So, you’re contemplating a career switch to commercial real estate appraising? What goes into the process and what skills are necessary to make that transition smooth? The following is my attempt (and I use attempt very loosely because there a myriad of things that go into the commercial real estate appraisal industry) to provide a brief guideline for the un-initiated.
Education and Training
As with anything regulated by the government, there are some initial barriers to entry. The first item is the appraiser trainee education requirements. The bundle consists of USPAP (the appraisal industry’s guiding force), appraisal principles, appraisal procedures, and the recently added trainee-supervisor course. The courses are designed to provide an introduction to appraisal methodology and governing rules. These are the required courses, but, from a practical standpoint, a person transitioning into the commercial appraisal world will need more in their toolbox than just what is presented in these courses.
In my experience hiring and training staff appraisers, a basic understanding of word processing software and spreadsheet functionalities (most often Microsoft Word and Excel) are critical to success in the commercial appraisal arena. In particular, understanding how to manipulate data and construct formulas, graphs, pivot tables, etc., in Excel will reduce some of the stress associated with moving into a new industry. From a supervisor’s perspective, any potential trainee needs to bring these skills to the table or the learning curve may be too steep to overcome.
The general public’s experience with appraisals is mostly limited to residential appraisals. The obvious difference between residential and commercial appraising is the format; residential appraising is form-based, whereas commercial appraisals are typically presented in a narrative format.
While software is increasing efficiency, the narrative format eventually requires the appraiser to analyze relevant market trends, explain adjustments, and credibly support conclusions. This is not to mitigate the work residential appraisers perform, only that commercial appraisers often deal with disparate data and must reconcile the evidence to support a credible value estimate. The ability to effectively communicate the rationale for assumptions is critical and strong writing skills are necessary if one is considering a commercial real estate appraisal career.
In my time hiring staff appraisers, the one item that most often is misunderstood is the time commitment. As with any career worth its salt, a new commercial appraiser’s initial time commitment can be a challenge. In particular, the time required to produce a report when a trainee is simultaneously learning to use proprietary templates, Excel and/or Word functionalities, and basic research guidelines, often results in the person deciding to move on from the profession.
My recommendation to anyone contemplating a transition to commercial appraising: be honest with yourself about your skill level. Not only will it give you the best chance at a successful transition, but you will also give your supervisor a better understanding of your areas that need support so they can focus on the appropriate areas. If not, the combination of an unfamiliar industry, the challenge of producing a credible valuation report, and the always omnipresent deadlines, will ultimately drive you away.
These areas are only a fraction of what someone stepping into the commercial appraising arena can expect to encounter. Despite the challenges, if you are committed to the transition and realistic about the timeframe in which the transition will take place, a successful career awaits you on the other side.
About the Author: Aaron DeCollibus is an MAI-designated appraiser focused on West Coast commercial real estate valuation and brokerage with his boutique firm, CJM Advisors, located in Seattle, WA. In addition to appraising, brokerage, and blogging, Aaron hosts a bi-weekly podcast, The Commercial Appraiser’s Perspective available on Apple Podcasts. In his limited free time, he can be found coaching or carpooling his three daughters to their various school and sports activities. Feel free to email Aaron with your questions or comments at [email protected].