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 Six months to two years
Before May 1, 2018, the AQB established a minimum of 12 months to obtain the 2,000 hours of experience for licensing. As of May 1, 2018, the minimum is now just 6 months and 1,000 hours of experience (half the time). Also, an Associates Degree is no longer required. Previously, many states implemented a requirement where the experience hours to licensing could 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 used to have to 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, as states adopt the new AQB changes, many, including Ohio, are now adopting just the minimum requirements, making this much easier to achieve.
Although time and hours have been reduced, in some 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 more than the required minimum time. The exception to the quicker time is if you desire to become a certified general (commercial) appraiser. Those requirements have not changed.
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 (Actually, Now it’s Becoming Easier)
Update: With the new, lower requirements, it is now less difficult to enter the appraisal profession. This can be good and bad. However, I am keeping the original heading of this article as a discussion point.
In 2015, applicants for certified and certified general used to be required to have a Bachelor’s Degree or higher. Now the AQB offers several alternative options if you do not have a bachelor’s degree. (This used to apply even if you were already licensed or you had been previously registered as a trainee. (Applicant’s for licensing were then 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 was also good and bad. This was bad if you did not already have these educational requirements. This was good if you did, particularly because these requirements were barring further entry into the profession, which was minimizing the competition you would 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 would be to get work at your established fee rate.) Now, however, the opposite is true. The new requirements are good because if you do not have the college education, you can still become licensed and if you want to become certified you have several other options. The bad is that more people can enter the profession. So with the new, easier requirement, you better get started asap and be ahead of your peers!
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 (actually, now it’s only tough to find a mentor. With the new AQB changes, becoming a licensed appraiser is so much easier). Once you make it, it can be a rewarding career. If you want to be a real estate appraiser, go for it!
I tried to maintain the original content of this article to allow you to contrast the process before and after the recent AQB changes. Hopefully it wasn’t confusing.
If you’d like to know more, I’ve created a video course 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. In addition, I also take you on real inspections (8 different appraisals!) to give you an idea of what it’s like to perform an appraisal inspection. If you have any questions in the meantime, drop a comment below!
When Should You Take The Appraisal Courses?
It is not required to take the required appraisal courses before finding a mentor.
However, I suggest taking the courses first for three reasons:
1) It will help you determine your level of interest and aptitude for actual appraising. Maybe you’ll change your mind after going through the courses, or maybe you’ll become much more interested. I offer an eBook about being an appraiser, but the licensing courses will show you actual appraising and you’ll do it in theory by completing samples (case studies).
2) If you find a supervisory appraiser, he/she may tell you to come back later once you complete the courses for the trainee level (at a minimum) and obtain the trainee license, which could take two months, depending how quickly you can complete the courses. In the meantime, someone else could take your spot.
3) Your experience hours don’t count until you’ve taken the courses and obtained your trainee license. So if you wait to find your supervisory appraiser before taking the courses, you’ll lose two months worth of experience hours (or however long it takes you to get through the courses). You’ll get the experience, but the hours won’t officially count.
Here’s an example of a trainee posting from Craigslist illustrating this:
“Certified Residential Appraiser looking to take on a trainee… Preferable applicant will have a minimal 2 year degree and will have completed all required basic level training to acquire an appraiser trainee license. Please submit a resume for consideration.”
Of course, if you find a supervisory appraiser who is willing to take you on immediately even before you complete the courses or obtain your trainee license, do it! You don’t want to lose the supervisory appraiser. Just accept the loss of initial “log” hours for the immediate opportunity you have.
Interested in Appraising? Check out the Ultimate Appraiser Career Guide!