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Publisher’s Note: Kudos to the AQB for proposing positive changes that are vital to the entire industry.
AQB Proposes Alternative to College Degree Requirement
By Isaac Peck, Editor
In a long-awaited and highly anticipated announcement, the Appraisers Qualifications Board (AQB) has just released an Exposure Draft (May 18) that indicates it intends to walk back the bachelor’s degree requirement for Certified Residential appraisers and more. The AQB also is proposing significant changes to appraiser experience requirements.
An AQB Exposure Draft is issued in anticipation of implementing changes to the Real Property Appraiser Qualification Criteria (Criteria), which is the set of education, experience, and examination requirements for appraisers to achieve a state license or certification. The AQB always sets a comment deadline and is committed to reading and considering all comments before making any changes to the Criteria. See below on how to submit your comments to the AQB.
The AQB’s controversial bachelor’s degree requirement, which took effect on January 1, 2015, has been hotly debated by appraisers and stakeholders on both sides of the issue. Many appraisers complain of being unable to advance in the profession with no time, opportunity or resources to return to school and earn a four year degree. On the other hand, many appraisers argue the college requirement encourages professionalism.
Degree Alternatives
The AQB is proposing two alternative tracks that will allow Licensed Residential appraisers to earn a Certified Residential license without a college degree.
According to the AQB, it wants to create a “consistent, measurable method” that will ensure Certified Residential candidates have acquired analytical, mathematical, and written communication skills. The first alternative to a four-year degree is for an appraiser to pass a series of College-Level Examination Program (CLEP) exams. The specific subject areas to be covered in the CLEP exams include: (1) College Algebra, (2) College Composition, (3) Principles of Macroeconomics, (4) Principles of Microeconomics, and (5) Introductory Business Law.
The second alternative to a four-year degree is for an appraiser to pass a handful of relevant college-level courses from an accredited college, junior college, community college, or university. This would involve the completion of 15 semester hours of higher education to include the following courses:
1. English Composition (3 semester hours)
2. Economics or Finance (6 semester hours)
3. Algebra, Geometry, or higher mathematics (3 semester hours)
4. Business or Real Estate Law (3 semester hours)
No College for Licensed Residential
Included in the AQB’s proposal is the complete elimination of the 30-semester hour requirement for Licensed Residential appraisers. Under the proposed changes, Licensed Residential appraisers will no longer need any semester hours from an accredited college or university. In terms of college level courses, only 15 semester hours will be needed for an appraiser to advance to Certified Residential.
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These alternatives would essentially roll back the majority of the current education requirements, significantly reducing the amount of higher education required to be both a Licensed Residential and Certified Residential appraiser.
In its exposure draft, the AQB indicates that these proposals are in response to concerns that the bachelor’s degree requirement for Certified Residential “creates an unnecessary hurdle for many otherwise highly qualified and experienced” appraisers and discourages “motivated and skilled individuals who would like to enter the appraisal profession, but find they are not well-suited to the traditional collegiate experience.”
Experience Requirements
In addition to proposing sweeping changes to the education requirements, the AQB is also proposing significant changes to appraiser experience requirements.
The AQB acknowledges that experience requirements for all levels of appraiser credentials need some adjustment. Based on the feedback it received, the AQB writes that there is “strong support and rationale” for revising the experience requirements because of the many obstacles currently facing the old appraiser-trainee model. As the rationale behind its proposals, the AQB cites trainees being unable to “locate a supervisor or losing their supervisor during the training period,” and the fact that potential supervisors are unwilling to take on trainees for a variety of reasons, including “increased liability, a requirement by many users of appraisal services that the supervisor accompany the trainee on all inspections, the refusal of many users to accept reports signed by trainees, and a lack of economic viability due to lower appraisal fees.”
In response, the AQB is proposing (1) accepting coursework in lieu of experience for Certified Residential and Certified General credentials (not for Trainees), (2) shortening the timeframe requirements for earning the experience for all license levels, (3) changing the number of hours required for experience for all license levels, (4) allowing for the substitution of experience from other real estate professions.
First, the AQB is proposing the development of practicum coursework that could account for up to 100% of the experience requirements needed to earn a Certified Residential and Certified General credentials. For clarification purposes, the AQB is relabeling the practicum coursework concept as Practical Applications of Real Estate Appraisal, which would include classes utilizing case studies as a means of providing practical experience.
Appraisers would be able to use Practical Applications of Real Estate Appraisal courses to meet the experience requirements needed to become Certified Residential and Certified General.
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There are no proposed changes for Trainees. Despite acknowledging that “opportunities for appraisal training have significantly diminished” and that “many experienced appraisers are reluctant to train because of the costs incurred and the lack of future monetary return,” the AQB indicates that it does not intend to allow Practical Applications of Real Estate Appraisal courses to substitute for a trainee’s experience requirements, meaning that a trainee would still need to complete all of his or her hours to achieve the Licensed Residential credential.
