As webmaster for the American Society of Appraisers’ New York City, New Jersey, and Philadelphia Chapters, I see a lot of mail from aspiring real estate appraisers looking for advice about income potential, courses, requirements, and sponsors. What I see there is echoed on my public service Real Estate Forum of New York and in the inquiries fielded by the real estate appraisers whose websites I built and maintain.
Oversubscribed Field. The long and the short of it is that there are a great many folks who think they’d like to be appraisers — some right out of school, many tiring of real estate sales, some looking for a “retirement” career in a field dominated by sole practitioners. But there aren’t many openings. Or to put it more bluntly, despite glowingly optimistic pitches by real estate schools, there is a glut of real estate appraisers nationwide.
Old Appraisers Just Keep on Trucking. The glut has nothing to do with the elusive “real estate bubble.” What it’s about is technology, technology, technology. The first technology is medical technology. Real estate appraisers, like everyone else, are living longer because of advances in medicine. And, because the work isn’t physically taxing, they don’t retire until they hear the peals of Time. When you’re self-employed and earning a modest to middling income, early retirement is usually not an option.
Computerization. The second factor in the glut is the computer technology that makes it possible for today’s real estate appraiser to produce more and better reports in less time than ever before. The pace of property inspections is accelerated by laptops, PDAs, GPS, digital cameras, and electronic measuring devices. Comparables (data on properties similar to the subject property) are widely available online from Assessors Offices, from specialized companies like COMPS, Inc., and by database exchange with other appraisers. And report-writing itself — with embedded photos, maps, computer-drawn scale floor plans, fast editing, and transmission by email — benefits from widely available low-cost, high-speed PCs and superb dedicated software, such as that from a la mode. The result: appraising capacity has increased exponentially over the last few years with no increase in the number of appraisers.
AVM: Automated Valuation Model. But more than anything else, the “oversupply” of real estate appraisers is due to the diminishing demand for these professionals. Ask Arleen Goscinski who does residential real estate appraisals on Long Island. A skilled appraiser at the top of her profession — she’s a past President of the Long Island ASA Chapter — she reports that inquiries from aspirants looking for a sponsor are way up, while those from clients looking for an appraisal are flat to down. Why? Because banks and other financial institutions have learned that the widely available property databases coupled with computer-generated appraisals — Automated Valuations — can approximate residential market values closely enough to be relied on in most cases. Why pay an appraiser when you can do it in-house with the click of a mouse? AVMs, then, are the third technological factor.
It’s Everywhere. What Arleen experiences in Nassau and Suffolk Counties on Long Island, others find true in the Bronx, Westchester and Rockland — downstate New York areas. Many have branched out into property tax consulting — tax grievances for homeowners — to boost their mostly residential real estate appraisal business.
Commercial Appraisers Fare a Little Better. Although their colleagues’ longevity and the computerization of appraisals impacts commercial real estate appraisers, too, they haven’t been assaulted by AVMs — yet. Commercial properties are much less homogenous than residential — making it harder to build adequate valuation algorithms — and the method of evaluation requires income and sales data that are not widely available. So past President of ASA’s NYC Chapter, Ronald M. Gold, who appraises commercial properties in Manhattan, and ASA Regional Governor, Timothy Griffith, who concentrates on commercial appraisals in New Jersey, Pennsylvania and New York states, aren’t battling AVMs, but they aren’t taking a lot of Caribbean vacations, and they’re both happy to take on residential appraisals that they might have farmed out in the past.
Expert Witnesses. Experienced real estate appraisers who are not only state-qualified — all real estate appraisers must pass muster in the states where they practice — but also accredited by a professional organization with high standards, such as the American Society of Appraisers, stay in business, in part, because they’re in demand for legal proceedings. Appraisers like Arleen Goscinski, Ronald Gold, and Timothy Griffith, are qualified by the courts as expert witnesses, and are called upon to render opinions in matrimonial actions, business dissolutions, and cases involving property and income taxes. But if you’re just starting out, expert witness fees won’t be part of your income for the first 5-10 years.
Suggestions for the Determined. If you’re still determined to make a career in real estate appraising, despite the overwhelming odds, may I make a few suggestions? First, make sure you can make do without any appreciable income for several years as you train and complete your apprenticeship. Second, don’t stop once you’re qualified as a residential appraiser, but keep going and get your commercial license. Third, join a professional accrediting society, which will keep you abreast of developments, furnish valuable credentials, and offer business networking opportunities. And, if you can, stay away from major metropolitan areas, where the well-groomed property databases in highly automated Assessors Offices make it easy for lenders to rely on AVMs. Oh, and good luck!