Appraisers' Free Forum

OK.....fun group.....intelligent, quick witted and a bit edgie. I like it. So I'll just throw this out there since this is my very first post here. No going back.

I'm not even a "newbie"....I haven't even had training....so what does that make me? In utero, I suppose?

I will be the first to say that I have the utmost respect for real property appraisers and the importance of the appraisal industry.....but I do not have enough information to know whether I want to pursue this as a career change. So forget even mentoring me.....I would greatly appreciate someone who could give me the pros and cons of the appraisal business.....job availability...and maybe a "range" of potential income. Can someone point me in the right direction for this kind of information....is this the place to post this here?

Thanks!
Kat

Kat,
Your best bet is to hire on with a bank or other lender that does its own appraisals and reviews. Chances are they'll pay for at least some of your appraisal classes.

In most states, you need to take the fundamentals classes in order to get licensed as a trainee. (Some states don't require this, though.) After you get your trainee's license, you must get at least 2,000 hours of supervised experience under a certified appraiser. That's the tough part: Finding someone to take you on and teach you how to inspect, appraise, and deal with clients.

Along the way to your 2,000 hours (minimum 2 years), you'll need to complete the basic education needed to obtain your state certification, which will be 200 classroom hours (counting your fundamentals courses) in 2008.

For more information, go to http://www.appraisalfoundation.org/s_ap ... /index.asp
and browse around. That's the Appraisal Foundation's website, and there's lots of good information about how to become an appraiser.

The reason I said to go to work for a bank is because you don't have to be certified or even licensed to do appraisals for your employer. If you can get an entry level position and work your way into the appraisal department, that'd provide the shortest route to certification time-wise. It'll also work you plumb to death, so expect long hours. Doing it independently will require lots of luck, and even longer hours at low pay.

Hope this helps.

Kat wrote:I'm not even a "newbie"....I haven't even had training....so what does that make me? In utero, I suppose?

That makes you a layperson.

Whether you would find the independent fee appraiser career worthwhile or not depends upon so many variables it is hard to know where to start. First, let me say that there is nothing wrong with Otis' advice. But, what attracts many people to appraising is the ability to do your own thing and be your own boss... working in the corporate environment is hardly appealing to me as an individual.

One of the biggest "cons" is the dues you have to pay for entry into the profession. Those just recently went up, and basically, it now requires a college education or some equivalent class work. Next (but not necessarily in order), you have to take a slew of appraisal specific classes from an appraisal school. Then, you have to do a specific number of hours of training or apprenticeship, and last, but not least, you have to pass a test and submit a sample of your work (requirements may vary slightly from state to state). To find out about the basic requirements, start here:

http://www.appraisalfoundation.org/s_ap ... 48&DID=206

The second big drawback to this profession (or advantage, depending upon your viewpoint) is that, unless you go the corporate route, you are pretty much on your own. One of my biggest shocks was getting all the requirements done and then still not being able to find anyone to hire me because I did not meet their individual experience requirements... fortunately, I had a good mentor to help me along. That is what I would say is the number one necessity for getting into the independent fee appraiser business... if you cannot find a good mentor, you are basically stuck. Now, stop and ask yourself, why would anyone want to train me to be their competition? I can only think of two good reasons... either they are going to get something out of it by making a lot of money off your work while you are in training, or else they really like you (like maybe they are your father or brother). There is a third possible reason, because they want to help the profession... but, those mentors are scarcer than hen's teeth. (Can you tell I'm from Missouri?)

The skill set: primary is understanding of statistics and economics. But, there are numerous other skills that come in very useful (I sure wish I had paid better attention in my high school geometry class). Writing, particularly business writing is important. Art can be useful... you have to be able to draw and take photographs. Basic math is not that important, we use calculators and computers nowdays... but, you do have to be smart enough to know when you have made a basic math error. Mechanical skill is also important... if something breaks I have to fix it, whether it is hardware, software, or something else. Since you are responsible for your own taxes (unless you are an employee in a corporate or sweat-shop environment) some basic accounting skills are also helpful.

