You can usually diversify your appraisal portfolio—and increase your income—with an appraisal license upgrade. Certain types of appraisals are more common in some markets than in others, and in some markets, a Certified Residential or Certified General license is a must.
John Brenan, director of appraisal issues at The Appraisal Foundation (Washington, D.C.), notes that the practice of many residential appraisers is limited to mortgage lending appraising, by their own choosing. However, he says, these appraisers could expand their practices by performing appraisal assignments in other areas, such as estate planning/probate, marriage dissolutions, and tax assessment appeals, among others.
“A Certified Residential appraiser may perform appraisals of any one- to four-unit residential properties, without regard to value or complexity, subject to the COMPETENCY RULE in USPAP,” he says. “However, a Certified General appraiser may perform appraisals on all types of real estate (again, subject to the COMPETENCY RULE in USPAP). This could include ‘common’ commercial property types such as office, retail, and industrial.”
Within those broad groups, Brenan says, appraisers could work on assignments involving subdivision analysis, feasibility analysis, absorption studies, rent surveys, etc., and specific property types such as golf courses, hotels/motels, skilled nursing facilities, factories and processing plants, and mobile home parks. Appraisers who specialize in niche appraisals invariably develop and maintain specific skills that help them produce more credible assignment results.
Develop your appraisal niche
A Certified Residential Appraiser is qualified to appraise multimillion-dollar luxury homes, which of course will yield higher fees. A Certified General Appraiser may appraise luxury homes and virtually all other types of real property.
“You do sometimes have Certified General Appraisers who have their tail in the water for all kinds of properties, but some appraisers have a niche, like skilled nursing facilities, and they become the go-to people, nationally and internationally, for appraisals of that kind of property,” notes Brennan.
A national or even international reputation is useful if an appraiser is working on a portfolio of properties, or a property type that might be rare locally but is seen all over the country: for example, a poultry processing plant.
“A key point to keep in mind,” he remarks, “is that different appraisers might provide different types of values, for that sort of property, but the most common is market value, which is the intuitive value that everyone thinks of: what would the buyer pay for this, on the open market? There, the appraiser is simply trying to mirror the market. He doesn’t put his spin on the valuation.”
Appraisal upgrade requirements and appraisal trainee obstacles
Many appraisers are eager to gain the higher certifications, but are put off by requirements that might in some cases appear excessive, or by the low status implied by the term “trainee.”
Andrew Craig, a real estate appraiser trainee based in San Antonio, Texas, notes that most of his work is for lawyers, developers, private land owners, and business entities. He does relatively little work for banks, due to the quick turnaround time, low fees, and high competition. This varied clientele requires appraisers with versatile skills.
“Our clients have typically been using us for years and know that while we may take a little longer, our work will hold up in court under a high level of scrutiny,” he says. “The owner of our company holds the MAI, CRE, and FRICS designations and is often called upon to be an expert witness.
“However, many appraisers are not training new people, due to clients’ unreasonable expectations. Between their daily work and continuing education requirements, there is simply not enough time, nor much incentive, to bring on appraiser trainees. I have been lucky to find colleagues who know the importance of bringing in and training new appraisers for the benefit of the profession’s and the firm’s future.”
Craig suggests that in some cases, the industry doesn’t give enough credit to recruits and trainees who have completed their undergraduate studies, when considering how much additional licensing education is required.
“I have an MBA, yet that is given no consideration when applied towards my certification license,” he notes. “The 300 hours, or minimum three-year, requirement to obtain your General Certification license in Texas is, in my opinion, excessive. Many undergraduate, and probably all MBA programs, require students to have a good understanding of complex financial and statistical concepts that are commonly used in appraisal technique.
“Also, I feel that the ‘trainee’ label has a negative connotation when applied to such a long period. I see no reason why a different label, such as ‘appraiser’ for trainees and ‘certified appraiser’ for those with certifications, can’t be used. After all, trainees are actively involved in the appraisal process.”
Qualifying education courses to upgrade your appraisal license
Are you ready to develop new skills that allow you to appraise different types of properties? McKissock offers appraisal upgrade package options and courses for whatever your next step may be.