|Services Offered this Issue
> The Appraiser Coach
> 2017 AMC Guide
> FHA Checklist and eBook
> OREP Appraiser Insurance > Adjustments Online CE (7 Hrs. OREP Education)
Training Success Stories
by Edward E. Cline, SRA, AI-RRS, GAA, RAA, MNAA
As appraisers, we are regularly bombarded with stories of how hard it is to become an appraiser and we are constantly told how no one can train new appraisers in today’s environment. We hear how the so called “barrier to entry” is so high that it prevents the next generation from finding anyone to train them. I’m here to share with you some trainee success stories.
I am currently training the next generation of appraisers and I have been doing so for over two decades. If you listen to the so-called “experts” and industry leaders, I am the exception. Perhaps I am the proverbial mythical unicorn? Sorry to disappoint, I am simply an appraiser who doesn’t listen to “experts” who are more concerned about creating form-fillers than about educating the next generation of quality appraisers.
The other significant difference between me and most of the “experts” is that I am actually a working “boots-on-theground” appraiser. I am not employed by an AMC, I am a working appraiser who continues to prepare and complete appraisals on a daily basis. I have asked three of my current trainees to share their stories and you’ll find them below. But first, here are the nuts and bolts of training employees.
Nuts and Bolts
When I hear “industry leaders” and experts talk about the need to get the trainees out of the office ASAP to do inspections, it is an indication to me that they don’t have trainees. Other successful mentors that I have talked to, as well as myself, are more interested in training our people than rushing them out the door. All trainees must learn the appraisal process as well as each individual office’s procedures before sending them out. By teaching the office part first, which we all do, you improve their professionalism and decrease the time it takes them to become productive. My trainees typically begin adding to production in two to six months; if they do not, they will never make it as appraisers.
The key to making it profitable is properly training them to be appraisers and not just be form fillers. I pay my trainees as hourly employees, with health insurance and a retirement plan. If I can do it, so can most of the appraisers. The real truth is that the task of training the next generation of appraisers would be substantially easier if there wasn’t such a disproportionate amount of the money going to the AMCs. Pay a reasonable fee and the future of the appraisal profession will thrive for AMCs and appraisers. The AMCs are making multi-millions and we are making pennies.
When it comes to the economics of it the math is relatively simple. You know what you get per appraisal and should know what your expenses are related to the report. You have to figure out how many more appraisals you need to do per week to pay for the trainee. But being in a big hurry to get them out the door is not the way to do it. In the decades that I have been training people I have never had any trainee who I wanted to hire refuse to take the position because of the pay. These appraisers need to learn how to run a business and just because you are self-employed does not mean you know how to run a business.
Most people are looking at this incorrectly, going through an appraiser trainee program is a better alternative for many than going back to school for a master’s degree. You get paid while you are going through training and have a guaranteed job after training. With a master’s degree, you do not get paid, you do not have a guaranteed job after you graduate, and you are typically paying tens of thousands of dollars for your education. An acquaintance of mine has a relative who has recently completed her master’s degree in Social Work. After a year of searching the open job market, she finally found employment with compensation of only $35,000/ year. The appraiser trainee program doesn’t sound so bad now does it?
If you plan to be an appraiser, you should prepare for going through the trainee program the same way you would prepare for getting a Master’s degree; you plan for the time it will take and save what you can. Each trainee’s financial situation is different but each plans for the needed expenses. Appraisers are analysts and they should analyze the situation and solve the problem. My firm helps out when we can. For instance, one of our appraisers recently became extremely sick and was not able to work. When he was ready to come back he still couldn’t work at the capacity he was used to. This appraiser covered the counties that are farther away from the office and it can be very time consuming and taxing to do. Others in the office took those orders and inspected the properties but let the appraiser assist in writing the appraisal so that he could still make money even though he couldn’t view the properties. He still received his full cut on all of the orders that he worked on. There are other ways we support our employees as well. We do this for all our employees and not just the trainees because that’s what’s best for the company and because it is the right thing to do. The key is that you need to treat your employees fairly and trainees even more so. Maybe it’s time for some of these naysayers to start treating their employees better and quit being so greedy?
I recently talked to a colleague who just hired a trainee and she loves it. This is being done in a low-paying market. Our firm is in one of the lowest paid areas as well. If you look at the fees on the Veterans Affairs (VA) fee panel sheet you will see that we are at the bottom of the list. We also are in a market where there is an oversupply of appraisers. If we can do it in this market, then anyone can. To all of these people who say this cannot be done, have they actually tried?
