Carol Urps wants to become a real estate appraiser. She thinks that she will like the work and that it will give her the flexibility she needs with two young children at home. After she finishes taking the 90 hours of required classes, she will spend two weeks studying for the state licensing exam for appraisers. She may pass, she may not (there’s a 40-60 percent pass rate.) If she doesn’t pass the first time, she will continue to take the exam until she passes. She’ll start interning for a licensed appraiser and then, in a couple of years, she may even be able to start earning a living as an appraiser.
The economy may not be booming, and a lot of people may be out of work. However, one group of people is busier than ever. As interest rates keep dropping, more and more homeowners are realizing that they can either purchase another house or refinance their existing mortgage, keeping realtors and mortgage lenders busy. It has also turned the world of real estate appraisal upside-down.
Yet, anybody who thinks they can become an appraiser overnight is fooling themselves. The commitment, both in terms of time and money, is substantial and not for the impatient. When all is said and done, it can be the perfect job, but knowing what’s required beforehand is critical.
There are those 90 hours of classes are required before one can take the state licensing exam. These courses are given at several local institutions (see separate story for details). Cost of these courses ranges from $850 to over $1,000.
THE DEMAND FOR appraisal classes has increased significantly in the last couple of years. Dan Geary, former president of the Appraisal Institute, said that there is a shortage of qualified appraisers, noting, “When times are good, people jump on the bandwagon; when they’re bad they jump off.”
At Northern Virginia Community College, there has been an upsurge in enrollment for appraisal classes students, from 28 students to more than 40 per class, said Frank Lembo, head of the real estate. “We’re adding more appraisal courses, but we’d had to turn students away,” he said.
After completing the courses, students are allowed to take the licensing exam, qualifying them as an appraiser trainee. They need to start their internship then, when they must build up a total 2,000 hours working a licensed residential appraiser over the next two years.
During that time, a trainee can do inspections and write reports; they just can’t sign a report on their own. They are paid a portion of what the licensed appraiser receives; anywhere from 30-40 percent of the appraisal fee.
It’s not always easy to find an internship - lenders often specify that inspections have to be carried out by a licensed appraiser, not the trainee. In some cases, an appraiser might sign off on a trainee’s appraisal, without ever seeing the property, leaving some firms hesitant to take on trainees.
Carol Urps said that of the 40-50 students finishing up the course at the Mosely Group, several were still trying to find somewhere to intern. Urps was lucky; she has already started working with someone.
URPS WILL BE INTERNING under Patricia Johnson, a licensed appraiser in Mount Vernon. Johnson route into appraisals was a little different: She was working for World Savings in California when the company asked if she wanted to train to become an appraiser.
“I recognized the opportunity,” said Johnson, and signed up for the intensive 90-day course offered by the company at the time. Upon completion of the course, she was asked if she wanted to transfer to the East Coast. Johnson was tired of living in California, so she jumped at a chance.
She passed the test, and began training at the company’s office in Bethesda. It was a complete change, a new job in a new area, and it seemed daunting at first. “It was so hard, I didn’t think I would make it,” said Johnson. “It took me so long to do an appraisal at first.”
After years of doing appraisals, it has gotten much easier, especially with so much more information available on the computer. Johnson continues to do some work for World Savings, as well as other clients.
Dan Waechter is in a similar situation. He moved from Sacramento, Calif., last year and started training as an appraiser with Glenn Staples & Associates, with offices in Annapolis and in Alexandria. “I’ve just been completely surprised by the prices in Alexandria and Arlington,” he said.
Johnson said that one of the things that made appraising in Maryland so hard was the fact that the public records didn’t list the square footage of the properties. Often, she had to knock on the door of a “comp” and ask if she could measure their home.
A “comp,” in real estate lingo, refers to a similar home in a comparable neighborhood, a term familiar to most people who’ve bough or sold a home. Comps are found by searching systems such as MRIS (Metropolitan Regional Information Systems, Inc.) for recently sold properties with the same features as the house being appraised.
FINDING A COMP isn’t always as easy as it appears. “The records are only as good as what the Realtor enters,” said Johnson. “You don’t know what you’re getting into sometimes. You have to be so prepared.”
There are often surprises, as Frank Gable, whose been doing residential appraisals for 18 years, can attest. Once, when looking for a comp for a 150-year-old house, Gable drove by what he thought was a likely candidate, only to find a brand new house.
