The education question — what is more important? The content of appraiser training, or how it is delivered?
Appraiser education “marketability” is similar to appraisal marketing itself. Buyers of appraisals and buyers of appraisal education judge by three things: Cheap; Fast; Good. “Pick any two” says David Towne in his graphic. Anyone can provide classes. But professional organizations are better able to provide quality content.
Here we consider that “delivery” is an administrative or marketing goal. Should we focus on selling, or should we focus on valuation content?
If it is content, should we focus on the long-established body of knowledge and subjectively-oriented standards, or should we consider the future – the rapidly changing challenges of our customers: lenders, investors, and equity agents? Customers who need objective reliability, not believability.
What can be our goal? Specifically, what should be our content goal? Three alternatives:
- It’s easiest to continue to teach what we have always taught – well-established appraisal methods.
- It’s also fairly easy to write lesson plans based on existing practices and many references, such as The Appraisal of Real Estate, USPAP, and rewrites of licensing material (as established some twenty-five years ago). It “complies,” and is thus easy to defend and “prove” to be right. Solidly established as long as 80 years ago. Everyone in line.
- The most difficult is to write valuation curriculum based on modern “data analysis” technology. It is difficult for our respected, established authors to venture out, research, and explore today’s available analytics software and enhanced visualization tools. Our committees champion the excellence of the past. Established practice, reviews, licensing, standards and regulation enforce that past.
Can our professional organizations regain education “market share” by repeating the past?
No.
Cheap, fast, outdated – is not good.
First, we must reveal to ourselves, to others, and to the “higher authorities” the exact nature of our songs of the past. What is “good.” We must relieve ourselves of the shackles of the excellence of the past. Yes, the “appraisal process” exemplified excellence – to answer the questions of the past. Answered with severely ragged data. And limited analytic options (such as NO calculators). And the limited reporting enabled only by a “modern” electronic typewriter, and “instant” Polaroid photos.
“Pick some comps, and adjust the comps, then type the typewriter.”
Let’s revisit our three education options:
- Continue to deliver the “pick-comps-then-adjust-model,” and sell it even harder-faster-cheaper,
- Revise to comply with USPAP Standard 1-4, using all relevant sales as may be available, or
- Adapt existing data science models, to sharpen appraiser judgment and added results.
Our professional appraisal organizations still provide the best hope for the future. If we can “get with it,” we can truly contribute to the public trust, our clients, and our inner peace. We can add to our own professional sense of contribution. We can provide additional product reliability, transparency, and reproducibility. And with that enhanced evidence, logic, and measurable credibility – we can provide much needed other products such as market visualization, risk scoring, instant revaluation, forecasting, and adaptable dashboard-based dynamic report delivery. We can sing a new song.
The information is here. The technology is here. The opportunity is here. What is needed is a major organization – perhaps such as the Appraisal Institute – to recognize its own historical mission and mandate.
To begin teaching today, not yesterday.
December 13, 2023 @ 6:22 am
Another good article, food for thought. It has been my experience that a greater percentage of appraisers have never measured a market themselves.
When markets slow down, appraisers typically go back in time or go further out until they find closed sales that work on paper, ie, look good.
All the while if the market is going down, current Listings may be on the market at prices lower than the closed sales.
We are working on a case that is exactly this situation, and placed our weight on the discounted Listings.
December 13, 2023 @ 8:07 am
Hello George, many of us are willing supporters of pushing the profession forward, but you as a member of the Appraisal Journal Review Panel and having written multiple articles for the Journal, including your 2017 article on this topic, “Regression, Critical Thinking, and the Valuation Problem Today” are possibly better positioned to ask the Appraisal Institute to develop a course on analysis in the modern word of the internet.
December 13, 2023 @ 12:42 pm
Thanks George, always good to push our thinking! 😉
Excuse my rant, but been a top area Appraiser 35 yrs and still butt hurt over “Cuomo” instigating a plan to take our customers from us (Cuomo as Housing Secretary had a financial interest in AMCs) to insert a 3rd party into the appraisal process. It is part of the entire problem with the appraisal industry, is the 3rd party income based on a business model of TAKING part of the appraisal fee, when AMCs clearly reduced the cost of work flow management and the AMC fee should’ve been taken from Lender costs, not the appraisal cost.
