The End of *most* Full Time Appraiser's ?

[ucbruin]

The last thing this board needs is a dislike button. I think there are 3 kinds of posters here - A) those who stick only to the topic, B) those who try to stick to the topic but get drawn into taunts or inults to respond in kind, and C) those who show up with the intent of insulting, harassing and mocking posters, often targeting those who have different political views.

I put myself in the B camp and wish I had the discipline be in the A group. The C group causes the toxic animosity which ruins threads because they are relentless about it.
It is one thing to attack or insult Trump or Biden or a public figure, and another thing to attack each other.

I think every newbie starts off as an "A"....
Until the long timers pummel them into a "B"....
Eventually newbies become old timers....
"C" are old timers tired of the same old 20+ year old appraisal topics....

 

[TC]

I think we should refer to posters as Q1, Q2, and Q3. Let's keep it professional.

 

[Tom D]

But some shut off comments so you can only view. There is free you tube and different levels one can pay for if you generate you tube videos to monetize and make money with advertisers.

I asked for that that a while ago, heard crickets. I think some of the dislike posters would wear it as a badge of honor being number 1 on that list. That would only increase their postings.

 

[ucbruin]

I asked for that that a while ago, heard crickets. I think some of the dislike posters would wear it as a badge of honor being number 1 on that list. That would only increase their postings.

I get how you feel....
I keep suggesting that any member who gets another member tossed in the TOB....
Be publicly named....

 

[WestMichiganCG]

I don't consider it marketing.

SO, in my opinion, there is a ton of rubbish with regard to so-called Appraisal Statistics. Absolute rubbish and nonsense perpetrated by some well known MAIs and others in the appraisal field who teach statistics for appraisers or voice their opinions in articles, books, podcasts and videos. -- It seems they take advantage of the fact that even the simplest statistics is beyond the reach of most appraisers, and they get very reckless in their statements, as they feel safe in what they consider is a knowledge level superior to most other appraisers.

Their day is coming to an end. Just about anyone can just take their statements, even articles and books to some Chat Box and get an objective and even detailed opinion as to their conceptual correctness and relevance. It is not just my opinion. It's the opinion of a massive computer system that has digested hundreds, or even thousands of relevant publications, that has itself been trained on multiple tests, and also has highly advanced reasoning and mathematics engines at its disposal.

The day of MAI charlatans comes to an end. You would think they realized that by now. But that is apparently not the case, these idiots stubbornly proceed a bit longer.

There is a group of these charlatans stemming from some oldies in the field. They all pat each other on the back and say they have done a good job. Well, "good" things don't last forever.

Be careful who you support. Think twice before giving a thumbs up --- because you may dirty yourself as a result. That applies to everyone. I made that mistake long ago, in using someone as reference in a presentation -- because I simply couldn't find any appraiser to quote as a reference and thought I needed one. I should have just foregone using the damned idiot. But, I thought I needed some kind of reference. That someone is still around and selling the same rubbish.

However, things are progressing very fast now, everything moves ahead. The charlatans need to be dumped. The sooner, the better.

The latest thing we need is MAIs who claim to understand AI and Statistics showing off what they think are strokes of genius on LinkedIn. Then I make a negative comment, which rarely makes it beyond their private eyes and next thing you know, their bright idea is pulled off LinkedIn, or whatever. Well, that's a good thing.

One could argue, that presenting fallacious interpretations and incorrect concepts is better than nothing. Well sure, if they don't mind criticism, I'd agree.

I am marketing, if anything, removal of incompetency. In appraisal, that is a big job. I am constantly moving forward to Valuation Engineering - and hoping for even more progress.

What is the purpose of all this? Well, it is what it is. You can make up your own mind. - I will keep doing the same thing in trying to improve valuation. Somewhere or another, what I actually do changes with time.

I draw a line between those who have some hope of progressing further and themselves improving things and those who are tied up in the past, supporting their status quo.

Here is a very good book to read. See if you can really understand the nuances:

Clayton, Aubrey. Bernoulli's Fallacy: Statistical Illogic and the Crisis of Modern Science (pp. 97-100). (Function). Kindle Edition.

