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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