Bank then, if our industry had more than a few thousand belonging to all appraisal org’s like the Institute and had some backbone, everyone would’ve flipped the middle finger until they fixed the problem and they would have done it too! See that? No strong leadership & no backbone. Basically our profession has been taken over, similar to how our country has been taken over. Hopefully I found a solution, but more on that another time.
Now “they” (AMCs) are able to leverage what was an $800 1004 STANDARD fee in Oregon 2022, to now appraisers are starving and begging to get 1004s at only $400. SERIOUSLY ?!! That is not a profession, that is a slaughter.. and until we find & implement ways to take back direct control of the majority of our industry work flow.. appraiser’s will continue to be flung around like a rag doll, with little ability to step above the fray (the mess of using work flow to almost always leverage the lowest appraisal fee possible) and also have little backbone to stand up to AMCs. Let’s be honest, that also means the majority of Appraisers actually lack the core ability to truly be “independent”, which is supposed to be the entire cornerstone of our profession. Isn’t it?
For those that don’t have a clue what top residential Appraiser’s are capable of getting, before work all but stopped after the FED rate hike 3rd quarter Nov 2022… the only order I did under $850 was 2055 or 442 completion forms. 40% of all my orders exceeded $1,200 and almost 25% of orders that year had a $2,000 fee.
All residential orders; some were clearly complex, large acreage and/or high dollar luxury. AND for those that don’t have a clue what AMC’s are making… my $1,200 Bank direct placed orders, are what the AMC’s are placing with appraisers for $400 today. Now if that doesn’t piss you off, you need to go get another cup of coffee. lolol
About your specific question, I think most Appraiser’s lack extreme confidence that everything they are currently doing, their processes, etc are really good and close to a “best practices” approach. So however our industry evolves going forward, hopefully Appraiser’s will be more involved in what those future processes should be. Also NICE if Appraisers were given access to all the cool tools FNMA, Core Logic and others have.. because are WE the valuation crew or are WE just keeping the seat warm until LENDERS figure out how to do it without us?
December 16, 2023 @ 4:06 pm
I don’t think it’s a question of the content or the delivery of education that produces good appraisers. While I agree that quality material and competent instructors contribute to one’s education. In the final analysis (and the words of Dr. King), it’s the content of one’s character that prevails (good, bad, or indifferent). A person’s character includes their ethical values, honesty, personal standards, drive, and many other aspects that make up who they are and what values they subscribe to.
The Appraisal Institute and other organizations have developed some of the best classes and instruction. Yet these same organizations have produced (and have in their membership) professional appraisers ranking from the top to the bottom of the profession. Education remains critical in the development of the next generation of professionals. However, in some cases, I believe the AI is heading in the wrong direction.
For example, when I took the Principles of Appraisal class many years ago, it was 80 hours long. Today is 40 hours long. The exams back then were difficult to pass and included both an essay portion and ACT-style multiple choice. My point is simple. While education and instruction are important, one’s character is equally (if not more so) critical to producing quality professionals. While anyone can attend law or medical school, not everyone is a good lawyer or doctor (true in all professions, including appraisal).
Do taking classes and passing tests produce an ethical, honest, and competent appraiser? I don’t think so. I think it’s not a question of content or delivery but rather a question of character. Those who have the drive, ethics, and desire will succeed. When the writing on the wall says otherwise, how do you find those with “the right stuff” and convince them appraising is a good future? Removing mentorship and making it easier to become an appraiser is not the solution. Content and delivery (while important) are not substitutes for oversight, exposure (without risk) to problems, issues, and solutions that teach the appraiser how to approach and solve the appraisal problem.
The much-needed mentorship component was also eliminated when the banks and S&Ls eliminated appraisal departments. Since that time, appraising has become a cottage industry, void of interaction between appraisers and without group resources where appraisers could learn and evolve. While membership in professional organizations exposes some to expectations, most lack the requisite fundamentals of what it takes (beyond education) to become a good professional.
For proof, look no further than the agendas of the various State Appraisal Boards. Those coming before the boards are educated, passed the required tests, and have the required experience. Yet, they are before their peers, pleading their cases. One could argue that education through the AI would have served them better, and I would agree. Even so, I would argue most are there due to flaws in their character.
I always enjoy your articles. They make me think.
Patrick