The 150-year old home was destroyed in a fire and the records hadn’t yet been updated to reflect the new build. “You’re looking for the most similar houses with the least amount of adjustment,” he said.
Gable said that when he started in the field of appraising, they didn’t require licensing, a process initiated only in the early 1990s. While Gable has requests for appraisals all over the metropolitan area, he does a fair amount of work in the Mount Vernon area.
“The Mount Vernon area is just like any other area. Real estate sales were stagnant and now they’ve just gone crazy,” he said. Gable said that he’s always had work, even in the slow times; the difference being now he appraises 8-12 houses a day compared to 1 or 2 in slow periods.
Taking advantage of the portability computers offer, Gable is here for six weeks and then goes to his other home in Arizona for two weeks. From there, he is able to complete his reports and get them back to his daughter, who mans the office while he is away.
WHILE HE SEEMS to enjoy what he does, he did say, “You don’t have much of a life. You work a lot of hours. Lenders want the reports as quickly as possible. One to two weeks is the typical turnaround, but sometimes it takes three weeks. You do the best you can.”
Lenders drive the type of appraisal that is required. Many are satisfied with “drive-by appraisals,” in which an appraiser may only take measurements of homes’ exteriors. An inside appraisal requires a walk-through of the house, to determine the condition.
“You’re looking for the condition of the kitchen, bathroom, walls, etc.,” said Gable. “You can tell pretty quickly what condition the house is in.”
Lenders decide for themselves which appraiser to use, and Geary said he’s concerned that lenders look for appraisers who inflate home values. “You don’t know how much lender pressure there is out there for appraisers to overstate values,” he said, especially when homeowners are trying to refinance their loans. If the house doesn’t appraise for what the owner predicted, the deal may not go through.
There’s more to appraising than finding a comp. Appraisers are expected to know all three methods of estimating value: looking at what similar homes have sold for; finding out what it would cost to re-build a similar house; and the income approach. Sales are the most common approach for appraising single family homes.
AN APPRAISER’S JOB isn’t dangerous; however, there can be some unforeseen situations. For instance, Gable said that one of his inspectors was “goosed.”
While the man was in the backyard taking a photo, a goose bit him in the rear.
Johnson said that she had “one hairy situation.” When she arrived at a home, all the curtains were drawn and the owner asked if she had to go in all of the rooms. He seemed to be concerned that she would see the basement, which was filled with guns, ammunition and animal heads. “It was like something from ‘Silence of the Lambs,’” said Johnson, who was very glad when she was safely in her car.
Recently, she and Urps went to appraise a home in Manassas where all of the bedrooms had locks on them. The owner had to open up each one for them to inspect.
It might seem that the property was a boarding house, which could impact the value of the home. But Johnson said all she can indicate on the form she fills out is that all of the bedrooms were locked. From there, it’s up to the lender to figure things out.
A WEB SITE ON small businesses lists a real estate appraiser as one of the best businesses of the 90’s. It estimates that the start-up costs can be anywhere from $3,000 to $10,000, and that the potential for annual revenue ranges from $70,000 to $3 million.
Such a wide range of revenues could mean anything, but those start-up costs are accurate. At a minimum, an appraiser needs a good computer ($1,500 or more); high-speed Internet access ($40-60 a month); multi-functional printing machine ($300-500); measuring tape or wheel ($20-30); and a digital camera ($150-300).
Appraisal software, which includes forms, mapping and sketching technologies and tools, and other essentials, ranges from $1,000-1,500. Employers pay for most of those necessities, but it can weigh heavily on appraisers thinking about venturing out on their own.
“There’s a lot of pieces to the appraisal pie,” concluded Geary.
Becoming An Appraiser
Institutions Offering Courses:
Appraisal Institute
301-924-1020
www.appraisal.institute
www.wdcmacai.com
Cost: call for details
Moseley Group
877-667-3539
www.moseley.org
Locations in Manassas and Fredericksburg, Va.
Cost: $976 (classes taken individually) or $846 (course package)
Northern Virginia Association of Realtors (NVAR)
703-207-3244
www.realtorschool.com”
Cost: $672 (members)/$782 (non-members)
Northern Virginia Community College (NVCC)
703-323-3166
www.nvcc.edu/annandale/business/real/index.htm
Cost: call for details
Testing Facilities: PSI Examination Service
800-733-9267
Nearest location is Falls Church
Cost: $75