(story continues below)
Training the Competition
As far as the objection of some that we are training our competition, they have a point. The way that AMCs distribute work adds to this. AMCs are consistently looking for faster and cheaper, and appraisers who offer fewer objections to their “questionable” requests. They often ask us to violate USPAP, ignore FHA and FNMA guidelines and sometimes ask us to commit fraud. If AMCs would place some emphasis on experience, qualifications and designations, it would minimize this situation. I would much rather compete with qualified, competent appraisers than form-fillers.
As far as training the competition, it’s relatively simple. Make them sign a detailed and inclusive non-compete and be willing to enforce it (non-competes are not enforceable in all states). Non-competes are important for several reasons. The number one reason is that it keeps them with you as they transition from trainee to appraiser. If things are set up correctly, once they are out on their own they quickly realize the importance of being with us. The other equally important part of the supervisory appraiser role is to stop looking at them as a trainee and begin looking at them as a fellow appraiser. I try to set up a system so they make more money and have a better quality of life with us opposed to being out on their own. Again it goes back to economics. If we get paid a customary and reasonable fee, I can do more for my coworkers (employees).
One final note on training the competition: these proposed AQB changes will open the flood gates of poorly trained form-filling appraisers coming out of the “puppy mills.” They will drive down fees and drive out the quality residential appraisers. This is not in our best interest and more importantly it is not in the public’s best interest. Have we not learned anything from the S&L crisis and the recent financial crisis?
First Person Trainee Stories
Trainee #1: The Banker
I have been asked to share some of my personal experiences and thoughts about the appraisal apprentice process. I realize that there is much debate nationally about this process and regional pressures will surely impact experiences but I also believe strongly that my experiences could have happened in any market throughout the nation.
With a degree in Economics, I entered the retail banking profession. First in community banking, then a migration to retail mortgage lending with a few detours along the way into wholesale mortgage lending and mortgage insurance sales. I found myself back in retail mortgage lending in a regional sales management role and I eventually became a Senior Vice President/ Mortgage Director of a 20 plus billion- dollar bank. Life was good until 2006/2007 when the bank I worked for was sold and the mortgage debacle occurred concurrently. My position was eliminated on July 3, 2007. Because of the mortgage industry’s climate and my personal salary history, I was pretty much damaged goods in the job market. I found miscellaneous jobs but I ended up working at the local Costco as a frontend assistant and cart boy… at age 48. Humble pie was on the menu every day.
With a career in mortgage lending, especially during the 90s, I personally knew many appraisers and considered many to be my friends. However, I did not jump into the appraisal profession without a lot of consideration of how to re-invent myself for the long run. I thought about many professions and weighed the pros and cons of each carefully. Specifically, I considered: educational cost, opportunity cost, financial reward, longevity of work and most importantly…quality of life throughout my remaining working career. I especially wanted to learn from my recent career history and mitigate the risk of having my career come to an abrupt halt due to others making a decision that impacted my livelihood i.e., a corporate merger. In short, I was looking to have a career that could continue long past traditional retirement and offer opportunities as I age.
Because of my age, the electrical and plumbing apprentice programs were not an option for me. Health care was very appealing but after research, the cost of schooling to become a Imaging Technician (Ultrasound or X-ray) didn’t match up with the financial gains I was looking to receive. Nursing has the financial rewards but the quality of life (working various shifts for several years) didn’t match up to my desire to be involved with my pre-teen children for weekend and evening activities. In addition, the outlay of money for school didn’t guarantee a position at the completion of schooling.
After researching online and talking to several friends, including appraiser friends and a family member who is an appraiser (not in the same state), I decided to become an appraiser trainee. For me, finding a supervisor was not hard at all. I’m sure having ties to the appraisal industry was an advantage, however, my company has hired several trainees since my hiring who have not had any relationship. My supervisor looks for the same qualities and attributes in the candidates that are appealing in many other career fields. Those who have a definite career path and sense of sacrifice and dedication typically get an offer.
Furthermore, it is very interesting that some of the barriers to entry that are now being questioned and debated are exactly what I found attractive. Looking at a few well-known professions, the higher the barriers to entry, the more successful and regarded the profession generally is. Doctors, lawyers, and CPA’s–all professions that with high barriers to entry–but also are professions which are highly regarded and offer numerous professional rewards. I would guess the American Institute of Certified Public Accountants (AICPA) is not focused on making the CPA exams easier to pass.
