Training the Future

WRE, Working RE Magazine, Appraiser News, Appraiser Magazine, Real Estate Appraisers, Volume 35
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Editor’s Note: Conventional wisdom is that the appraisal industry faces a serious challenge attracting new blood to its ranks. Here is a quick look at the issues and a (possible) “grassroots” fix.

Training the Future 
by David Brauner, Editor

Conventional wisdom is that the appraisal industry faces a serious challenge attracting new blood to its ranks. The “why” is no mystery to most appraisers. Here is a quick look at the issues and a (possible) “grassroots” fix.

Roadblocks to mentoring appraisal trainees have been around since licensing and before: training the competition is always a concern, along with the time and effort involved in mentoring newbies properly, a process which can be thankless and unprofitable. Then there are the professional and personal risks of opening your business or home to an unknown quantity.

On the other side of the equation, for the trainee, the hours of apprenticeship required have always made it difficult for newbies to support themselves through the two-year plus process. But even with all this, like some migrating bird that against all odds travels thousands of miles each winter to nest, year after year, the appraisal trainee process continues; there always have been enough appraisers willing to take trainees under their wing with an eye toward expanding their capacity and giving back to the profession they love. Likewise, there have always been sufficient incentives for newbies to enter the fold: a well-paying and well-respected profession at the end of the process; challenging work, flexible hours and the dream of being an independent businessperson.

Then along came the Home Valuation Code of Conduct in May of 2009- five years ago. In its aftermath, the benefits of appraising have diminished along with the positive calculation for mentors and trainees.

Most appraisers know what makes taking on a trainee so difficult these days for all but the largest and/or commercial shops: the downward pressure on fees for mortgage work has shrunk the pie, making even the fairest fee split untenable for either party. To add to the misery, many lenders these days will not accept an appraisal where a trainee has assisted, removing a big incentive for having trainees in the first place.

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Furthermore, unlike the old days where an appraisal office had the relationship with the client, today, with appraisal management companies, the relationship, if there is one, tends to be with each individual appraiser on the panel and not the “business”; so why build a company or work for one?

The already rigorous training and education requirements are kicked up a notch as well, leaving many to wonder why any college graduate would choose this path, given all the challenges facing appraisers today. Sadly, most appraisers nowadays say they would not recommend their once beloved profession to anyone just starting out. And with the average age of appraisers over 50, many are beginning to wonder about the future of the profession. One school of thought predicts that the “market” for new trainees will expand once enough graybeards retire or go out of business, and demand increases for appraisal services. Others argue lenders won’t wait for an orderly transition; when a shortage of appraisers begins to clog the mortgage machine, lenders will have the leverage they seek to expand the use of AVMs, which are cheaper and faster and not subject to pressure.

Mentor Me
Appraiser Deborah Gedney contacted WRE earlier this month, suggesting that we revisit the topic of sponsorship. “It has always been hard to find a sponsor due to the low fees and high legal liability of supervising trainees. However, now it is nearly impossible due to the refusal of appraisal clients to have trainees work on their jobs, and the additional requirements in states like mine (Connecticut) where a sponsor must take a specified course before being allowed to take on trainees,” Gedney said. “I have been appraising since 2005. It took me until 2013, working full and part-time at various intervals, to gain enough certified experience to qualify for the state certified residential exam. I have thousands of writing samples and excellent references, including one from the chairman of the state appraisal commission. I’ve taken all but two of the required certified general classes, and only need about 350 more experience hours. However, when I recently wrote to every single MAI in my county, I received not one single offer for an interview, let alone a sponsorship. I thought I’d have an easier time finding someone to sponsor me toward upgrading to Certified General now that a potential sponsor does not have to take that additional class. But that simply has not been my experience.”

Snap Shot
Gedney started a LinkedIn thread on the subject, which may be a good sampling of the national picture. Just like the past, most mentoring remains a family affair- usually offered to a relative or friend. Larger and commercial firms are more apt to have a formal training program in place to recruit new appraisers, and for many it seems to be working. The best timing for new recruits to join the profession hasn’t changed either, it seems to be either right out school, when there are fewer bills and/or they still live at home or have another source of income, like a working spouse, or later in life as a second career when they can rely on some kind of supplemental income such as a retirement.

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OREP Appraiser E&O Insurance

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For those who take on trainees today, and many still do, some of the best win/win situations are where trainees are compensated by a mix of salary and commission; a base to help pay the bills along with an incentive to work long, hard hours to provide some return to the company.