Advantages. Well, number one is being in control of your own life (or, maybe that's a disadvantage... depending on your viewpoint). Right now the industry is going through some major changes. No one knows for sure how this will shake out... but, my guess is that, at the end of it, the form-fillers will primarily be gone and what we will be left with is appraisers. That could be a real problem for someone just now trying to get into the business... or, an advantage, depending on your viewpoint.

So, to summarize:

Costs: education, training, and other dues = several thousand dollars
Apprenticeship: Time spent and opportunity cost = several thousand more dollars
Being in Charge of Your Own Destiny: Priceless

There are many pros and cons, as have been mentioned. What has not been mentioned is that for the time and money you must invest into becoming an appraiser would be better invested in a higher paying career that is inclined to be in higher demand.

Careers as medical technicians, nurses, teaching, etc. cost about the same but pay much better.

Thanks so much for all your great replies!

Just to help you know how to help me, it might be a good idea to tell you what my background is. I've been in the interior design business for about 20 years....on and off (while raising my kids)....and back on in the last 8 years. I've also added real estate staging to my biz, but honestly, the latter has hurt me more than helped. One or the other, but ironically, the two do not mix well. A lot of my design work has been design/build....or remodels....so I'm very comfortable with the "real estate" aspect. As a stager, I've worked very closely with my realtors and clients to help them get what they assessed through appraisal reports, the local real estate market and what the homeowner needs out of the sale. It's been my job to showcase what the appraisal reports says is marketable.

I've also been in business for myself, so I know and hate that goat rope, but I hate the corporate structure worse. Been there and went insane. So, yes, the appeal of being independent is more my style. It's all a trade off.

I'm gearing up to go back to school/training etc...so all that information is very important to me.....in addition to the cost of it. The licensing etc is also a process I'm familiar with....albeit different exam/licensing requirements in interior design.

Everything that has been said so far has been extremely helpful. I appreciate the candor too about the questionable future of the industry. Being self employed is not easy from any POV....but yes, the freedom is priceless. The difference I see compared to what I'm doing now, is if the economy takes a down turn, my current business shrivels up. It's not a necessity.....and being in Central Texas, staging is not in demand because the market is doing fairly well, where I am. Staging gets valuable in areas where houses are not selling.....and people see the need for investment as part of selling their home.

So...my question would be....if the economy turns South....how does that effect the appraisal industry? My guess is that competition gets tough....but it's still a necessity as part of the mortgage process, right?
What would be the worst scenario.....other than what I'm facing of being totally out of work! I want to be smart about making this move and understand the whole picture from those of you in the trenches. I'm not afraid of long hours and hard work. But.....can someone ballpark a starting income? Hard work really sucks when one can't financially support oneself. I know we all agree on that one. (I'm assuming that the income would vary across the country, so if anyone knows a "range" for the state of Texas, I would really appreciate that.)

The other big ? is can someone walk me through the process of getting a client, what takes place during the appt (ie photos, measuring, amount of time etc) on through to the putting facts down on paper and delivering it to the client. Also...working with mortgage co's and that relationship.

I can't say enough how much I appreciate this feedback. I have read some of the other posts and totally understand that every industry has it's lemons. I don't want to be one of them. That's why I want to know very clearly what would be involved. You all are helping me tremendously.

First things first:
Finding a mentor. That's the tough part. Assuming you can find a one, you will make little or not money until you grasp the concept of appraisal. By little or no money I mean you may not get a paycheck at all at first and then you may get a few hundred dollars each week.

Once you have found a mentor, begin taking classes from a GOOD school. This part will cost you at least $3,000 but may cost as much as double that.

Provided you have the required education and if you have enough hours in after a couple of years of training you can apply to take the test. After passing, you should continue working with someone more experienced than yourself for several more years but at least now you should start getting paid for it.

