"You’re an appraiser… what do you do? Why do you do it? How do you become one? What opportunities are there?” These are four questions which are both common and typically asked in conjunction with one another.
An appraiser provides an opinion of value on a property utilizing market data and financial analysis. For most properties, this is done by one or more of the following techniques: Sales Comparison Approach, Income Capitalization Approach and Cost Approach. Why would I pay more/less than the property which just sold down the street (Sales Comparison)? Which property offers me the best return (Income Capitalization)? Why would I pay more for an already-built property when I can build the same property for less and exactly the way that I like it (Cost)? These are some of the major questions that appraisers have to answer for every assignment.
There are many “intended uses” for real property valuations; some of which you may not know existed. The most common use is for mortgage lending purposes. Have you ever purchased a house or an investment property? Chances are that you’ve encountered an appraiser during the lending process. They are an essential part of helping the lender to understand the pledged collateral and structuring a loan package. The mortgage lending industry is a large part of the American economy and appraisers play a crucial role in that industry. However, what about the intended uses that many may not know about? Property tax assessment appeal, estate planning, pre-listing guidance, financial reporting/purchase price allocation, PMI removal, condemnation, divorce, partnership dissolution, investment decisions… these are just a few of the myriad uses for real estate appraisals. Additionally, we perform these valuations for mortgage lenders, insurers, REITs, pension funds, attorneys, accountants, financial planners, investors, buyers/sellers, corporations and individuals. Are you unsure about how an appraiser can assist with your valuation needs? Ask us!
As with most licensed professions, the following are critical elements in the successful navigation to a chosen career in this field: education, experience and competency. Depending on your desired career path (residential or commercial valuation), there are different valuation-related educational (200 hours residential, 300 hours commercial and a national exam for both) and experience (2,000 hours residential, 3,000 hours commercial) requirements. The experience requirements, known as your “trainee” time, need to be satisfied under the guidance of a certified appraiser who will serve as your “mentor” during this process. Competency, however, isn’t something which is satisfied by the completion of an exam or by a fixed number of hours. The appraisal profession is one which necessitates continuous learning, adapting and updating of one’s skillset in order to perform your duties competently. Additionally, ethics, another key component in real estate appraisal, goes hand-in-hand with competency during a person’s career. Therefore, make sure that you keep up with the latest trends, laws, and events in real property valuation!
We are often asked two additional questions: “have you appraised anything interesting” and “what do you like about your job”? We have appraised unique properties such as: a national monument, golf courses, fractured condominiums… we’ve even appraised an easement between two neighbors’ houses! We never know what kind of assignment will come in next and we always need to be ahead of the curve to serve our clients’ valuation needs. Another great facet about our job is flexibility. With both of us having young families, we can be there to get our kids off of the bus, go on a hay ride during a field trip or see the school play. We also make time for the off-the-cuff round of golf! In other words, we try and play as hard as we work. To that end, our income is directly related to how much we work or produce so that gives a clear incentive to work hard. We have both found that the real estate valuation world has provided the best possible work-life balance while offering interesting, plentiful and ever-changing work. Finally, due to the variety of users and uses of appraisal services, we had job security even during the market crash of 2008. Banks needed to better understand the value of their declining portfolio collateral and appraisers were right there to assist! By applying the economic concepts of supply and demand, it is clear that there is a healthy demand for appraisers while the supply is on a decreasing trend. The decreasing trend is primarily due to the increasing age of the average appraiser, a figure which is now in the low 60s. However, with the proliferation of online education, more possibilities to work remotely and the advancement of relaxed regulations regarding licensure, we believe that there is an opportunity now more than ever for students as well as professionals who are looking for a transition into a second career.
Finally, as members of the Candidate Guidance Committee for the Philadelphia Metropolitan Chapter of the Appraisal Institute, we have visited multiple Philadelphia-area campuses to speak about the appraisal industry to the “next generation” of real estate appraisers. To date, we have visited: the University of Pennsylvania at Wharton (graduate and undergraduate), Temple University, Lehigh University, Saint Joseph’s University and the University of Delaware. These visits have translated into additional opportunities to speak in front of groups of real estate students and professionals. We have found a palpable increase in interest in the appraisal industry as a result of this endeavor and we are always looking forward to making connections whether you’re coming out of college or looking for a second career!
Ed Falkowski III, MAI, SRA is associate director of Valuation & Advisory with Cushman & Wakefield.
Walt Krzywicki is director - certified general appraiser at Benchmark Appraisal Group.