Valuable Tips on How to Become a Real Estate Appraiser
Last updated on 2021/5/9
Choosing a career, second career, or side gig requires careful study and consideration. You may know that you want to work in a specific industry, but not know what you want to do within that industry.
If that is the case for real estate, you have many options including a realtor, appraiser, and inspector. Today’s article looks at the career of a real estate appraiser.
What Does a Real Estate Appraiser Do?
A real estate appraiser examines a property inside and out to determine the actual value of the property in comparison to other similar properties. This process lets the potential buyer know that the seller is asking for a fair purchase price.
The real estate appraiser conducts an on-site inspection that bears many similar aspects to a home inspection. However, the inspection occurs after the potential purchaser has made an offer on the home. The inspection is the second part of the home valuation and determination of any issues with the home. They do not provide mortgage tips or help with rate shopping, but their appraisal of the home proves key to you obtaining a loan.
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The appraiser conducts an objective assessment of the property and authors an unbiased report with an accurate value appraisal of the property. The most common reason for an appraisal occurs when the appropriate amount of a mortgage loan gets calculated. Other situations include lease negotiations and tax assessments, insurance assessments or real estate development deals.
What an Appraisal Includes?
The job of a real estate appraiser is simplified by the systematic process of the appraisal. The appraiser’s visit takes between one to two hours. The steps within an appraisal are:
Examine the interior’s condition by conducting a room-by-room walk-through,
Examine the exterior of the property by walking its length,
Conduct an assessment of any built-in amenities, like a finished basement or swimming pool,
List and describe any health or safety code violations,
Record the property’s layout,
Inspect the property’s square footage,
Determine its dwelling or property type, i.e. a single-family dwelling or office or commercial building.
The appraiser also looks at the properties around the appraised property that have sold in the past one to three months of the same type as the appraised property. These are referred to as comparable or comp homes. The final appraisal report will include information on the value of similar properties in the area.
The Typical Workday of a Real Estate Appraiser
Employed Appraisers
Most real estate appraisers do not work independently. They typically work for management firms that randomly assign an appraiser to a property. This added layer protects both the realtor and the appraiser from any hint of impropriety. Some work directly for banks or mortgage companies.
One way that the AQB protects both appraisers and property owners is standards-setting. The AQB set the Uniform Standards of Professional Appraisal Practice (USPAP) which all appraiser must adhere to for complex appraisals.
While the appraiser does work in an office, they spend most of their day in the field on property visits. Commercial appraisers spend more time in the office since their appraisals require more information analysis and more detailed reports.
Real estate appraisers work a full-time, 40-hour or more week. This usually includes evenings and weekends.
Independent Appraisers
Certainly, independent appraisers still exist. You do not have to work for an agency or bank, but independent appraisers must pay all of the expenses associated with the position. Insurance coverage tops that list, requiring an E&O policy. The minimum cost for an E&O policy is about $1,000 annually.Other expenses include continuing education, data services, software licensing, and professional association membership fees totally a minimum outlay of $4,000. The other expenses include a range of items that vary in cost depending on location such as utilities, office space, office supplies, marketing, and automobile expenses. Independent appraisers must also pay self-employment tax..
What Does a Real Estate Appraiser Earn?
Real estate appraisers do make a salary as opposed to working for an hourly wage. The average salary for US real estate appraisers is $57,606. Data for the year 2023, showed salary ranges of between $14,000 and $142,000.
Trainee Appraisers should expect to earn around the starting salary. It can start lower though. Until a trainee amasses some experience, they typically will only earn $50 to $100 per appraisal. That means they could take home around $20,000 to start.
Changes with the Current State of Economy
Once you obtain your status as a Licensed or Certified Real Estate Appraiser, you will begin earning at the higher ranges and probably enter the $40,000s.
