Today, fewer individuals are ready to take the dive into real estate appraising. Many of them simply don’t know about the profession, and for those who do, the training process doesn’t always present the most attractive picture, especially because of increasing licensing and certification standards and regulatory compliance. But there are appraisal professionals out there who are dedicated to hiring, training, mentoring, and retaining new appraisal professionals.
We spoke with Forsythe Appraisals, LLC President and CEO John Forsythe, SRA, and Chief Appraiser and Senior Vice President Alan Hummel, SRA, to get their take on current barriers for prospective associate appraisers and what the industry is doing to remove those obstacles.
How training has changed over the years
The training process to become a valuation professional certainly is not what it once was.
“When I got started, there wasn’t any licensing in place, but obtaining an industry credential was a very significant commitment and important to obtaining assignments,” Forsythe said.
Forsythe went on to say most of their company staff appraisers earned a designation through a professional organization like the Appraisal Institute or American Society of Real Estate Appraisers.
Hummel noted the training process didn’t start in earnest until the Appraisal Qualifications Board created licensing and certification requirements in 1992. Now, prospective appraisers must take a course before starting training to understand exactly what the process means, and supervising appraisers must do the same.
Moreover, interested individuals need a 4-year college degree, and the number of required experience hours for certification has gone up, rising from 1,500 hours to 2,500 in no fewer than two years in most states.
The effect of increased regulatory compliance on training
New regulations have had an indirect impact on people entering the appraisal profession. While federal or state rules haven’t made it harder to start training, lenders’ and potential supervising appraisers’ perceptions about liability and what the regulations allow have changed.
“There is a misconception that Fannie and Freddie do not allow a trainee to conduct a solo inspection on an appraisal,” Hummel said. “In fact, that’s just totally untrue. Fannie and Freddie both accept licensed trainees to sign an appraisal report that’s delivered to them as long as the licensed supervising appraiser also signs the report and accepts the supervisor certifications.”
Moreover, Forsythe pointed to a fear for some supervising appraisers. In particular, if an associate makes a mistake, what kind of exposure could supervisors face? Because of this apprehension, many trainees have a hard time finding a mentor.
“We acknowledge the critical importance of proper training and mentoring; however trainees are an opportunity to invest in the right individuals and build a future valuable member of your staff,” Forsythe said.
Challenges faced by future appraisers
The aforementioned training standards and regulatory issues, as well as other factors, create barriers for people who consider becoming an appraiser. Here are the obstacles Forsythe and Hummel highlighted:
Finding supervising appraisers
The perception of unknown liability exposure for the supervising appraiser is a key factor that impedes trainee appraisers from being able to find a mentor. In addition some experienced valuation professionals are worried about training their competition.
“I would suggest not all appraisers have the skills or want the expense, stress and liability of being a sole proprietor,” Forsythe noted. “Treat employees right, and the vast majority will recognize the value of remaining a long- term employee. This business has become much more complex and appraisers are more often recognizing the value and stability of being a staff appraiser. Many appraisers are so stressed that they are looking for opportunities to stick to the core practice of appraisal.”
The other issue is economic.
“Will the supervisor be able to increase production to the point where it makes financial sense to bring on a trainee?” Hummel asked. “One- or two-person offices may have a lot of appraisals on Monday and Tuesday, none come in Wednesday and Thursday, and then they get another one on Friday. The workflow is not always conducive to having work available for a trainee.”
Knowing the profession
Another issue relates to how the appraisal industry markets itself. First, few people are exposed to residential appraisal as a possible profession. Many appraisers became aware through a family member or friend who is an appraiser. Some individuals have organic exposure to the profession through work at a bank, lending institution, or as a real estate agent.
Then, those who do find out about it don’t get the most accurate picture of the profession, particularly if they already have experience in real estate. College grads often come out of school with a lot of debt, so the prospect of being in training for up to two years can seem unappealing. Moreover, real estate agents and underwriters who consider the appraisal profession don’t want to start at the same trainee level as the person whose only experience is summer jobs during high school or college.
How the industry has responded
The good news is that these issues are being addressed by the appraisal profession. Appraisers, appraisal firms, lenders and appraisal management companies have recognized the challenge this entire industry faces with the declining number of trainees and its impact on service levels.
“One thing that has had some positive momentum lately is the acknowledgement by lenders that there are no Fannie or Freddie restrictions on the use of properly supervised trainees, and we’re seeing a few lenders and AMCs saying, ‘Yes, we’re going to allow the use of properly educated, supervised and mentored trainees on our appraisals,'” Forsythe said.
As for the actual training requirements, Hummel noted the AQB recently sent out a questionnaire to get feedback on the minimum standards for certification. This includes whether 2,500 hours is the right threshold and what other types of experience should count toward certification.
Training advantages offered at appraisal firms
National appraisal firms in particular offer more pathways for individuals to begin training and advance in their careers. While the certification standards are still at play, firms can do more to get an associate appraiser started. Here’s how:
Staff appraisal firms are equipped to handle a larger volume of assignments, so there’s less worry an appraiser in training won’t be able to gain experience. Also, there’s less risk of a supervising appraiser absorbing all of the work during slow periods.
Sole proprietor supervisors can sometimes find themselves somewhat limited in the types of appraisals that make up the preponderance of their volume, meaning trainees may not get the valuable breadth of experience. Most large national firms handle anything from traditional full interior and exterior inspections, to desktop appraisals, employee relocation, and luxury property valuations, so new appraisal professionals have the opportunity to be properly mentored and trained to develop a variety of skills. Plus, with a large number of seasoned colleagues, there are many peers to help out with more complex assignments.
Opportunities for advancement
People want to see the opportunity for advancement in their careers, and many firms offer that for trainee appraisers. Internal training and mentoring programs help these individuals develop into certified real estate appraisers and continue their education thereafter. Before they know it, there could be career opportunities as branch managers, training managers, client relationship managers, or in corporate management and business development. They could even decide to become a specialist in specific appraisal disciplines such as relocation appraisals.
All of these benefits allow appraisers in training to direct their attention toward growing the core skills with less distactions and stress. In the end, they can focus on what first attracted them to the appraisal profession—appealing compensation, flexible schedules, and being out in the field providing well-supported opinions of value on residential real estate.
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