Will There Be Enough Qualified Appraisers in the Future?
By Charlie Elliott, Jr., MAI, SRA

The real estate appraisal business, like the rest of the mortgage industry, has been prospering in these days of low interest rates, but appraisal trainees, or apprentice appraisers as they are called in some states, have been, and continue to be, struggling, as a whole, to find enough work in order for them to become fully licensed.

Most of these men and women have no trouble getting enrolled in the proper initial training classes or even passing the standard state examinations based on the material taught in these courses. The problem comes once they pass those exams and become licensed appraiser trainees. At that point, they must make arrangements with a licensed or certified appraiser and perform appraisals under the guidance and supervision of that person.

That’s the hard part. The state or the school does not and cannot assign a trainee to an appraiser to work under. These prospective appraisers, more often than not, find it very difficult to hook up with a mentor appraiser, someone who will let them work under his or her guidance. Some appraisers say they do not like the idea of “training my competition.” Others express concern that the inexperience of trainees can cause them legal problems, due to the greater chances of inaccuracies of the appraisals.

Complicating the problem for appraiser wannabes is the fact that many, if not most, states are making requirements for an appraiser to become fully licensed even tougher. Some have increased the number of required classroom hours needed before becoming a licensed trainee. More importantly, some states have increased the number of appraisals that are required to be performed under a mentor appraiser. Furthermore, there are more restrictions these days on the number of trainees an appraiser can supervise and the maximum distance a trainee can live away from his or her supervisor’s office. Mentor appraisers are also expected to be present more and more on inspections by trainees.

Under these circumstances, it appears to me that it is entirely possible that one day in the future there could be a shortage of licensed and certified appraisers. There is not a shortage of people wanting to become certified, but the circumstances that I have described tend to discourage them and more often than not lead them out of the industry and down a different career path. This shortage could lead to higher fees charged by appraisers and longer waiting periods before the appraisals can be completed.

Trainees are often earning income below the poverty level as they work toward obtaining their licenses. The stricter rules regarding more input from a supervising appraisers are making the situation worse for those seeking a career in our industry. While a few appraiser trainees, might be making a decent salary, most are not. Most get a split of the fee, a split significantly less than that of a licensed or certified appraiser. And, if the trainee is in one of the many states that have required extra supervisory time for mentor appraisers, the splits could very well be lower for the trainee than they have in the past. When you take into consideration that a trainee takes longer to perform an appraisal than an experienced appraiser, it becomes obvious that a trainee’s earnings per hour is not very high.

I know of people out there who have offered to work for no compensation at all as an appraiser trainee just as long as they are able to get the work in necessary for licensing. I personally don’t like this idea, and I’m not sure it is even legal.

Trainee appraisers, in some cases, have to find part-time jobs in order to support themselves, and perhaps their families, as they try to break into a new career. Needless to say, many in this predicament get discouraged and move on to something that offers more immediate income.

Many states set a time limit on how long a trainee can spend to become a licensed appraiser. Usually the time limit is five years or somewhere close to it. The reasoning behind such a time limit is that, after such a length of time, the rules and regulations have probably changed so much that what the trainee learned in his or her original appraisal schooling may have changed to the point that it has become obsolete. Also, if it takes that long for someone to complete his or her licensing requirements one has to wonder about how serious that person is about becoming an appraiser.

Since it costs money to train an appraiser, just like it does to train anyone else in the business world, some appraisers insist that trainees sign a non-compete agreement before allowing these prospective licensees to work under them. Under these clauses, a trainee would agree to continue working under an appraiser for a designated length of time, perhaps five years, after he or she becomes fully licensed.

There are drawbacks to non-compete agreements for appraisal trainees. Such an agreement suggests that an appraisal company loses money on a trainee, even with the adjusted fee-splits, but it doesn’t do that company any good to have a disgruntled, frustrated appraiser on its hands if that person feels that he or she is unfairly bound to the company that provided the opportunity for his or her licensing, particularly at a low fee split. After all, animosity not only takes its toll on a company’s bottom line, it also makes the work place a less pleasant place to be no matter what industry you are in.

Now, I’m not saying we should weaken our standards, but we do appear to have a dilemma here. In fact, the strict standards could actually backfire on the quality of people entering the real estate appraisal industry. After all, if appraisal trainees have such a tough road to hoe, won’t this discourage qualified people entering this industry?

I think it will. Furthermore, I think the problem will get worse before it gets better.

Charlie W. Elliott, Jr., MAI, SRA, is President of ELLIOTT® & Company Appraisers, a national real estate appraisal company. He can be reached at (800) 854-5889 or at charlie@elliottco.com or through the company’s Web site at www.appraisalsanywhere.com.