Also, I have heard that the two year time frame is being looked at as too long of a training period. I disagree. In my lending career I have been on due-diligence teams purchasing blocks of mortgages worth millions of dollars. I had a personal lending authority of $1 million and I sat on a bank re-purchase committee for Freddie Mac. I would guess my appraisal knowledge out of the gate exceeded most trainees. In my first six months of working as a trainee, I couldn’t believe how much I didn’t know about the appraisal process and how new scenarios just kept coming up. These are experiences that happen over time and they just need time to happen.
The opportunity to become an appraiser was a great fit. The profession fulfills the requirements I was looking for in my quest for a long-lasting second career. I sincerely hope that the requirements to enter the profession are not lowered. Doing so would be an injustice to the existing professionals who have struggled to obtain the required education and experience, not to mention the risk of having incompetent appraisers active in the marketplace. If there is an imbalance (shortage) of appraisers in a certain market, then market pressures, including fees, will self-correct if allowed to happen. Keeping the requirements high will ultimately have a longterm positive influence on the real estate and lending community.
— David A. Moore
(story continues below)
Trainee Story #2: Realtor, Assessor, Insurance Inspector
I have been requested to impart my personal experience as to the process of becoming an appraiser trainee. There has been much argued and agreed upon as of recent regarding the newly implemented guidelines. I would like to first touch base upon my background and experience.
My formal education is in business management with a specific focus in human resources. I have been a licensed Pennsylvania Realtor since 2010. I have been involved in all aspects of real estate sales and prior to becoming a Realtor, I was a homeowner insurance surveyor for two years. There, my job description entailed the inspection of homes and a thorough report of my findings to specific insurance carriers. These reports were to either confirm or deny that the policy was sufficient to support overall protection against potential loss.
My time prior to becoming an appraiser trainee was as an assessor for Beaver County, Pennsylvania. It is worth noting that I am also a Certified Pennsylvania Evaluator, which enables me to determine valuation of real property for ad valorem taxation purposes. While attending classes through the Appraisal Institute for the aforementioned, I decided to pursue becoming an appraiser. Within weeks of this decision I had found an appraiser who offered me an immediate position, once I worked out the exit of my previous employment.
Although not typical of new trainees, my background has proven to be extremely beneficial. Though my past experience within the real estate industry only supplied me with a very basic and general understanding of the appraisal process, I was fortunate to find a mentor, someone I knew, who was immediately willing to offer me training.
Initially, during my early training as an appraiser, my main concern was the length of time it would take to become Certified; countless hours and numerous classes. However, my eyes were opened to the discipline and detail of this industry in a very short time. I look at the requirements and guidelines now with appreciation rather than frustration. Although I am anxious to become Certified, I value my current time spent obtaining knowledge and the necessary tools required moving forward. Again, I am extremely fortunate to have initially been given a complete overview of what being a trainee entails. This past year has offered me many experiences that will undoubtedly aid in my future success as an appraiser. It has also showed me that a trainee is neither prepared nor competent to become an appraiser in one year.
In closing, the current requirements and guidelines are exactly what the industry needs. USPAP sets forth criteria, rules, and guidelines to follow in order to promote public trust. That is what the current requirements promote: trust. I can remember when I became a real estate sales agent; I took two classes and passed a test. That was it. I was then able to represent the buying and selling public in real estate transactions. The appraisal profession is much more complex and detailed. It needs to be more defined with stringent requirements and that is what the current guidelines accomplish. The real estate industry as a whole depends on it. Anything less would be a disservice to the appraisal profession. All professions are measured by the experiences and requirements needed to be a part of them. Appraising is no different, and with the current implemented guidelines, there is a much higher level of public trust.
— Matthew J. Maybray, CPE
Trainee Story #3: Mortgage Banker
I decided after 13 years in the mortgage finance business that it was time for a career change. The fallout of the mortgage crisis had far-reaching effects and the secondary market side of the business transitioned from being a mutually beneficial relationship between the buyer and the seller to a widget-selling price war. The appraisal industry interested me, given my experience on the financing side, and I began researching this career path in May 2016.
