According to a recent survey conducted by the Appraisal Institute, “trainee hiring will remain relatively weak for the next one- to two-years.” Um, I hate to disagree with the results of what I am sure is a credible survey, but this is just a gross underestimation. One-to two-years? How about FOREVER unless something drastically changes in our industry?
Most know me as a fairly optimistic voice in the appraisal world. I am not usually one of those on the sidelines calling “foul” at every supposed indiscretion and ‘unfair’ practice that is thrust upon us. Instead, my attitude is generally to roll up my sleeves and work to either fix the problem or find a way to prosper despite the disadvantage. However, there is a growing issue that cannot be hidden under a bushel any longer without some very dire consequences for real estate appraisers across this nation, and eventually the industry as a whole. The industry in general is increasingly making entry into the profession more difficult and closed to growth. The problem at hand is two-fold: First, there is no financial incentive for new trainees to enter the field. Second, there is no financial incentive for current appraisers to bring others into the field.
Barriers for a trainee to enter the real estate appraising profession are growing insurmountable. I have heard many explanations for why this is, but frankly, they are all secondary. If you ask me, the big reason is a combination of an overreaction to the ‘housing crisis’ and current appraisers (some sit in powerful positions) trying to protect their own jobs. In the end, it is doing the profession a disfavor. Some appraisers look at this as a positive thing (a shortage of appraisers means higher fees, right?), but my view is much different. Artificial hurdles stifle free-enterprise and economic principles are thwarted when that happens.
The bigger problem here is the self-interest of the appraisal business owner. In the ‘good ‘ol days,’ I could hire, train, and send employees out in various directions doing inspections. If they were well-trained and watched over closely, this meant more volume and the ability to serve my clients on a higher level. This is no longer the case. While USPAP, the AQB, and Fannie/Freddie still allow trainee inspections, lenders and AMCs don’t. What financial incentive do I have to hire, train, deal with all that comes with having an employee, and pay an individual if they are not even allowed to work in a way that provides the best support and value to me—the business owner?
In the end, the future for trainees (and for current appraisers for that matter) is grim. Until we stop shooting ourselves in the foot by limiting the ability for new appraisers to enter the profession and removing the financial incentive to train, the outlook for hiring trainees will be grim for more than just the next few years.
Now, go create some value!
Dustin Harris is a multi-business owner, but he has found most of his success as a self-employed, residential real estate appraiser. He has been appraising for nearly two decades. He is the owner and President of Appraisal Precision and Consulting Group, Inc., and is a popular author, speaker and consultant. He owns and operates The Appraiser Coach (www.theappraisercoach.com) where he personally advises and mentors other appraisers helping them to also run successful appraisal companies and increase their net worth. His two-day workshop will be held on Oct. 7-8, 2013 in Salt Lake City.
He and his wife reside in Idaho with their four children.
12 thoughts on ““Hiring of Trainees to Remain Slow.” This is ‘Shocking News?’”
Dustin,
I am a apprentice commercial appraiser and our company echoes these concerns. I am very fortunate to work with a fantastic company that has agreed to pay me a modest salary for my work as an apprentice.
“lenders and AMCs don’t”. Well, those are the bullies that are strategically forcing the appraiser industry’s hand. How are Banks and their lackey’s (the AMC’s) allowed to ignore FMFM/USPAP et al from disregarding their intentions, rules and reg’s? Funny/ironic how those players are on the USPAP board! This is simply a way to eliminate Appraisers-period. This extraction model works well in most professions and industries. Appraisers are the ones with the red stapler working in the basement now. So agreed, just a matter of time.
Unless, things change, the only new appraisers will be the children or very significant friends and family of current appraisers. There is almost no benefit and and significant cost and risk to hiring a trainee. My son is set, so he won’t be an appraiser, my daughter is a psychology major in college, so she may need to be, but I am praying that she won’t. I can’t imagine who else I would train, unless after a few years of service an assistant really wants to. The possibility exist that banks or AMC’s with staff appraisers may start to hire trainees.
I agree 100%; I’d love to hire a trainee but, it would result in a decrease in my own production/income until the trainee became fully licensed. And then the second hammer hits; I will not be able to carry him or her as and employee because of the overhead (hard to work out of a home office with employees) and retaining him/her as an Independent Contractor may work in the short term but, they will eventually go out on their own and my investment in training them will no longer provide a return on the investment. I see a future of less and less large appraisal shops and more self-employed appraisers working out of a home office. Maybe there is a future in running an Appraiser School where a qualified appraiser can train a large student body that would provide sufficient income to the trainer to offset his lose of income from appraising.
Work is slow for me. I did 3 jobs in two weeks. I tried to get higher fees (above $275.00). When work was busy a couple of months ago. I turned down multiple jobs that paid $250.00 – $275.00 for rural homes. Rural homes have outbuildings and acreage, much more time consuming then track homes. Not one of those jobs came back with the higher fee. NOT ONE. I was then put on the “back burner” for most of the amc’s that I had requested higher fees. That tells me that there is an over supply of appraisers right now. NOT A SHORTAGE. There is an oversupply of appraisers willing to work for peanuts. This is what is hurting the “full time” appraisers. I had an amc cancel a job after the inspection ( I had asked for $25.00 more) after I saw the manufactured house. The amc cancelled the order and refused to pay me for my time. WOW…Shortage of appraisers? not here…
I am a second generation appraiser celebrating 21 years in the profession. The trainee will help kept your sanity & help with workload. I have hired many, some work some don’t, some stay some don’t but WE gotta keep pushing & growing this profession. Trainees can be Office help-managers before they they go on inspections/then go on SOME inspections with you they are great at taking photos talking to borrowers while you work on your inspections/type in appraisals for you to look over/they are there to help your business flow. They will help make their income. It is not healthy to work alone & work LONG crazy hours & the one man shows are done(sometimes you guys are embarrassing my Dad agrees with me(He was a one man show) now he drives for me some & he tells everybody that I have carried it so much farther so I dont want any hate emails,etc.) We gotta fellowship with other appraisers,realtors, lawyers & people. WE ARE PROFESSIONALS! We also need to try hiring appraisers not just trainees.