This salary range vacillates depending on the economy and real estate industry. In 2019, the average income for real estate appraisers jumped to $60,597. The salary of certified residential real estate appraisers had risen to $150,000 or greater. As the appraiser amassed experience, their salary rose.
Changes with Location
The pay of real estate appraisers also varies by location. Those residing in large metropolitan areas typically earn higher salaries, yet they also experience a higher cost of living. For example, real estate appraisers in New York City, New York earn about 63 percent more than the national average; in San Francisco, California they earn 57.6 percent more than the national average; in Chicago, Illinois they earn 46.7 percent more than the national average. In smaller cities like Phoenix, Arizona these positions earn 13.8 percent less than the national average.
Some employers of real estate appraisers offer an insurance benefits package. In a recent survey of licensed appraisers by The appraisal Foundation, those working in the industry reported that 40 percent did not receive a benefits package. Of those who do receive insurance benefits, 59 percent receive medical insurance, 47 percent receive dental insurance and 41 percent receive vision insurance.
What Skill Set Does a Real Estate Appraiser Need?
Before you embark on the education required to become a real estate appraiser, ensure that you have the inherent skills necessary.
You need to have superior writing skills and an analytical mind capable of critical thinking.
Another set of vital skills includes active listening and verbal communication.
Educational Requirements to Become a Real Estate Appraiser
Beyond the proper skill set, you also need the appropriate education. While the licensing requirements vary by state, the education requirements apply nationally.
The Appraisal Qualifications Board (AQB) decides the minimum requirements to become a real estate appraiser, called the Real Property Appraiser Qualification Criteria. The state gets to set other training requirements. They cannot be less than the national requirement, but each state can add requirements for state-specific courses. The Appraisal Subcommittee (ASC) of the AQB has oversight of all states, their licensing, and certifying requirements.
National Requirements
Before you can become an appraiser, you need to complete the coursework to become a Trainee Appraiser. While your state may add requirements, the AQB requires the following courses nationally:
Basic Appraisal Principles: 30-hour course,
Basic Appraisal Procedures: 30-hour course,
National Uniform Standards of Professional Appraisal Practice (USPAP): 15-hour course.
Check with your state's appraiser regulatory agency for any additional course requirements.
Obtain a Supervisory Appraiser
After completing your trainee courses, you need to complete an apprenticeship with a Supervisory Appraiser. This credentialed appraiser supervises your appraisals for at least your first 1,000 hours of appraisal experience which must take place during a six month or longer period of time. The local affiliate of the real estate appraiser organization can help you find a Supervisory Appraiser.
Other Necessary Real Estate Appraiser Qualifications
You must earn certification from the Appraisal Foundation. Many states require you to become licensed for the position as well. Just as you completed educational hours for the trainee level, you must complete 2,000 hours under the supervision of a Certified Appraiser during a minimum time period of one year. Some states require a greater number of hours, so check with your state’s regulatory agency first.
Licensing Education Requirements
You do not need a bachelor’s degree to become a real estate appraiser. You will need to complete additional coursework to become a licensed professional after you complete your trainee time. The AQB requires the following course before you can attempt licensing:
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.
In addition, you must complete 30 hours of college-level coursework. This can be part of an associate degree or higher degree, but must come from an accredited community college, junior college, college, or university. You also must check with the state appraiser regulatory agency in the state in which you will practice for any additional state requirements.
Register for the Licensed Residential Exam
Register for the Licensed Residential Exam at your local state advisory board. This comprehensive exam covers topics including appraisal math, valuation methods, types of real estate value, and real estate market and investment analysis. Once you successfully pass this, you can apply for your residential appraiser license.
Applying to Become a Licensed:
1.Licensed Residential Appraiser
When you reach this point, you passed your comprehensive exam. You now submit your license application to the state licensing board in the state in which you wish to practice. Once you become licensed, you may appraise homes on your own.
Here’s the hitch. You may not appraise just any kind of property at this point. You have met the minimum qualifications to appraise small, residential properties.