Opinion, Non-fiction, and Academic Writing by Aubrey Clayton — Aubrey Clayton

Aubrey Clayton's writing on math, statistics, and probability has been featured in Boston Globe Ideas and internationally-renowned journals.

aubreyclayton.com

I'll ask my question in a different way. You are trying to convince everyone that Value Engineering is a valid career path. You are getting a response from an actual engineer and appraiser who is using statistics in his valuation and is asking how to sell more product. Give me an example of what your work product is and who is purchasing it, similar to what I did. In my case, the assignment was to pull up all land sales in a two-year period, determine a best fit curve for size, determine the low end of the range, high end of the range, mean, median, standard deviation, COD (Std. Dev/Med), COV (Std. Dev/Mean), Min @ 1 Std Deviation, Max @ 1 Std. Deviation. I then put the numbers into a table that they could use to justify a range of values for purchasing right of way and it auto filled out the paperwork for them. In my client's case, it saved them a ton of time and money, and they were very happy with the product. Are you saying that I'm showing off? I do have a solid grasp on statistics, and I have put in the work, and I do understand the weaknesses. I got my MAI to challenge myself and make myself better, not for bragging rights. I work in the commercial appraisal space and I'm often dealing with an N=1 situation and sometimes have to question if there is an educated buyer and seller in the market, ex. (Civics Theater, Minor League Baseball Stadium). I passed on both those examples. I use statistics for time adjustments, building size adjustments, and land size adjustments. I've not been able to wrap my head around advancing beyond that as my data sets are so dissimilar and my sample sizes are too small.

 

[Elliott]

I think it was back in the 90's, AI came up the 'consulting' idea and encouraged doing essentially what you are suggesting. I tried it a few times when I'd get the call, "We just want to get an idea what a property is worth, we don't need a full appraisal." So I would sit down with someone and then they would say, "Well, we just want a number." It just didn't work in the real market for appraisal services. I just went back to "I can only do a full appraisal and my fee is $X." And state regulators would have a conniption fit if they don't see a full report with workfile.

 

[glenn walker]

Until It's recognized by his own appraisal institute membership and it hasn't been recognized. Then by State Board's and TAF and E & 0 Insurance Carriers as being an appraisal it will have little to no market in the appraisal community and be treated as a very expensive software program and a AVM.

Most great ideas from engineers never make it out of the basement because there is no way to produce and market at affordable price level's.

This engineers other problem is he is too arrogant and hot headed to do business with the people who do the production and sales and marketing.

 

[George Hatch]

I think it was back in the 90's, AI came up the 'consulting' idea and encouraged doing essentially what you are suggesting. I tried it a few times when I'd get the call, "We just want to get an idea what a property is worth, we don't need a full appraisal." So I would sit down with someone and then they would say, "Well, we just want a number." It just didn't work in the real market for appraisal services. I just went back to "I can only do a full appraisal and my fee is $X." And state regulators would have a conniption fit if they don't see a full report with workfile.

Geek alert and not relevant to the main point under discussion in this thread:

That's not really what Consulting was about. It wasn't some "appraisal-lite" alternative to SR1/SR2. Here's the definition of the term back when it was in use in SR4/SR5.

Consulting: The act or process of providing information, analysis of real estate data, and recommendations or conclusions on diversified problems in real estate, other than estimating value.

(note the then-current use of the term "estimating")

Back when SR4 was about the development of consulting and SR5 was about reporting requirements for the service, they were talking about activities that involved appraiser competence but (by themselves) didn't involve actually developing and reporting appraisals.

Here's the first comment of the 1990s SR4

In performing real estate or real property consulting services, an appraiser must be aware of, understand and correctly employ those recognized methods and techniques that are necessary to produce a credible result.

