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How to Make a Profession Disappear

We are fairly near the end of the continuing education cycle for appraisers in my home state of Pennsylvania. Among other topics, I’ve been presenting changes to laws and regulations, which include the new Appraisal Qualifications Board (AQB) standards that go into effect in January 2015.  You can find the regulations here: http://www.appraisalfoundation.org/

The overwhelming response from existing appraisers is: “Do they just want to make us go away?”

The new requirements will include a bachelor’s degree, as well as — in most states — 2,000 hours of experience under a state-certified appraiser (the number of hours varies, but the requirement to gain experience under a state-certified appraiser is found in all states), plus another 75 hours of specific appraisal classes, including the 15-hour basic Uniform Standards of Professional Appraisal Practice (USPAP) course.

Most state laws require the supervisory appraiser to be present at the inspections, supervise the trainee, and basically do the appraisal. Pennsylvania regulations can appear somewhat contradictory: You can find this language: “Accompany the assistant during the physical inspection of the property until the assistant has logged 300 hours of appraisal experience or until the supervising appraiser determines the assistant is competent under USPAP to perform the physical inspection unaccompanied, whichever is the longer period,” as well a statement that the assistant “may not arrive at an independent determination of value.”  Source: http://www.pacode.com/secure/data/049/chapter36/chap36toc.html#36.13.

Couple this with the reluctance of some lenders to allow trainees to work at all on appraisals, and you can see how difficult it will be to become a state-certified appraiser.

Now let’s talk about the inspiration for this blog: the money side of things.

I’ve had trainees in the past. I could not afford to pay them much because when you’re doing something you know how to do inside out but taking time to explain to another person what you are doing, why you are doing it, and how it fits into the big picture, well, it takes at least twice as long. If you have children, think about training them to tie the laces on shoes. It’s the same idea. You can do it much more quickly by just doing it yourself.  You take the time to show your kids how to do it because (1) it’s a skill they need and (2) you love them.  On the other side of the appraisal equation, appraisal management companies (AMCs) want appraisals faster and cheaper than ever before.  Working appraisers who have already had to cut their fees have little, if any, money left to pay an assistant.  Under the new standards, assistants will be college graduates. Can we agree college graduates expect more than minimum wage? After all, they spent four (maybe more) years in school and probably have the student loans to prove it!

Now, assuming a good-hearted certified appraiser takes in a trainee and scrapes together some funds to pay the person. (Some trainees are coming from the brokerage side of the business, and continue to list and sell. That complicates the appraiser’s schedule, but that’s a whole other headache.)  At the end of the time period, that trainee takes (and hopefully passes) the state exam. The appraiser has just created a new competitor.  Some appraisers work from offices, but many of my students — if they do not have a brokerage or work in one — are working from a spare bedroom or den.  They don’t need a place to meet with clients. They just need Internet, computers, printers (rarely), and fax machines.  So, having completed the education, they don’t have a significant outlay for an office and equipment; in fact, many people already have all those things in a home office.  It’s easy to set up your own business and simply say bye-bye to that appraiser who trained you.

With one exception, the only appraisers I’ve encountered who train others are training family members. It’s part of a succession plan. And typically, it is not just exclusively appraisal — because the money isn’t as good as it used to be.  I’ve said this in class, and I’ll say it here: “I have two kids, both of whom have college degrees. If either one of them expressed a desire to get into appraising, I’d suggest brokerage instead because I see more stability of income there in the future.”

My kids might think about real estate appraisal as a career because I’m second generation in real estate.  How many other kids will they look at a job that requires a two-year apprenticeship — at next to no pay and, typically, with no benefits — and decide that this is a viable career path for them?

Melanie McLane

Melanie McLane, ABR, CRB, RAA, is owner of McLane Solutions, a real estate education and training company in Jersey Shore, Pa. She is also a certified residential appraiser and an associate broker with Jackson Real Estate in Jersey Shore. In addition to the ABR, CRB, and RAA, McLane holds a number of other designations and certifications from the NATIONAL ASSOCIATION OF REALTORS® and other organizations, and she is a nationally recognized speaker.

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Comments
  1. Rob Burkley

    You nailed it ! The appraisal business is tricky ! Tight lender guidelines, demanding home owners, potential legal action if you make a mistate or upset a client, lower fees, quick turn times, E & O insurance, no benefits, lots of driving, inspections in bad neighborhoods, thoughtful / quality / “matched pair” adjustments, annual CE education / license renewal, annual fees, etc………..
    Why train an apprentice how to succeed when once licenced they could become your competion working for some start up AMC.
    I hope the GSE’s go away and let the lenders start lending.

  2. If you really want to screw up a profession, get the government involved. Then create a document that changes constantly that is written ambiguousely. Mandate the States license and certifiy people and enforce federal law unfunded. Finally change the law so that AMC are used by most lending institutions. I have been in this profession for over twenty years. The pay is the same today as it was when I started. As far as the farce known as Dodd Frank, NOTHING HAS CHANGED. The same people who were in charge of OFFIO are thick in FHFA. All they did was change acronyms.

  3. Gregg

    Most people that ask me about appraisal – I tell them consider getting you experience hours via a tax assessor or any other area that is not part of the mortgage lending industry. Most appraisers that do lender work wont give you the time of day. most but NOT all there are always exceptions to the rule, very few too.

  4. Tim in Fla

    Good question and the answer is most likely “YES”. It would be way more profitable for lenders to use automated valuations while charging borrowers premium fees than having to deal with those pesky appraisers who are always whining about making minimum wage. Could it be possible to “insource” some workers from India who would be more than happy to work 70 hrs a week for $750 take home pay at the end. Sure, most of the TBTF lenders are outsourcing mortgage processing work overseas now. Some appraisers use overseas appraisal “form fillers” to try and make the margins work after the AMC’s have taken a huge bite out of the check the consumer/borrower wrote for “valuation services”, leaving crumbs for the independent appraiser.
    Perhaps the writing is on the wall and the appraisal profession is now obsolete. Yes, we have regulations and laws at the state and federal level to protect “appraiser independence” but no enforcement. In the last 18 months we watched as some of the largest AMC’s, working as agents for the TBTF’s, skip town with millions in unpaid appraisal invoices. Reports have gone from 15-20 pages a few years ago to well over 30 pages now and the work hours to produce these reports have doubled while compensation has been cut in half. This leaves some quality of reporting something less than respectable.
    If this is the case, I say send the memo out, “no appraisal needed”. Tell us we are finished now. With the average age of a appraiser in the mid 50′s it would be quite decent of the powers that be if they could give us a little lead time to figure out how we can supplement social security in our retirement.

  5. David

    NOBODY in the their right mind would consider entering the appraisal profession after 2009. Thankfully they will be requiring a college degree soon; that should stop anyone from entering this dead end business.

    I find it amazing that any still remains in the business. I suppose as long as there are credit cards to live off of and spouses to support the hobby of appraising there will be ding bats who refuse to move to more lucrative careers. Better them than me.

    The highest and best use of an appraiser’s license today is as toilet paper.

    Appraiser Who Refused To Be F’d

  6. Retired Appraiser

    The beginning of wisdom is coming to the realization that residential valuation is a dead end career choice.

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