How small?
A Licensed Residential Appraiser may: “Appraise non-complex one-to-four residential units having a transaction value less than $1,000,000 and complex one-to-four residential units having a transaction value less than $250,000. “
The phrase “non-complex” refers to a property that is comparable to the area’s other properties. A beachfront luxury home or historical home would qualify as a complex home.
Also, note the use of the term “residential.” The base licensing for an appraiser does not include commercial properties or industrial properties.
2.Certified Real Estate Appraiser
Let’s say you want to go further with your appraisal career. Perhaps you want to examine complex residential or you want to move into the area of commercial or industrial appraisal. You need to obtain further education and certification to do so.
The title certified real estate appraiser is the second licensing tier in most states. You must obtain the second-tier license to move on to the third-tier of Certified Residential Appraiser which allows you to appraise commercial properties. A fourth level exists that allows you to appraise all property types, the Certified General Appraiser.
After obtaining the final credential, you may appraise all types of non-complex one-to-four family residential properties. There will be no transaction value limitation for residential. You will be able to examine all types of real property with a transaction value of less than $250,000. This includes commercial and industrial properties.
3.Certified Residential Appraiser
In order to achieve this third level of appraiser, you must earn a bachelor’s degree from an accredited college or university. You must also complete the following educational requirements that add 50 hours to the 150 hours already amassed:
Statistics,Modeling and Finance: 15 hours,
Advanced Residential Applications and Case Studies: 15 hours,
Appraisal subject matter electives course: 20 hours.
You also must add to your supervised experience by completing 2,500 hours of work under the tutelage of a Certified Appraiser during a period of at least two years. You will add at least 500 hours to the 2,000 already earned at prior levels.
After completing these requirements, you must pass the AQB-approved Certified Residential Real Property Appraiser exam to obtain your licensing. Upon passing this exam, you may apply to your state appraisal regulatory agency to obtain your license.
4.Certified General Appraiser
In order to achieve this third level of appraiser, the Certified Residential Appraiser, you must earn a bachelor’s degree from an accredited college or university. You must also complete the following educational requirements that add 100 hours of state-approved coursework to those earned at the other three development tiers.
The fourth level of appraiser training also requires additional supervised hours. You must add at least 1,500 hours of non-residential experience to the 2,000 hours you already amassed. While this level requires a total of 3,000 hours, the above non-residential requirement means that if you did not complete at least 500 non-residential hours before this level, you will need more than 3,000 hours.
You must pass a licensing exam approved by the AQB called the Certified General Real Property Appraiser exam. You must complete all education and experience requirements before attempting the exam. Once you have passed the exam, you may apply to your state appraisal regulatory agency for your license.
Studying for the Real Estate Appraiser Licensing Exam(s)
You can find exam tips, practice questions, and study guides online. Also, check local bookstores for printed study guides. If you tend not to test well, invest in a test prep course. Each exam includes comprehensive coverage of materials and can contain questions from material learned at a prior level. For example, your level four exam could contain material you learned as a trainee appraiser.
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Getting Started as an Appraiser
You can get started on the road to becoming an appraiser pretty easily. All you need to do is contact your state regulatory agency to learn the trainee level requirements. You will also need a list of accredited schools from which you can obtain the courses.
The state regulatory agency can also provide you with a list of supervisory appraisers with which you can log your training hours. You should work from this list to find the appraiser with whom you will work. That is because the state agency provides you with a list of appraisers who have obtained their licenses at an appropriate level. To do so, they already had to complete all of the training.
Final Thoughts
You can become a trainee appraiser relatively quickly. You need to invest a few years in higher levels of appraiser licensing though.
While you can join an agency or bank, you can also work at this job from home. It can either become a full-time or part-time career, so it does make for a great choice as a side gig.
To make a top salary in this career, you must invest in your education and build years of experience. Those who earn at the high-end of these salaries have two decades of experience.