The Difficulty of becoming an Appraiser Today

[Terrel L. Shields]

I dropped over $1,000 on AI text books recently.

Look for used on Amazon

 

[Trihard]

This is my recommended path:
-Read and understand Nelson Bowes “In Defense of the Cost Approach.”
-Learn to use Solomon Adjustment Calculator
-Read and understand David Braun “The Valuation Analyst”
-Learn single and multiple linear regression in excel
-Take George Dell’s class Stats, Graphs, and Data Science
-Understand the fundamentals of market conditions analysis, including market segmentation and seasonality
-For your first few years, interview every agent of every comp you analyze, especially the ones where the data isn’t making sense.
-Have copies of the HUD Handbook and Fannie/Freddie Selling Guides and USPAP on hand and reference them often.
-Try to extract every adjustment in every assignment using at least 2 methods.
-Participate online and try to soak up knowledge on appraisal topics.

Do this over the course of a year or two and you’ll be in a great position to earn business when it becomes available.

He can do all of this and he will still make $500 per week as a licensed appraiser working through the AMC model.

 

[sputnam]

Hi I am newly licensed appraiser and wanted to state my experience and opinion on becoming an appraiser in todays time and market.

First the current model of entry into getting licensed is antiquated and terrible. The quality and range of your education is dependent on your supervisor. And just because someone can do the job does not mean they can effectively teach the job. If your supervisor gives you only the "cookie cutter" appraisals and teaches you in only the methods you need to pass the test you will get your license but won't know enough to compete in the job market. All you will know well is paired data analysis and a one trick pony can't make a show. On that note, the supervisor may never teach you any marketing skills beyond getting on AMC panels. As of right now with the current slump in inventory no AMCs are adding you to their list and even if they do you won't receive or win any bids no matter how low you go. Add in that while you are learning you make practically nothing.

Once out in this world of appraisal with low volume you don't have the option to do AMC work because you can't get it and you can't get clients because you were never taught how to get other clients. If you want to do the appraisals that a lawyer needs for the different areas in it is required in the legal system you have no foundation for this work as you learned only to write appraisals for lending purposes. Any change from lending work puts you even further behind since, at least from what I have been told, it is a different animal.

Gone are the appraisal firms that would bring in someone new and pay them to type up reports and learn the business. That is mostly not needed anymore since technology has allowed appraisers to write reports faster and with less effort. With this reduction in support staff and the government putting the AMC in the middle why would someone want to start an appraisal firm. You can fill in the bulk of statements by clicks or various forms of cut and paste in the report software and the AMC handles front and back end management.

Any advice for getting up and running in this business and broadening my analysis tool box would be greatly appreciated. I don't want this career to die on the launch pad.

It's not supposed to be easy. Becoming a professional appraiser not only requires time and effort... it should require time and effort. There is no magic involved in increasing your volume of business. That part of being an appraiser is sales. It requires meeting people, making contacts, asking for business, etc. If you aren't willing to do (or aren't good at) that part of the business it will be more difficult. If you know that you are bad at self promotion, your best path might be to work in a larger appraisal firm.

One huge mistake, imo, that newbie appraisers have always made and condinue to make is leaving their mentor too soon. Why would you expect your mentor to teach you how to take his/her Clients? Stick around a while longer. Pay attention.

 

[Raven59]

We all started in the same place, facing the same initial hurdles. Some make it, some don’t. The difference often lies in persistence, adaptability, and a bit of luck. Embrace the role of luck. Sometimes, success comes down to being in the right place at the right time. Stay open to opportunities and keep pushing forward, even when things get tough. You'll find your path to success with hard work and some luck.

 

[alebrewer]

My mentor was old school and started appraising before licensing. He was also a RE agent. He was more of a wheeler and dealer than an appraiser or agent. An entrepreneur but not a good one. I realized early on that his knowledge was limited and some of his "methods" made no sense.

You could probably copy and paste this as a typical experience for most trainees under the current supervisory appraiser model.

 

[alebrewer]

He can do all of this and he will still make $500 per week as a licensed appraiser working through the AMC model.

