|
Understanding the Appraisal Industry's
Paradigm Shift
Has the Shift to Government Licensing Been Good or Bad for the Industry as a
Whole?
From the depression until the late 1980's, the real estate appraisal industry
has steadily grown and evolved, largely as only a professional organization,
untouched by regulation or state laws. In the early 1930's, the appraisal
industry founded it modern roots as an offspring of the economic lessons
learned in the great depression.
For well over half a century, the appraisal industry grew and evolved, largely
under the guidance of two organizations that were exclusively real estate
related. The Society of Real Estate Appraisers and The American Institute of
Real Estate Appraisers, the former generally known for its residential
expertise, and the latter for commercial and industrial real estate.
The "Society" and the "Institute" conferred membership to individuals through
competency of education, experience and examination. Members attained various
designations, most notably the SRA and MAI designations.
During this past decade, the real estate appraisal industry has gone through a
dramatic shift. The Financial Institute Reform and Recovery and Enforcement
Act, authorized by Congress during the real estate fallout in the late 1980's,
changed appraising from being under the guidance of its purely professional
association, to a regulated industry controlled by laws.
Quantity vs. quality?
Prior to the act, the quantity of designated appraisers through predominately
the most commonly know designations generally totaled about 20,000 certified
appraisers.
Subsequent to licensing, the total approached 80,000 appraisers. The four-fold
increase included those who were now full-time appraisers, as well as those
likely to earn income from multiple facets of real estate services.
The quantity of members in the Appraisal Institute, predicated upon a general
count of the active members in the Appraisal Institute directory approximate
12,000 members, represented only a small portion of the total quantity of
state-certified appraisers.
Prior to licensing, when a highly competent appraisal was required, property
owners, lenders, attorneys and other users of appraisal services knew to
contact someone who earned one of the above highly respected designations.
Certification comparison
Education, experience and examination are the basis for licensing in all 50
states. State boards of certification generally require the following in the
Mid-Atlantic region, including Pennsylvania, Delaware, Maryland, Virginia, the
District of Columbia, and New Jersey:
-
Education: Predominantly 180 hours
-
Experience: Predominantly 3,000 hours, of which only a portion need be in non
residential type real estate
-
Examination: Standardized multiple choice exam
The MAI designation, generally know as the premier designation in the appraisal
profession, requires the following:
-
Education: 11 Appraisal Institute courses, totaling 383 classroom hours
-
Experience: 3,000 hours of specialized appraisal experience
-
Examination: Must pass a rigorous two-day, four part modular examination
-
Be a state certified appraiser;
-
Have a four year college degree;
-
Must receive credit for a demonstration appraisal report on an income producing
property;
-
Adhere to a very strict code of professional ethics
he quantity of practicing appraisers has increased dramatically, largely because
of less rigorous standards of admission. These standards were implemented by
state and federal regulatory agencies because of a perceived need for more
appraisers, after the savings and loan crisis of the late 1980's. Whether this
need was perceived or real is questionable.
This increase has led to a dramatic lowering of appraisal fees because of a new
level of competition. These lower fees limit skilled appraisers from performing
all of the necessary analyses to properly conclude estimated market values.
There are now more appraisers doing more appraising, but with less intensity
than ever before. Is that good or bad for the public?
As an MAI, it is my vote that the education, experience, and examination of the
Appraisal Institute members do make a difference. Consider an appraiser holding
this coveted designation, or any other highly respected designation, for your
appraisal assignments. The appraisal industry has dramatically shifted, but for
those who respect quality, nothing has changed.
Return To Listing...
|
