Author: Woody Fincham - http://www.woodyfincham.com - Woody was one of the founders and the managing appraiser for FM & Associates. He has worked as a fee appraiser for 8 years for various firms, most recently with Braun & Associates in Maryville, TN. He is now an appraiser with the City of Newport News Real Estate Assessor, and performs private fee work with F&M Associates in Virginia Beach, VA. Woody is a Certified Residential Appraiser in Virginia and Tennessee. Woody is also a Member of the a la mode labs project
To Become Designated or Not.
Should a designation be the goal of residential appraisers? If you ask several appraisers, you will get a bunch of different answers on this topic. When lurking over at appraisersforum.com, it can sometimes be comical how polarizing the topic of designations can be. Normally these conversations degrade into one side trying to out-insult the other. I wanted to summarize some information in one place regarding designations, and the benefits of earning a designation.
What Designations are Available?
Several organizations offer real property designations in the United States. The largest five are comprised of the Appraisal Institute (AI), the American Society of Appraisers (ASA), the American Society of Farm Managers and Rural Appraisers (ASFMRA), the National Association of Independent Fee Appraisers (NAIFA), and the Royal Institution of Chartered Surveyors (RICS). The AI has the most recognized designations in the USA: the SRA and MAI. The next three, ASA, ASFMRA, and NAIFA, are somewhat smaller organizations, but are all equally recognized within the industry. RICS is not as well known in the USA, it is originally from the United Kingdom.
All of the major five designations require specific classes, exams, real world experience and demonstration reports. Each designation earned shows that the appraiser has taken education that far exceeds the education of most licensed or certified appraisers. Many appraisers attend private schools that offer education that is typically less quality. The mentioned organizations have, arguably, the best appraisal education available in the United States. Designated appraisers also agree to be held to the standards, that they hold membership in, respectively. These standards are beyond the normal standards set forth by USPAP. A designation can be removed by the respective organizations if the member is found to not meet the standards, whether from maintaining CE to conduct unbecoming in practice.
Below is a chart that shows the essential differences between the SRA designation requirements, and a typical certified residential appraiser. I am using the SRA for the comparison, because it is the one that I am most familiar with. The other organizations have similar paths to designation.
* The education must include the appraisal curriculum overview every cycle. This course allows designated members an opportunity to look at new theory and practices as they develop.
Looking at the requirements one notices the small difference in classroom hours, the demonstration report, the continuing education and the experience hours. While it is possible for a non-designated appraiser to have taken all of their education from one of the five organizations, the biggest difference rests with the demonstration report and the continuing education. The demonstration report or acceptable alternative allows the appraiser to show case his or her ability to research and report value utilizing the proper techniques and procedures that are contemporary at that time. Once again, the continuing education must be from a quality provider, most often the organization that the designation was earned from.
What is the Big Debate Amongst Appraisers?
As I mentioned earlier, appraisers in general have a mixed response as to whether designations are beneficial or not. Depending on whom you ask, you may get a flowery reply, or you may get a very cynical reply. Asking a designated member about the benefits of earning a designation will usually result in a very positive response. If you were to ask a seasoned non-designated appraiser (meaning an appraiser who has been active for more than 10 years), the answers are normally very scattered, but are often backed up with strong opinions either way.
I have had the pleasure of being able to attend various industry functions all over the country. In doing so I have met numerous appraisers, and this topic often arises. I have been surprised more than once by the replies that I get.
Here are some of the negative things that I hear:
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- “It depends...if an appraiser wants to be an employee of the lender, a designation is often helpful in getting hired.”-anonymous
- “I only do bank/mortgage work, and the lenders could care less.”-anonymous • “Designated members are just part of an ole boys club. Why would I want to join that?”-anonymous
- “Why should I waste my time and money on something that will not net me more money? I have plenty of mortgage use work.”-anonymous
Here are some of the Positive things that I hear:
- “The path to designation provided far more education, and it exposed me to a great number of people whom I still consult.”-Danny Wiley, SRA, IFA
- “Acquiring a designation is not only a personal career goal, but is imperative to my future. …obtaining a designation will set me apart from the competitors. Designated appraisers are held to higher standards given the rigorous educational and ethical backgrounds required to earn the designation.”-Emily LaFrance
- “…the connections made along the path to designation are invaluable. I still chat regularly with folks I met in my 101 class over 25 years ago.”- Danny Wiley, SRA, IFA
- “My mother taught me to acquire any type of license or designation that you think will help you in the future, even if you may not need it in the current period. Regardless of how close or far away you are to receiving a professional designation, work towards receiving it. Securing a professional designation says to potential clients that you are not satisfied with the status quo.” –William Whitley, SRA
What are the Benefits and Negatives of Designation
Prior to licensing, designation was an effective way to find appraisers that were properly trained. Once licensure began in the 90’s the playing field for non-designated and designated appraisers was leveled. Now it seems that all that is necessary for most mortgage lending assignments is that you are licensed or certified whether you hold a license or not. Whenever there was a boom in business, it appears anyone with a desire to pay for local real estate appraisal classes would be passed through to receive their license. Designations now mean more to the non-lending world, but that is something that should perhaps change.
