Getting On Better Quality Approved Lists

In the five years from 2001 through 2005, getting business was relatively easy for new appraisers. Loan Brokers and many Mortgage Bankers, and Banks or S&L's doing wholesale business with both; were essentially accepting anyone with a license and insurance. 

For this reason, neophyte appraisers with a forms program template that was pre-programed to keep red flags out of the report, were able to build large volume businesses.  One California appraiser was found to have had 24 trainees, all of whom solicited their own business, and used his digital signature, delivered the reports and sent him half the fee.  The appraiser who rolled over on him admitted her share of the fee in 2005 was $320,000 but that she had four people working for her, two that went out and inspected the properties and comps and two that researched and packaged the reports. Everyone was happy.

Liberal appraisal review and underwriting prevailed. This was especially trued from 2004 onward. Money Magazine listed Appraisal as one of the Top Ten Jobs in 2004-2006. Ease of entry, flexible work hours, low costs of doing business were some of the things cited by the giddy appraisers who though they were getting rich slamming reports out with reckless abandon.

This mentality was promoted by the Prep Schools, who attracted tens of thousands to the field.  The number of licenses swelled by over 20,000 in less than 3-years during the boom years. Now, many of the most recent Trainee's are finding they cannot get work, even AL's are having a hard time, as more and more loan brokers and mortgage lenders failed in the last year than in the previous five years.

Now the tide had turned, appraisers are being Black Listed for doing exactly what they had been doing, and don't know why.

Appraisal reviews have tightened up as management became concerned.  Reports are being rejected, and in some cases, the appraiser does not understand why or how to fix them.  It might be that the property was never worth the appraised value, only now the report is simply not being accepted.

Having a client base of loan brokers or Sub Prime mortgage banking firms, is the bottom of the barrel in terms of fees, time pressure and value pressures.

Getting on better quality lists or on Preferred Appraiser lists takes a conscious effort, ethics and skills.  How does an AT or AL, who was never really trained properly, and who might not even know what Good Appraisal Procedures are, upgrade their game?

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Education is the name of the game. Here are some course titles that will help get one onto a path that will result in the ability to effectively solicit better quality clients.

• Advanced Residential Appraisal Procedures
• Market Analysis
• Highest and Best Use Analysis
• Advanced Sales Comparison and Cost Approach
• Rent Surveys and GRM Analysis
• Report Writing and Case Studies
• Financial Analysis and Statistical Analysis
• Business Ethics {not USPSP}

In addition, there are real estate courses offered from Junior Colleges, to Universities.  They typically include the following Real Estate Courses:

• Principles
• Practices
• Law
• Finance
• Appraisal
• Economics

Building an educational base, a broad based education in the field of Real Estate and Appraisal is a good thing.  It not only looks good on a resume and makes one more hireable, you actually learn things while obtaining the education.

Think of a Chief Appraiser looking at a sea of resumes, trying to figure out who was the most serious, who could be trusted the most, just based on what was contained within the four corners. I once looked at 257 resume and sample packages all from one state.  I found two honest appraisers, who worked together in one city. I told my boss to stay out of Texas.  He honored me, never even questioning why. Saved us from lots of losses too. That was in 1985. By 1986 we were hearing about Texas Bank failures, like Vernon and Empire S&L's. In 1988 he put me in for a $75,000 bonus for all the losses I prevented, simply by keeping them out of one State. That was then, we are in the here and now. Back to the point.

The resume conveys things to the reader beyond what you might think. At the Chief Appraiser level, many look for real education, not just appraisal prep-courses and CE seminars to maintain a license.

My admonishment to any who do not have a degree or professional credentials; spend your money on courses that count toward one or both. Make your money work for you beyond simply getting CE credits. The AI, ASA, NAIFA courses can be used for college credit, and credentials and CE credits too. Besides, courses cost less per hour than seminars do in general.

With as few as four real courses under ones belt, their awareness and their vocabulary begin to change.  Supply and Demand issues take on meaning after one has studied Market Analysis techniques.

What is learned in course work can be turned into a marketing tool by giving breakfast, lunch or dinner speeches to various groups that use appraisal services or rely upon appraisals in the normal course of their business. I have even given talks to Realtor groups.

Here is a good topic for them, "Sales Price and Market Value, Why they are or can be Different". Or you can give the same speech to a Bar Association meeting, by changing the Title to "Cross Examining the Expert on Sales Price verses Market Value as Defined", or "Using the Definition of Market Value to Impeach the Expert".

Ann Rourke, MAI, SRA in her 1994 book on Marketing for Appraisers, lays out a plan of action that is well thought out. I will list the Chapter Headings, but let you buy her book to get the good stuff.

1. Marketing is Not Selling
2. What's Your Image?
3. Developing Your Marketing Plan
4. What Are You Selling?
5. How Much Should You Charge?
6. How To Increase Referrals
7. Promote Your Business by Speaking and Writing
8. Increase Your Name Recognition by Advertising and Publicity
9. Personal Selling For Appraisers
10. Client Surveys Tell How You Are doing
11. Marketing to Lenders
12. Marketing Review Services
13. Marketing to Attorneys, Accountants and Relocation Companies
14. Marketing to Public Agencies
15. Marketing and the Business Life Cycle

You can buy her book on line at http://www.appraisaltoday.com/marketing.htm and she has a number of Free articles on Business Development.

AUTHOR: Steven R. Smith, MSREA, MAI, SRA, Smith Realty Advisors,  Redlands, CA, Real Estate Appraisals, Consulting, Expert Testimony, Forensic Reviews, Fraud Research and Analysis, Litigation Support.  All opinions expressed in this post are the author's and may not reflect those of the Appraisal Scoop blog.