Comment: STANDARD 4 is directed toward the same substantiative aspects of professional practice as are set forth in STANDARD 1, but addresses the performance of consulting services by an appraiser. Consulting is a broad term that is applied to studies of real estate other than estimating value. Land utilization studies, highest and best use analyses, marketability feasibility, or investment studies; and other research-related studies are examples of consulting assignments. An appraiser must have the ability to develop an analysis/research program that is responsive to the client's objective, to perform primary research; to gather and present secondary and tertiary data; and to prepare a documented written report.​

Every aspect of the ETHICS RULE and the COMPETENCY RULE still applied to these activities so appraisers still had to act impartially WRT the outcomes and they still had to perform competently. Consulting was not intended to function as a swerve around any aspect of the role of the appraiser or the professional requirements applicable to their conduct, but was simply aimed at a different aspect of appraisal practice other than appraisal or appraisal review.

 

[RCA]

Sir, what are you smoking? I appraise real property rights in a very heterogenous market.

What are you smoking? I never said you didn't appraise property rights in any kind of market.

 

[RCA]

I'll ask my question in a different way. You are trying to convince everyone that Value Engineering is a valid career path. You are getting a response from an actual engineer and appraiser who is using statistics in his valuation and is asking how to sell more product. Give me an example of what your work product is and who is purchasing it, similar to what I did. ...

There are many facets to your comments and questions. I passed. the MAI exam a long time ago in 2006 - and I know there is much to learn by going that route. Early in 2007, though, I could see there was no future in appraisal for me, as the work dried up around then. So, I went back into software engineering - until I retired at the age of 70 in 2017. Then I took up residential appraisal again, using MARS and RCA - for doing GSE and Attorney work. I never had to "market" myself. Instead, I did R&D while doing the work.

And now, as many have commented on this forum, commercial appraisers including MAIs are not doing that well as a group.

On the other hand, Financial Engineering is an up-and-coming field that will allow you to easily take on many jobs outside Financial Engineering, because you have programming and statistical skills that are valued by themselves. Let's look at current salaries from SuperGrok:

"Salary Potential with an MFE Degree​

A Master of Financial Engineering is a specialized, quantitative finance degree that prepares graduates for roles such as quantitative analyst, financial engineer, risk manager, portfolio manager, or algorithmic trader. These roles typically command high salaries due to the demand for advanced mathematical, programming, and financial modeling skills.

• Starting Salaries: According to recent data, MFE graduates from top programs earn substantial starting salaries:
  • Princeton MFE graduates averaged $260,000 in base pay (including salary and sign-on bonus) in 2024.
  • Baruch College MFE graduates averaged $228,000 in total first-year compensation, with a range from $133,000 to $300,000.
  • Berkeley MFE graduates saw starting salaries rise from $119,000 in 2020 to $150,000 in 2022.
  • Carnegie Mellon’s Master of Science in Computational Finance (MSCF) reported an average starting salary of $136,052 in 2023, 31% above the average master’s degree starting salary of $103,535.
  • General estimates for MFE graduates range from $108,000 to $150,000 for starting salaries, with some variation by program and location.
• Mid-Career and Long-Term Earnings: MFE professionals often see exponential salary growth due to performance-based bonuses, stock options, and promotions. For example, roles like quantitative analyst have an average salary of $147,576, with potential for higher earnings in hedge funds or proprietary trading firms. Senior roles, such as VP of Finance, can exceed $140,000 annually.
• Industry Demand: The demand for MFE skills is strong, with 89% of Carnegie Mellon MSCF graduates receiving job offers by graduation and 100% within six months. Employment in financial analysis roles is projected to grow 6% over the next decade, aligning with average occupational growth"

"Salary Potential with an Appraiser’s License​

Real estate appraisers estimate property values, requiring expertise in real estate markets, valuation techniques, and regulatory compliance. Licensing levels include Trainee, Licensed Residential, Certified Residential, and Certified General, each with distinct education and experience requirements.