Like you, I know several appraisers without designations that do quite well for themselves. I bought into the belief that designation would not benefit me at all, a belief that I have since reconsidered. The last several years were very good to me and to most of you as well. With the recent HVCC and the apparent flight to BPOs in lieu of appraisals for lending use work, many appraisers are questioning their continuance in the profession. Designation seems a foreign concept, as it seems hard to understand that designation would benefit you in a down economy. Ken Chitester, Communications Department with the AI, told me in an interview that the number of designations earned annually has stayed steady the last few years.
“Now is the time to earn your designation. Even if times are slow and income down, you should consider taking the classes to become designated. It may be a sacrifice now, but it will pay off in a short period if you will make the decision to go forward. “-Sandra Adomatis, SRA
My own personal journey in the appraisal industry was changed when I decided to close my office and take a job with David Braun, MAI, SRA in Maryville, TN. I was burned out on running an office and the mountainous beauty of east Tennessee enticed me to give it a go. David and I had met while working with the a la mode labs project. Working with him gave me insight into how different designated appraisers work versus the average appraiser. I had already completed several of my classes on my designation path, but seeing the respect that David received intrigued me.
The biggest revelation was the high amount of non-mortgage use work we received. Within my first six months, my average fee per appraisal assignment increased significantly, although my volume was down. I moved from a larger MSA (Virginia Beach/Norfolk are of VA) to a much smaller real estate market (Knoxville MSA). This worked out well in my mind, as I was doing higher priced work and felt better about my earning potential per assignment.
I hear similar stories from other designated appraisers. Many appraisers have a business plan that almost focuses entirely on mortgage use assignments. The truly successful residential are more diversified in their assignments. They are busy with other types of users, and are happier for it. This appears to be the dividing line as to whether an appraiser feels designations are worthy of the pursuit.
Appraisers who do mostly lender work, typically see little value in pursuing a designation of any kind. It seems these appraisers, for the most part, have settled for one of the most difficult markets to compete within. This market is over saturated with appraisers of all kinds of quality. There are some good, non-designated appraisers out there. There are also some very poorly trained appraisers out there.
Lenders do not normally pursue designated appraisers actively to do their work. I am not sure why that is exactly, but it sounds like it would make a good article. Perhaps we can explore that topic later on. While there may be lower value to an appraiser to have a designation that only does lender work, having one does establish you as different. I do have some lender clients that recognize appraisers with initials behind their names often are the leaders of the pack.
“If you keep doing the same old thing, you’ll get the same results. The designation will help keep times more stable. If you plan to be an appraiser planning on working for lenders, you may find yourself out of a job in the near future. Making the sacrifice to become designated is like buying insurance for your future”.-Sandra Adomatis, SRA
Lawyers, accountants, government offices and astute consumers look for designated appraisers. These users need experts that are vetted through accredited means and through expertise. A good attorney knows that designations do carry weight in the courtroom. Attorneys get the opportunity to watch appraisers give testimony and see whether the appraisers can support their reports.
If you are an appraiser that wants to work for a private company such as a lender, government office or other non-fee type position, designation does set you apart from the pack. This is especially true if the position you seek is handled mostly by a human resource professional. These professional resume readers look for distinctions amongst applicants, and would note any added education or designations.
Conclusion
Designation is not for everyone. You are not a bad appraiser if you do not pursue a designation. Working towards and obtaining one does show your dedication to the profession. It does underline your commitment to be on the cutting edge. It will open additional opportunities to you, especially in the non-lender world.
I can honestly say that even if I stop right now, and never get my designation, I am a better appraiser for having taken the classes that I have. The best class by far was “Advanced Residential Applications and Case Studies/Parts 1 & 2”, with the AI. Sandra Adomatis taught it and she did a superb job. The biggest insight to my personal workflow was a surprise. The course forced me to focus not on what I did well, but where I needed the most improvement. I feel that I am more rounded as an appraiser because of my experiences with my designation path; I believe I am writing work that is more defensible.
Author: Woody Fincham - http://www.woodyfincham.com - Woody was one of the founders and the managing appraiser for FM & Associates. He has worked as a fee appraiser for 8 years for various firms, most recently with Braun & Associates in Maryville, TN. He is now an appraiser with the City of Newport News Real Estate Assessor, and performs private fee work with F&M Associates in Virginia Beach, VA. Woody is a Certified Residential Appraiser in Virginia and Tennessee. Woody is also a Member of the a la mode labs project
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