Gedney has the unique experience of being on both sides of the hiring process and offers another roadblock for those wishing to hire. She says, “I seriously considered hiring a friend to do data entry for me. She is smart, hard-working and has had years of related experience (title searching, building construction). And she was interested in learning appraising. In short, she would’ve been a fabulous addition to the industry. We negotiated past so many hurdles- fees, coursework, etc. but I could not overcome the fact that she would be considered an employee for tax purposes. This fact increased her (minimum wage) hourly rate to me by 50 percent through no fault of hers. I felt I’d have to hire a payroll service to process her unemployment insurance, social security, disability, etc. But they are too expensive. So, on top of everything else we do I wasn’t interested in taking classes on those subjects in order to be sure I was doing it correctly. We face so much liability already that the last thing I want on top of that is an IRS audit. So as humble as it would have been, there is one part-time American job that did not get created last year. She eventually took a job with a large retail chain where employee benefits are notoriously skimpy, but light years better than what I could’ve offered her,” Gedney said.

Questions and Answers
Is there a solution? We hope to try at the grassroots level. Working RE/OREP has set up a new Appraiser Trainee Blog where mentors/sponsors can exchange information on what is working for them and what isn’t, as well as a “services offered/services needed” section where trainees and mentors can find each other. A few appraisers complain of not being able to find qualified trainees in their area. Hopefully this will help some of you achieve your goals. If it’s like our earlier efforts, such as the Working RE/OREP HVCC TalkBack Blog, regulators and others from state and federal government- those who can make things happen, will be checking in, in addition to tens of thousands of appraisers. If you want your ideas to be taken seriously, please consider making the comments constructive, concrete and thoughtful (and please use spell check!). That’s not bad advice if you’re trying to put your best foot forward as a trainee either.

We thought we’d give appraiser Gary Lovell the final word about taking on trainees. “I personally interview each (trainee) applicant first, ensuring a college degree. I make sure they get paid for what they do and that they understand that MY business is the priority. If orders start falling off so does work for them. I pay them very well, they have to make a living while training. You have to make money also to cover your additional expenses of traveling to every project they look at, to make sure they are doing their job completely. But the most important thing is to be a mentor! It’s not about me. It’s about the future of the appraisal profession.”

We’ll check in with you in a few months to see how the future is looking.

>>For a flash from the past, read Selecting and Managing Trainees from 2006 (Issue 26).


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Comments (5)

  1. One of the items that didn’t get discussed is a trainee finding an appraiser that is actually good at what they do. Meaning they don’t just do what was told to them by a mentor. They are constantly going out to find new and more information about the profession they are apart of; not just the bare minimum requirements levied by the regulator. I just recently viewed an appraisal on a dwelling with adjustments of 100% plus. I’m thinking that I”m very, very grateful the training that I have received from my mentor and the education that I have been along the way with the new 2008 testing.

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  2. Don’t know any other profession where fees are continually being cut and decreased as more and more education, licensing, government intervention etc continues. How did management companies take over and have the nerve to call Appraisers……Preparers…seriously I am offended. I have a BS degree and over 26 yrs as an appraiser and have to fight to call myself a Professional. No one discusses lawyer fees or doctor fees…and especially real estate commissions and loan agent commissions….seems we appraisers have really gotten the short end of the stick. I might have a few more years in this field but the way things are going they the lenders will not need us.

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  3. by Jeremy Hall Appraisals - Colorado

    Great article. I could take on a trainee today, but they’d have to pay me. That’s a tough sell. HA! / As long as appraisal order distributors keep on playing appraisers against each other, the industry will continue to contract. One cannot build a sustainable business, around a question mark. Lasting client relationships are necessary, and so are fee increases. Otherwise, game over.

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  4. by Michael Smith

    The fees need to rise before appraisers take on trainees. We are saturated with enough appraisers already. The AMCs choosing the cheapest appraiser is the problem right now. The AMCs are trying to use appraisers like a commodity. ….raise fees and we will train.

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  5. Great article. I own a small appraisal company in Portland, OR and I have two trainees and have trained others. Although it is hard for trainees these days, I do not think that AMCs have not ruined it. We are fortunate to have a strong base of lender and non lender clients who accept my trainees. My work is better when a trainee assists on a job. We collaborate and check each other’s work. Each trainee that I have brings something to the company and makes us a stronger organization be it writing, computer skills, customer service, etc… When my assistants become licensed, I pay them well and they continue to work for the company and make the company stronger.

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