Having been on the business to business side of mortgage banking, my interaction with individual appraisers and appraisal companies was limited. My first stop in researching this new career was the Appraisal Institute website, and I found it helpful in explaining what the requirements are for starting the education process of becoming a trainee. It did have a few missing pieces though. With no salary or income data, I had to utilize other resources to get a feel for what I might except to earn. It also did not have clear guidance on how to find a mentor which would be helpful for assisting those who may be considering this career path.
In order to find a mentor, I found a list of appraisers in my area online. I reached out to many of them asking if they had any opportunities available. In total, I contacted 20-30 appraisers and appraisal companies this way. In addition, I leveraged my existing mortgage industry relationships and professional network for more local contact information. I also used online job posting websites to find open trainee positions and I reached out to the contact listed on the Pittsburgh chapter of the Appraisal Institute for additional guidance on how to locate a mentor.
From this process, I was able to learn a bit more about what would be required of a trainee from those appraisers willing to speak with me. This also allowed me to gather salary data. I realized I would need to overcome the obstacle of low trainee pay in order to make this move. I had three interviews in total and two offers of employment by the end of August 2016. Many individual appraisers told me they would not take trainees, and a few said they would only consider having a trainee as an unpaid “internship” type position.
I personally did not find it difficult to assess the appraisal industry as a career choice and find a mentor in order to start my new career. It did take a substantial amount of research and action to find the “right” mentor but anyone willing to make that effort shouldn’t have difficulty finding a position. The biggest obstacle for me (and I’d imagine others) is a financial one. The pay for a trainee is low (or in some cases nothing) which presents a challenge for many exiting a bachelor’s degree program with debt or for those starting a second career with existing financial obligations.
Ultimately, appraisers are responsible for providing professional opinions of value on which major financial decisions are made, both by consumers and financial institutions. Purchasing a home is one of the biggest commitments a person will make in a lifetime and financial institutions depend on appraisals to mitigate risk, assist in valuing portfolios and calculate real and potential losses. Given the profound effect of a quality appraisal, it seems appraiser compensation does not currently reflect the significance of the profession. Addressing that shortfall would allow potential appraiser trainees to see the appraisal industry as a viable career, and it would allow mentors to have the financial capability of paying them appropriately.
— Stephanie L. Gaydis
Postscript from Ed Cline
My girlfriend recently purchased a house in Yorktown, Virginia. The appraisal was done both professionally and in a very timely manner. From the time the appraiser called her for access (the AMC made her the point of contact, not the agent), until the time that she received the appraisal by regular U.S. mail was one week! A happy borrower right? Not really. Instead, her closing was rescheduled three times and took 52 days to close. Will this delay in closing be blamed on the appraiser (as it often is) and not the parties actually responsible? I would encourage all of us to share our success stories! Our industry should not be molded by the naysayers or AMC interests but instead by the actual working appraisers.
CE Online – 7 Hours (approved in over 30 states)
How To Support and Prove Your Adjustments
Presented by: Richard Hagar, SRA
Now you can improve your skills and earn CE credit conveniently online. Richard Hagar’s, SRA highly acclaimed adjustments seminar is now available online for CE credit in most states. Do you have the proper support for your adjustments? Stop taking the same old CE courses and learn proven adjustment methods with instructor Richard Hagar, SRA. Fannie Mae states that the number one reason appraisals are flagged is the “use of adjustments that do not reflect market reaction.” Stay out of trouble with Fannie Mae, your state board and your AMC/lender clients with solid, supportable adjustments. Learning how to make defensible adjustments is the first step in becoming a “Tier One” appraiser, who earns more and enjoys the best assignments. Up your game, avoid time-consuming callbacks and earn approved CE today!
This course never expires!
Take the tax deduction this year and use the hours when you need them- this year, next year, or years from now.
“Why wasn’t this taught years ago?” – Jackie Henry
About the Author
Edward Cline, SRA, AI-RRS, GAA, RAA, MNAA is the owner of Ed Cline Appraisals, a busy appraisal office
with 10 appraisers and three trainees in Beaver Falls, Pennsylvania. He is a Certified General appraiser
in Pennsylvania and Ohio. He performs both residential and commercial appraisals and is a licensed Real
Estate Broker and the owner of Premier Property Management Services. Cline is a licensed Pennsylvania
contractor and holds a certification in lead abatement. In addition, he is a certified FHA 203k consultant
and an active real estate investor.
Send your story submission/idea to the Editor: email@example.com