Real estate appraising can be a rewarding profession. If you are a field appraiser like many appraisers, you have the opportunity to own your own business, even from a home office. Your income is fee based, so getting paid is never dependent on the successful closing of a loan. Your work is split between the field and office, so you will always get a break from sitting at the desk. However, such perks require payment of dues and we’re just not talking about E&O insurance premiums and MLS fees. The purpose of this article is to highlight some of the challenges you may encounter on your journey to becoming a real estate appraiser.
1. Finding a Mentor Can Be Difficult
Finding a mentor can be the greatest challenge for anyone entering the real estate appraising profession. Any appraiser who decides to mentor a trainee is essentially training his or her potential competition. Some appraisers will refuse to take on a trainee for this reason. Or some may only sign off on half of your state required experience hours. Others may agree to mentor you but will offer you very little hourly pay or a low percentage of the actual fee for the assignment. And once you find a mentor, he or she may actually be a bad appraiser who does sloppy work and and is not in compliance with USPAP.
Fortunately, good (ethical) supervisory appraisers who do excellent work and will teach you well and pay you fairly do exist. However, this may require extensive networking. Those with family members or close friends in the appraisal profession have a significant advantage.
2. Obtaining Experience Hours Can Take From 1 to 5 years
Although the AQB has established a minimum of 12 months to obtain the 2,000 hours of experience for licensing, many states have implemented a requirement where the experience hours to licensing can be obtained in no less than a 2-year period preceding the date of application. For example, in Ohio the 2,000 hours for licensing or 2,500 hours for certification must be obtained in no less than 2 years, even though a typical full time work week can result in 2,000 hours in a year (the experience hours are even greater for certified general).
However, in many cases you may or may not be able to spend a full 8 hour work day or 40 hours per week on appraisals. If the fee split or hourly pay you receive is not sufficient to live on, then you will have to find a second job or source of income. Or maybe your supervisory appraiser does not have enough work for both you and himself for full time. Then you will only be able to do real estate appraising part-time or on the side. For this reason, some people may spend 3, 4 or 5 years obtaining their minimum required hours. Depending on your goals, it may take 5 years, particularly if you are trying to become a certified general (commercial) appraiser.
3. Most Appraisal Work is Now Given to Certified Appraisers
Many larger lenders and AMCs now require an appraisal to be performed by at least a state certified appraiser. That means if you are only licensed, you will not receive orders from clients with these requirements. One exception is if a state certified appraiser inspects the subject property with you and signs the report as your supervisory appraiser. Another exception is if an order is from a smaller lender with less stringent requirements. This mostly applies to larger lender and AMCs, so as a licensed appraiser you should still receive some work from smaller, local lenders and credit unions.
4. Fees for AMC Work Can Vary Greatly By Location
If you live and plan on appraising in larger cities, your fees received for appraisal management companies may be much less than those appraising in smaller town or more rural areas. The reason is simple – the fewer appraisers, the less competition and the greater your ability to tell the AMC your fee and receive the assignment. The more appraisers located in your area, the more there are to compete for the work by lowering their fees. Many AMCs are susceptible to assigning appraisal orders based on the lowest fee. They operate to make a profit like any other business and this is their strategy. If your fee is higher than the next appraiser, you will not get the order. But if you are the only appraiser in the area, or one of the few willing or able to take the assignment (due to complexity or distance, for example) you are likely to get the order even with a much higher than typical appraisal fee. $450-$500 for a Form 1004 wouldn’t be uncommon for rural appraisals (and some busy urban markets).
5. It Is Becoming Increasingly Difficult to Enter The Appraisal Profession
Beginning in 2015, applicants for certified and certified general are now required to have a Bachelor’s Degree or higher. This applies even if you are already licensed or you have been previously registered as a trainee. Applicant’s for licensing are now required to have 30 semester credit hours of college level education from an accredited college, junior college, community college, or university OR an Associate’s degree or higher (in any field). This is good and bad. This is bad if you do not already have these educational requirements. This is good if you do, particularly because these requirements are barring further entry into the profession, which is minimizing the competition you have for appraisal work. The lower the number of appraiser in the area to compete with you for work with their lower fees, the more likely you are to get work at your established fee rate.
This article is not meant to discourage you from pursuing a career in the real estate appraising industry. Rather, it’s meant to give you insight into the practice so you can fully prepare yourself and make informed decisions. It can be tough in the beginning. But once you make it, it can be a rewarding career. If you want to be a real estate appraiser, go for it!
If you’d like to know more, I’ve written an eBook that addresses how to overcome some of these challenges. One of these includes a lesser known “loop hole” for overcoming the experience hour work requirement and earning you more hours more quickly, among many other things. If you have any questions in the meantime, drop a comment below!
Interested in knowing more? Read our 60-paged eBook written by a state certified appraiser!