The above is rather generic. Check with your state for specific licensing requirements. You may be surprised at how much is required.

Expect to live without an income or a break even income for a couple of years. After that, you can make as little as nothing as the demand for appraisals is very limited presently to $150,000. More realistic is $30K net based on present circumstances.

I don't want to be a party pooper but there are many appraisers with years of experience that are quiting due to lack of demand for services. To be honest, the time and money you might spend in getting into the business is a poor investment. Although I love what I do, it is no longer a lucrative field.

Kat,
The economy *has* turned south, and has been traveling that direction for a while. Most of us are now experiencing some of the slowest business activity in ten years. Several, like me, have the financial reserves to enjoy the time off. But many are in dire straits, with mortgage payments to make and families to feed. Some have left the profession for more stable income. Others have taken jobs in the public sector (assessors' offices, for example). Some, like our own DB (who has worse luck than anybody I know), have had as few as 13 orders all year! But DB's got more talents in reserve, and has filled in the income gap with work in other fields. I guess what I'm trying to say is that you have to be resilient, determined, and tough to stay in this business.

Reading through some of the forum posts will help you get a feel for some of the problems we face. One of the biggest is loan originators who demand that we commit fraud for $300 so they can get a $2,000 commission. You MUST retain your ability to say "NO" and make it stick. When you do, you'll lose a client. And losing that kind of client is a good thing, but it doesn't put food on the table.

Kat wrote:The other big ? is can someone walk me through the process of getting a client, what takes place during the appt (ie photos, measuring, amount of time etc) on through to the putting facts down on paper and delivering it to the client. Also...working with mortgage co's and that relationship.

That's a tall order.
A client, if you're referring to mortgage appraisals, is usually not an individual. It'll be a bank, an Appraisal Management Company (AMC), or a mortgage broker. These will make up the significant bulk of your business when you're starting out. When you start getting your feet on the ground, you'll start to complain loudly about those last two groups, and you'll start to divest yourself of them. How do you get'em? Advertise. Go meet the people at the bank who hire appraisers. Ask for an order. List yourself on appraiser listing websites. Tell people you're an appraiser. You'll get a few individuals needing appraisals for marketing, or to settle an estate or dissolve a partnership or marriage.

Let's assume you have a mortgage assignment. When appointment time arrives, so should you. Be on time. Dress tastefully but comfortably. Explain to the homeowner that you'll be measuring the house, and that you'll need to see every room. Tell them that you'll need to look into the crawl space as well as the attic. You'll also want to see the basement, utility room, garage, and anything else that's on the property. You'll be looking in the cabinets, closets, and everywhere else in the house. You'll be drawing a sketch of the floor plan, and observing the general condition of the walls, floors, ceilings, windows, and trim. Doing all this usually takes about 30 minutes (some of us are faster) for an average-sized house, but if you get to gabbing with the homeowner, it can cost you an hour or more.

After you get back to your office, you analyze the market, determine the site value, select your comparable sales, and perform your other analyses. Then you write your report and proofread it. (That's all the detail you get for now. This is the part that you attend classes to learn, and practice it with your mentor looking over your shoulder.)

Delivery of a mortgage appraisal is usually made electronically; PDF format is the predominant form. (But you don't send that report until you've been paid.) Personally, I don't start a report until I've been paid.

Great information!!!!! Thank you. I'm meeting with a local appraiser next week. I'll be prepared to know what to expect in our discussion.

Just curious, what state are you guys in?

I understand that the economy is hurting a lot of businesses. Housing sales are slowing here too....but this is typically our slow time of year. This area is always behind the ripple, so I know it's coming and will be worse. I think we all need to be resilient no matter what our situation is. I wouldn't be here exploring other options if my own business was great.

Good luck to everyone....and thanks again!