OUR FEES:Some areas are different about fees but if some companies wont pay find new ones that will pay the key is find the companies that flow with your business the best. It is ok to do an appraisal for $250-$300 if the company is supplying good amount of work & great borrowers to work with & great underwriting. If the company has many PAINS try others companies that appreciate your hard professional work. Appraisals should range from $300-$400.00(my opinion). We dont need to price ourselves out of a job but we need to be high enough to make a living, we need good equipment, & put some back for savings & retirement,etc. If the property is a hard one or takes longer or further in distance,etc charge more or DONT complain about doing it. It sounds corny but think out of the appraiser box try something new until it works. Come on guys be united because it feels so good & go create some value thanks coach!
Hi Dustin, Down the road, there will be a shortage of certified residential appraisers. When the next bubble hits, the Banks will cry that the work needs to be done, for the good of the consumer. Let the banks do the appraisals using all of the information that is being gathered and their AVM’s. Congress gives the OK. Voila, no appraisers needed and total controll for the Banks. Think about it. Ken M.
sadly, things have become so complicated why would anyone in their right mind want to get into this business. I had a reasonably intelligent person come to me looking to become a trainee and get licensed, when I started showing him the reporting process he could believe the amount of work that went into it. We went together to a basic educational class, as I was thinking we could discuss things on the way and way back,( and I could get C Ed) I couldn’t believe the general sentiment in the class after a few sessions, same ideas from most, too much for too little money. I have been in the business for 27 years and really have evolved into this lengthy reporting, but I understand why someone would look at it and not want to get into it. ( my trainee passed the police exam and now has a secure job, with benefits). I have had others call me on the phone, send copies of their resumes (one guy sent one, almost half the words were spelled wrong). It just doesn’t seem like it is attractive enough for someone to want to put the time in. I became an appraiser in 1986, before licensure, when licensure came in I was all for it, but thought at the time (1992) that it would create problems for new people, I guess I was right about that.
I can’t believe there are areas of the country where it is still difficult to get steady work. I have all the work I can handle and I turn down more work than I accept. Its been that way for the past couple of years. Most of my fees are between $300 and $325. No AMC got rid of me when I asked for higher fees. If you don’t have enough work sign up with 20 or 30 more AMCs until you get enough work. I look forward to there being fewer appraisers. We have lost 21,000 appraisers in the last five years. As a result, every year my fees have increased. In a few more years when there are fewer appraisers, I expect I’ll be making $400 or more from AMCs. The AMCs took advantage of the appraisers for years, but soon the tables will be turned. By the way I have one family member as a trainee. I don’t believe I would train anyone who wasn’t family.
THERE ARE WAY TOO MANY APPRAISERS IN THE INDUSTRY. ANY TIME YOU CAN PUT OUT A $275 APPRAISAL AND IT IS GONE IN LESS THEN A MINUTE, THAT TELLS YOU ALL YOU NEED TO KNOW. THE INDUSTRY WAS SATURATED WITH TOO MANY APPRAISERS IN THE FIRST PLACE WHEN REQUIREMENTS WERE LOW. THE NEW STANDARDS ARE GOOD FOR THE APPRAISER….NOT GOOD FOR AMC BOTTOM LINE.
Thanks for the article! I’m currently looking for a supervisor before I begin the education requirements but have had no luck. “Not looking to bring on a trainee – you’ll be my competition – my son is training, etc”Has there been any progress with the PAREA program (virtual training)? Any suggestions would be greatly appreciated.
By the time you calculate all your operating costs in and the multitude of hours you spend on completing a “good” appraisal, you can earn more money working at In-and-out burgers. For the lenders, it’s all about liability. The mortgage industry simply doesn’t want to shell out just compensation for an appraisal. They just need an appraiser’s signature to take on the liability of what Fnma requires of what that market value is or isn’t. They are the ones that are controlling the compensation to appraisers. The amcs are just bottom feeders looking to capitalize on the situation. Amcs typically take a 25% commission out of your appraisal fee just for assigning and reviewing the appraisal. It’s a big scam. Amcs are no longer needed in the industry as long as the “Appraisal Independence” clause exists. Until the lenders are willing to stick up for appraisers and give them similar pay as to what the loan officers are earning on each loan, there will always be a shortage of slave waged appraisers. To bring an appraisal fee up to current living wages, the minimum fee should start at $1500 and go up from there. Once such fees are initiated, there will be a flood of new appraisers coming into the industry. It’s as simple as that. It’s funny how no one seems to mention, nonetheless even get this? Oh… since the appraiser coach and many of the commentators on here are either mortgage or amc industry lobbyists… um, you will never get the truth as I’ve explained here.