowners house is worth way more than what they thought at the time and that 95% LTV that they were looking at is down to 70%. This happens all the time.

Most importantly find an appraiser who is willing to train you first. Don't go get the classess and expect to start. Sounds like you have read several of the posts and as you notice several of the people trying to break in to the bizz are having a problem finding a mentor. Once you do find one that is willing to take you under there wing spend a couple of full days with that appraiser. Just to see what the entire day looks like. Not just the fun part of the inspection.

Sorry for the long post but there it is.

Ryan

 

[Tim Hicks (Texas)]

Brian,

I would not recommend our profession to anybody that needs a future laid out in front of them. There is so much speculation and conjecture with regard to the future of our profession, that I would worry about the investment of time, effort and monies to find out that there was no future or a shrinking profession. Yes, there are some that say there will always be jobs for appraisers, but the technology that we embrace may be a tool toward our demise. AVM's do not have to have a license or follow USPAP. We do. We could not possibly perform a task that we now charge $300+ for $30. The state of our profession has already made the appraisal report 50% CYA and 50% data and conclusions. My typical report is 20 pages long. Six pages are for USPAP coverage alone, two pages are license and resume, and 2-4 pages of maps and addendums. We are regulated by state boards and held to standards by the ASB, AQB and USPAP. AVM's are regulated and manipulated by the lenders. Which do you think has the best future?

That being said, the appraisal profession is not as easy as it looks. Besides the typical lender pressure mentioned on this site, we don't sit behind our desks all day and lead a life of leisure. Half of our time is spent field in the elements, crawling behind bushes, avoiding angry dogs, rain, muddy paw prints, snakes, lizards, cats,etc. Sometimes you can look like you haven't had a bath in days and you might have another appointment. We also have to go to the "bad" neighborhoods. It is not a coat and tie profession (at least not here). Then you have to realize there is no job security. My client list changes yearly. Sometimes you are one killed loan away from losing a client. Then, there are the slow times. We haven't had many of them lately, but they do come. We are a commission profession. No work. No pay.

Now, for the bright side. It is a good profession if you like meeting people. You must have people skills. It is a good profession if you enjoy long hours. It is a good profession if you are self motivated and don't need somebody pushing you. It is really a good profession if you are well versed, educated and take care of your customers. The pay can be good, really good. My favorite part is the inspection and meeting the people. I get many ideas about my home and future plans for my dream home from seeing other peoples homes. It is fun to see how "good" some people live, when others are struggling to stay above water.

If you are willing to invest the time, effort and money into becoming an appraiser, then do it. If you are willing to risk finding a new career 5-10 years down the road, then do it. If you are willing to work two years for "chump change" while training in order to get your license, then do it. If you are a "go getter" and can be successful at whatever you do, then by all means do it. The answer lies inside you.