How to Become a Real Estate Appraiser
In May of 2018, the Appraisal Qualifications Board (AQB) lightened the burden for becoming a real estate appraiser. They reduced the educational requirements and cut the hours of trainee experience in half. There's good reason for this—not only is the projected growth rate for the profession double the national average, but they may soon be facing a retirement crisis. The ranks declined 20% from 2007 to 2015, and as of 2017, 62% of all appraisers are 51 or older. We're already seeing an increasing shortage of qualified appraisers as the old guard retires. That all makes today a good time to consider whether real estate appraisal is the right career for you and learn what it would take to begin your journey.
What Does a Real Estate Appraiser Do?As you might suspect, real estate appraisers provide an objective estimate of a property's value. They can be employed by an appraisal firm (large or small), by a bank, or as a freelancer. Typically, a mortgage lender or financing organization hires the appraiser or appraisal firm, though individual property owners occasionally do as well. Appraisers then assess a property's exterior and interior condition with a systematic walk-through, evaluate amenities, and look for safety or health code issues. Then, they compare their findings to similar properties in the area to decide its value. Appraisal is more lucrative than being a real estate agent, and rather than commission, appraisers receive a fee for each property. The fee varies by the size of the property, the type of assessment required, and how stiff the competition is for appraisers in your area. If you work in a large city with many appraisers, anyone offering the cheapest fee is most likely to get hired first; this drives the appraisal fee down. If you work in a rural area or a region with an appraiser shortage, you can name your price. On the other hand, appraisers work longer hours. According to the National Association of REALTORS®, appraisers in their organization evaluate an average of 243 properties per year, and over a third of them appraise more than 300. Since there are typically 255 business days per year (with holidays), appraisers handle at least one property a day. You need strong analytical and critical thinking skills to be an appraiser. Writing proficiency is also necessary for extensive report writing.
How to Become a Real Estate AppraiserThe requirements are going to vary by state—the AQB sets the minimum national requirements, but individual states can impose additional standards. It's critical to check your state's requirements. The steps below address the national minimum to become a Licensed Residential Appraiser (the most basic appraiser's license).
Step 1: Take Your Real Estate Appraisal CoursesIn order to become a trainee real estate appraiser, you need to complete and pass specific pre-licensing coursework. This includes:
- Basic Appraisal Principles (30 hours)
- Basic Appraisal Procedures (30 hours)
- Uniform Standards of Professional Appraisal Practice (USPAP) (15 hours)
- Supervisee/Trainee class covering the expectations and responsibilities of both roles (4 hours)
Step 2: Find a MentorThis might be the hardest step, and if you have any connections to a licensed appraiser, you should take advantage of them. You'll be responsible for finding your own mentor, so if you don't have existing ties, you'll need to network and/or cold-call appraisers near you using your state's licensing board. Some appraisers refuse to take on trainees because it's more work for no real compensation. If they do agree, you'll earn either a modest hourly wage or a small percentage of the appraisal fee. Don't expect to get rich during your trainee hours.
Step 3: Earn 1,000 Trainee HoursThere is no national requirement to pass a real estate appraiser course before working as a trainee, but some states require it. Once you've got your mentor and passed any state-specific tests, you'll start doing appraisals under your mentor's supervision. Before you can get your license, you must log at least 1,000 hours of supervised experience in no less than 6 months. This is the new national minimum. In the past, it was twice that. It's theoretically possible to manage 1,000 hours in 6 months, but in all likelihood, it will take you longer. This is because:
- You may not be able to pay your bills on trainee income alone. That means making the time for a second job.
- Your mentor may not have enough work to constitute full-time hours for two people, or enough time to supervise and teach you on a full-time load.
- You may want to work through your additional pre-licensing coursework at the same time.
Step 4: Take Additional Pre-Licensing CourseworkIt's no longer necessary to obtain an associate degree before you can be licensed (hooray!). To become a real estate appraiser, however, you'll need to take additional appraisal coursework before your licensing exam. In most states, it won't matter whether you take them before, alongside, or after your trainee hours. The minimum coursework required by the AQB includes:
- Residential Market Analysis and Highest and Best Use (15 hours)
- Residential Appraiser Site Valuation and Cost Approach (15 hours)
- Residential Sales Comparison and Income Approaches (30 hours)
- Residential Report Writing and Case Studies (15 hours)
Step 5: Register for and Take the ExamOnce you have your coursework and trainee hours completed, you'll submit all documentation to your state board and register for the Licensed Residential Exam. You can find sample questions, content outlines, and other helpful information on the Appraisal Foundation website, but essentially you'll be tested on what you've learned in your courses.
Step 6: Submit Your License ApplicationOnce you've passed the exam, you'll submit an application to your state's board for approval. Then, you can begin work as a Licensed Residential Appraiser.
What Can a Licensed Residential Appraiser Do?As a Licensed Residential Appraiser, you're allowed to appraise residential properties that:
- Contain 1 to 4 residential units, AND
- Are worth less than $1 million with no complex appraisal factors, OR
- Have complex appraisal factors but are worth less than $250,000
- Atypical for its area
- Unique in architectural style