Kat,
Look in the sidebar under my name, where it says "Location." And, btw, if you want help with licensing issues, requirements vary by state. You might get more on-point advice if you visit your profile and at least list your state. Listing your city might actually get someone local to you to respond.

One part of my advice I need to correct: "Tell people you're an appraiser." Doing so before you're licensed or certified is a misdemeanor in many states, and can interfere with your application for certification if they catch you doing it. Instead, tell people you're in training to be an appraiser. Don't tell anyone that you're an appraiser before you actually are. All you have to sell is your reputation for honesty. Don't compromise it.

Kat,
Others have addresses the pros/cons and ins/outs well so I won't reiterate that.

I can, and will, add some comments on income. After all, that is a pretty important part!

I started as a researcher in an office that specialized in right-of-way work for a whopping $10/hr (that was with a MBA. Ouch.) Experience gained was priceless.

As a split fee trainee for residential mortgage work, I got 40% - 60%. The shop (not a good one) I worked for ranged from full fee of $350 to AMC rip-off fees of $125. This was during the boom and I averaged 5-10 reports a week. Note that starting splits are often lower for trainees with no experience.

I am now an independent single-woman shop. I do full fee residential work only. During the busy times I get 5-7 jobs per week and slow times 0-3. Right now is slow, very slow. Realistic net for a single person shop is about $20K to $80K. I put the top at $80K, because life requires fun time and I turn away work beyond 5-7 reports a week.

Working for the Assessor's office around here will earn you about $30K - $60K per year with good bennies.

Sorry, I don't have any info on bank work.

Hope that helps!

Kat,

Just telling you of my experience.

Started out knowing very little about the appraisal world. I started at a bad time (September 2005) from an income standpoint, as things had slowed down.

The positive side of this was my mentor(s) had the time and took the time to be a good teacher for me.

I basically "worked" for 18 months with no income, but still had my bills to pay (I went through about $40,000). That may be the most difficult part for many. In my opinion you must be dedicated and available to "work" full-time with a mentor. This means going when and where they go, sometimes on a moments notice. This makes it difficult to even consider working a part-time job.

Let us say, for the sake of argument, you do the needed steps to become licensed. Next, you will be in a situation that creates a new issue. You want to earn money and are asked to compromise your ethics and integrity by some to do so. It is difficult, to say at the least, but you cannot for any reason do so if you want to be seen as a professional, IMO.

The market is a roller coaster ride and you must have the ability to hang on during the ups and downs, as well as the curves it will throw at you.

I have not built my practice to the point I desire, but I love the profession and will continue to ride the roller coaster and hope I am strong enough to hang on!

BTW, this forum is a great place to gain insight and knowledge in my opinion. There are many poster here that I would love to have half of their knowledge and wisdom.

Good luck in your decision making process in concerns to the world of appraisals.

What a great bunch of people! I'm overwhelmed by the interest to help others. One common thread I see is the getting started and the roller coaster ride of service oriented businesses are part of the process. I have no back up income if I decide to bail out of my current profession. So these are all important points to know about just surviving the initial few years of experience. If it's possible to learn "part time" and continue my current client base and income, (albeit cut back some), then it might be possible to survive financially on a shoe string. But, what I'm hearing is that it's long hours with no pay during the training process. If that's true, this may not work out for me.

Jim...I hear you loud and clear re: calling oneself an appraiser before being licensed. As a licensed interior designer, the state of Texas will not allow any individual to print, type or use the title "interior designer" unless they have passed the state NCIDQ exam. It's a $500 fine for every offense. It's not just a matter of snob appeal....it's critical to understanding building codes, HDA specs, etc....which means it's regulated and not to be taken lightly. I can understand how the appraisal business would hold the same strict type of regulatory guidelines when dealing with property values and financial lending.

WM.....thanks for your input as well. It's nice to hear a woman's perspective. Good luck with your continued success. It sounds like you have the right attitude to hang during the highs and lows.