• Salary Data: The median annual wage for property appraisers is approximately $65,420, with an average salary around $61,340. Earnings vary based on experience, location, and licensing level, with Certified General appraisers handling commercial properties potentially earning more. Independent business ownership can increase income but introduces financial instability.
• Career Path and Requirements:
  • Trainee Appraiser: Requires minimal education and supervised work, with no college degree needed.
  • Licensed Residential Appraiser: Requires 150 hours of education, 1,000 hours of supervised work (6–12 months), and a state exam. Some states may require college credits.
  • Certified Residential or General Appraiser: Requires a bachelor’s degree, 200–300 hours of education, and additional experience.
  • Job growth for appraisers is projected to be average, with steady openings due to retirements and career transitions.
• Work Environment: Appraisers often work independently or for appraisal firms, spending significant time on site visits. Earnings can fluctuate with real estate market conditions, offering less stability than MFE-related roles.

Can Combining an MFE and Appraiser’s License Increase Earnings?​

To assess whether an appraiser’s license would increase earnings for an MFE holder, consider the following factors:

1. Salary Comparison:
   • MFE-related roles significantly outpace appraiser salaries. Starting salaries for MFE graduates ($108,000–$260,000) are 1.5 to 4 times higher than the median appraiser salary ($65,420). Mid-career MFE professionals in roles like quantitative analyst or portfolio manager earn more than most appraisers, except perhaps top-tier Certified General appraisers running successful businesses.
   • The appraiser’s license is unlikely to match or exceed the earning potential of MFE roles in high-paying sectors like investment banking, hedge funds, or fintech.
2. Career Synergies:
   • Overlap in Skills: MFE programs focus on quantitative skills (e.g., stochastic calculus, financial modeling, programming) that differ from appraising, which emphasizes real estate valuation and market analysis. However, an MFE’s data analysis and statistical skills could enhance appraisal work, potentially improving efficiency or enabling specialization in complex commercial valuations.
   • Niche Opportunities: Combining credentials could open niche roles, such as real estate investment analysis, where MFE skills in portfolio optimization and risk management complement appraisal expertise. For example, working for a real estate investment trust or private equity firm could leverage both skill sets, though such roles typically prioritize MFE skills and pay at the higher end of the finance spectrum. Starting an appraisal business using quantitative skills could differentiate services, but this involves entrepreneurial risks.
   • Transferability: MFE skills are highly transferable across industries (e.g., fintech, technology), whereas appraiser skills are specialized to real estate. The versatility of an MFE reduces the need to diversify into appraising unless there is a specific interest in real estate.
3. Time and Cost Considerations:
   • Appraiser Licensing Requirements: Obtaining a Licensed Residential appraiser credential requires 150 hours of education and 1,000 hours of supervised work (6–12 months), while Certified Residential or General levels demand a bachelor’s degree (already held by MFE graduates) and 200–300 hours of education plus additional experience. This process could take 1–2 years.
   • Opportunity Cost: Time spent pursuing an appraiser’s license could be used to gain experience in MFE-related roles, where salaries and bonuses grow rapidly. For example, a year spent on appraisal training might cost $100,000–$200,000 in foregone MFE earnings, far exceeding the cost of appraisal education ($1,000–$5,000 for courses).
   • Financial Investment: Appraisal education is relatively inexpensive, but its return on investment is lower compared to the MFE’s high earning potential.
4. Market and Location Factors:
   • MFE roles are concentrated in financial hubs with high salaries, while appraiser earnings vary by region and real estate market conditions. Appraisers in high-cost areas may earn more but still lag behind MFE salaries in similar locations.
   • Real estate market fluctuations can reduce appraiser income during downturns, whereas MFE roles in finance are more resilient, driven by technological advancements and quantitative trading.
5. Practical Scenarios for Combining Credentials:
   • Side Business: An MFE professional could obtain an appraiser’s license to run a part-time appraisal business, supplementing income. However, the additional $30,000–$60,000 annually from part-time appraising may not justify the time and effort compared to MFE career advancement, where bonuses alone can exceed this amount.
   • Career Pivot: If an MFE holder seeks to transition into real estate, an appraiser’s license could facilitate entry into roles like real estate analyst. However, these roles often value the MFE degree more, and salaries may not exceed those of traditional MFE roles.
   • Entrepreneurial Ventures: Starting a firm combining quantitative finance and real estate valuation could yield high returns, but this is speculative and requires significant business acumen and market demand.

(to be continued)​