Monday, July 22, 2013

Specialized Training - Part 3

1.
Life of Learning

In the previous chapter, we covered the introductory education process.  The process can take a couple of weeks to several years depending on how hard you hit your education, but the process does not stop there.  We have already discussed that certified residential appraisers are required to have a minimum of 200 hours of approved appraisal education, but general certified appraisers are required to have 300 hours. 

Each year, appraisers are required to take a minimum of fourteen hours of continuing education (CE).  Continuing education can consist of re-taking classes you have already had, or they can be classes for advancing your certification (i.e. - residential to general certification).    When you ask someone who you consider to be a professional, “How much training do you do?” and they answer you by saying, “Oh, I just do the minimum” this does not inspire confidence.  True professionals make learning a life-long goal.

A professional appraiser will benefit from more than just appraisal education.  As I think about my daily routine, I interact with people and financial institutions, perform general business duties, draw on my appraisal knowledge, deal with the legal system, and use a wide array of computer skills.  When you think about it, that covers the human resources, legal, finance, real-estate, information technology, and business management fields.  That is a lot of learning you can pack into a life time, not including the type of education you receive from on-the-job training and learning from your mistakes and the mistakes of others.  We will be covering some of the specific skills needed in the business environment in a later chapter.

As a part of your appraisal education, you will have the opportunity to pursue credentials from institutions that promote best practices and above-average education.  Credentials allow other people to perceive that you are not just an average appraiser, that you take your profession seriously, and that you go above and beyond the minimum standards.  Some of the credentials you may be interested in are: MAI, SRA, SRPA, and ASA to name just a few.  Credentials require meeting their individual requirements for education, experience, and some kind of a fee.  Speaking of fees, study the requirements, benefits, and do not waste your money!  A good friend of mine recently told me that he allowed several of his credentials to expire because they were not worth funding each year.  Keep in mind that some credentials cover very specific fields within the appraisal industry.  Some of these disciplines include business, agriculture, economics, and investing. 

Independent, Impartial, Objective

Lastly, I want to cover one of the most critical soft-skills that you will need to develop early or it can get you into a lot of trouble: the ability to remain independent, impartial, and objective (IIO).  Remaining IIO is a USPAP requirement, and it is one of the foundations to our industry.  Why is it so important?  I am glad you asked.

When we are engaged by our clients to render an opinion of value on a piece of property, it is because they need an educated opinion to aid them in making a decision: to lend or not to lend.  If we allow ourselves to be influenced and favor a particular side of a transaction, then we have not fulfilled our duty to our client to give them information that allows them to make a sound decision.  We have ceased to be objective, and we are now advocates.  Advocacy has its part in the industry, but not when we are asked to render an opinion of value in a financial transaction.  Let me explain it in a real world situation.

John and Jane have repeatedly taken equity out of their home through refinancing.  Now the market has turned and their bank account is getting tight.  So they try to refinance their home again through a local mortgage company that will send the loan to the secondary market, which is where you are called in.  While inspecting the property John and Jane mention several times that the property has been recently appraised for $xxx,xxx, and they just have to have it appraised for more than that.  After doing your market research, you discover that John and Jane’s subdivision has noticeable depreciation over the past several years.  So here is your dilemma, you can make the home-owners and the mortgage company happy by cherry-picking sales and allowing the lender to loan money on a property that has an inflated value, or you can fulfill your obligation to your client and call it like it is.

Remaining IIO will result in tough decisions, nasty calls, and occasionally losing clients, but it is the right thing to do.   Here are a few ways to remain IIO: do not get emotionally involved in the transaction, do a thorough market analysis, and ask yourself at the end of the appraisal, “Do I believe this opinion of value?” 

Thanks for reading.  Stay tuned for the next installment where we will discuss what to expect once you get your certification.  

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Monday, July 8, 2013

Appraising The Situation - Part 2

1.

Supervisors 

So the appraisal industry sounds like something you would like to get more information on, where do you go now? Well, the first place is start talking to appraisers who able to take on apprentices.

 The supervisor’s job is to continue your training once you have completed your entry-level training and exam. They will be with you on your first inspections, guide you through the valuation process, help you complete your reports, and hopefully teach you how to be a professional in the field and in the office.

You should interview several appraisers in areas in which you will consider working. The interview process will be educational in and of itself because it will expose you to a variety of office policies and supervisor styles. Be sure to ask about goals; employment contracts; who pays for resources, errors & omission (E&O) insurance, highs and lows of the work cycle; equipment; weekly meetings; if your work is provided by the supervisor or if you must come up with your own work; coverage area; access to work files; pay; and how termination will be handled. I must warn you at this point, that finding a supervisor may be harder than it sounds.

I have heard several appraisers say, “Why would I want to train my future competition?” which is a valid point. Many appraisers get comfortable working in a specific area and have a small customer base. The amount of work that these appraisers typically get would be diminished if a new appraiser suddenly shows up in their market. My suggestion to this situation is simple: don’t seriously talk to these about a supervisor role.

Instead, look for an active appraiser that is fixing to retire. There are two advantages to this. First, they are more willing to pass along what they have learned to a trainee. Second, they have a huge amount of experience in which you can learn from.

 Licensing 

So you have talked to a couple appraisers, some may have been open to your proposal, some may have said, “Come back after you have your license and then we’ll talk.” You have now come to a point in the road where you will have to invest in your future. Most supervisors will ask you to pay for your own training, but they might point you to an education provider. I won’t be suggesting education providers here, but keep in mind that most states have some type of core class that you can take in a matter of a few weeks. The alternative is to take the classes over a long period of time.

These classes will introduce you to the basis of the appraisal industry. Some of the topics that are covered are the origin of property rights, types of valuation methods, finance, technical writing, and much more. Once you have completed your entry-level training and passed the associate level exam, you are now ready to get into the field with your supervisor. According to the Appraisal Qualifications Board (AQB), a residential trainee must have 200 hours of appraisal education, and 2500 hours of related work experience under a supervisor(s) before you take your certification exam. Your entry-level exam from your education provider, the associate level, and the certification level are the three exams you will have to take to become a full-fledged appraiser.

1. http://www.modernmanagers.com/Portals/2/iStock_000003537496Small[1].jpg