I think that's the rub. I absolutely agree with all of what CG said. However, at a market rate of $400 per assignment, once you've performed all the perfunctory tasks (zoning, census, neighborhood/market info, property identification/legal description, maps, site identification, etc.), then perform your site/improvement inspection, then drive comps - you're already in ~ 6-8 hours depending on your drive time. Add to that the 'clean up' time (time necessary to clean up the report before sending) and you're in 10-12 hours. Assuming 12 hours is closer, the appraiser is at ~ $33/hour. How much true 'analysis' is the typical appraiser going to be willing to spend after all that?

Couple of thoughts:
- the users of our services will continually push for faster and faster deliveries, thus dis-incentivizing appraisers from performing adequate analysis
- the idea that appraisers use 'adjustment guides' to perform their adjustments/analysis plays into the users' push for more automated analysis and metrics

Now, some would say that there should be no correlation between fee and level of analysis - and I'm one of those folks. IRL, though, appraisers have to adapt or change careers. And they've adapted in the only meaningful way possible - they've 'dropped' the analysis piece of the puzzle. Why? well, the perfunctory tasks are easily recognized as errors - get the legal wrong, or the zoning wrong, etc. and it's easily identified by the users. Analysis/adjustments are much more subjective - even with objective tools - and, as such, easier to conceal. Most folks have an intuitive idea of what a property's value is, and manipulate data to support that idea. It's MUCH faster than true analysis.

 

[Zoe]

He can do all of this and he will still make $500 per week as a licensed appraiser working through the AMC model.

That is where it is going to have serious backfire to these new PAREA graduates thinking they can make tons of money after they graduate.

There will be some angry graduates.

It is already happening. The best appraisers will get the most complex assignments. All kinds of complex assignments out there. Just have to go get them.

If you are not careful, you won't make $500 a week on them with no fringe benefits to boot.

 

[Cob]

I was in OPs position in 2011, came here to ask for help/insight on the prospect of getting back into the business. Everyone said that appraisal was dead and to run to another career. I said I could work for $500/week and make enough get by, and it would be worth it because at some point it would get better. One told me that I didn’t understand the basics economics of the current market, and for that reason I would make a terrible appraiser. Another told me to stay out of his profession if I was planning on working for $500/week. Probably both are dead or retired now.

I jumped in at a terrible time, worked my way from office assistant to senior appraiser, got my CG, built a business and never looked back. Is this time different? Maybe. But I remain optimistic because I know that no matter what they try to do, there will always be a need for good appraisers. We’ve already seen a lot of retirements and there will be more over the next 2-5 years.

You jumped in at a terrible time, the O.P. jumped in at the worst time EVER, also I do not think the O.P. has intentions of becoming a C.G. appraiser as you did, if they do, that's probably their ONLY slim chance of making it, the way things are now is it will FINALLY be the time that after ALL the years people saying the residential appraiser is going to be done, what's happening now is that big brother is basically starving GSE residential appraisers to the point that we will be leaving in MASS, I have already taken all of my classes and have finished and am now an official arbitrator and mediator in the state of Texas, I no longer consider myself an appraiser, I literally consider being an appraiser a side gig, I also returned to the restaurant business last February just to make ends meet. At my current pace of work, I consider myself an arbitrator/restaurant worker and an appraiser as side work.

 

[Red Flint]

If you want to do commercial work however, you dang sure better learn both and learn them well starting at a fundamental level of recognizing such simple tenants of the business as valuing land as if vacant and available for its highest and best use.

Agree.

Side note, tenet for tenant.

 

[ReadyFreddie]

It's not supposed to be easy. Becoming a professional appraiser not only requires time and effort... it should require time and effort. There is no magic involved in increasing your volume of business. That part of being an appraiser is sales. It requires meeting people, making contacts, asking for business, etc. If you aren't willing to do (or aren't good at) that part of the business it will be more difficult. If you know that you are bad at self promotion, your best path might be to work in a larger appraisal firm.

One huge mistake, imo, that newbie appraisers have always made and condinue to make is leaving their mentor too soon. Why would you expect your mentor to teach you how to take his/her Clients? Stick around a while longer. Pay attention.

I couldn't stick with my mentor any longer. He had someone willing to pay him $1000 each a month for him and his two children to learn to become appraisers. So as soon as I had my log filled out he pushed me out.