When contacted for comment, John Brenan, Director at TAF, confirmed that trainees would not be able to use these practicum courses towards the experience required for the Licensed Residential classification. However, Brenan left the possibility open, indicating that the goal of the exposure draft process is to solicit feedback. “It’s possible the AQB may receive feedback suggesting the Licensed Residential classification be included as well. If so, the AQB may revise the proposal in subsequent exposure drafts,” Brenan says.
Other Changes to Experience Requirements
The AQB is considering these changes to the experience requirements as well.
Option 1 would allow appraisers to earn their hours in a shorter time frame. Currently, trainees must complete 2,000 hours to become a Licensed Residential appraiser but in no fewer than 12 months. The 2,500 hours for a Certified Residential appraiser must be obtained in no fewer than 24 months, and the 3,000 hours for a Certified General appraiser must be obtained in no fewer than 30 months. The AQB is proposing that the candidates for advancement can complete these same hour requirements without any restriction on how quickly or efficiently it can be done. For example, a trainee would be able to complete 2,000 hours in less than 12 months.
Option 2 would reduce the hours of experience required. Under this option, a trainee would only need 1,500 hours to become a Licensed Residential appraiser, the experience for a Certified Residential appraiser would be reduced to 1,750 hours, and the experience for a Certified General appraiser would be reduced to 2,000 hours.
Option 3 would permit experience from other professions could be considered for a portion of the overall experience required for licensure or certification. This experience could account for up to 50 percent of the overall experience required for the credential.
As part of Option 3, the AQB outlines several professions with skill sets that could be considered as alternative experience, including (1) Property Inspections, (2) Area Descriptions, (3) Real Estate Agent/Broker Experience, (4) Financial Analysis, and (5) Participation in the Appraisal Process. The AQB writes that it did not include real estate assessors within this concept because their “mass appraisal” experience already qualifies as experience under current Criteria rules.
By allowing experience from other professions, the AQB is potentially opening up the appraisal profession to professionals with experience in home inspecting, real estate sales and brokering and other real estate related professions.
The AQB proposes the following matrix that indicates allowable credit for up to 50% of a trainee’s experience requirements:
This table seems to indicate that a real estate agent/broker, for instance, can defer 3% of the trainee experience requirement for every year they’ve been an agent or broker, up to a maximum of 15% of the total. These categories can be combined but cannot exceed 50% of the trainee’s total experience requirement.
More on Trainees
The AQB is also proposing the removal of the three-year supervisory jurisdictional rule that requires an appraiser to be in good standing within a particular state before taking on a trainee. This change will not remove the requirement that an appraiser be in good standing for at least three years, but simply removes the requirement that the appraiser be licensed and in good standing within a particular state or jurisdiction for three years prior to hiring a trainee in that jurisdiction.
Lastly, the AQB writes that it has considered requests by some stakeholders to change the Trainee label due to a perceived lack of public trust that may be attached to the word. While noting the concerns, the AQB is declining to suggest any changes to the trainee label. However the AQB notes that “because of the misunderstandings by some that the Criteria prohibits Trainees from performing inspections without a supervisor or from signing an appraisal report, the AQB intends to issue guidance (in the form of one or more Q&As) that will distinguish the requirements in the Criteria from those in the marketplace.”
To read the AQB’s Exposure Draft in its entirety, click here.
Send Your Feedback!
Appraisers are encouraged to submit their (concise, considered and spell-checked) comments to the AQB before the June 17, 2016 deadline: Email: aqbcomments@appraisalfoundation.org or mail to: Appraiser Qualifications Board, The Appraisal Foundation, 1155 15th Street, NW, Suite 1111, Washington, DC 20005.
Future of Appraisers Survey
In addition to sending the AQB your feedback regarding these particular proposals, you can also take Working RE’s Future of Appraisers Survey. Share your opinion on the college degree requirement, trainee experience requirements, and more with Working RE’s Future of Appraisers Survey.
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About the Author
Isaac Peck is the Editor of Working RE magazine and the Director of Marketing at OREP.org, a leading provider of E&O insurance for appraisers, inspectors and other real estate professionals in 49 states. He received his master’s degree in Accounting at San Diego State University. He can be contacted at Isaac@orep.org or (888) 347-5273.
Send your story submission/idea to the Editor: isaac@orep.org
by Carol Ray
My husband was one of the best rural appraiser’s I know and he passed I have all the knowledge he knew even how to read a plat map to find homes that aren’t 911 addressed. He still gets requests due to his wide knowledge base and has nothing to do with a college degree and now I can’t make a living for myself due to the education requirements. Please reconsider the college degree for all appraiser’s certified residential and below as these appraiser’s use very little calculations of income with the most being simple duplexes or similar income, but no large income-producing real estate that should require a 4-year degree. Please think of people like myself that has all the knowledge needed for work, but not the 4-year degree.
-by B Street
While I was in support of the education requirement at the time, this LR lost my FHA business, 8 years of training and education down the drain. With over 20 years of residential experience under my belt, I have reviewed many reports over the years and I see good reports from all licenses but I also see bad reports from all licenses. Our reports need to be reviewed by our peers for competency. With my lack of college, I might use to instead of too and would need to work on that aspect but I also see reports without any commentary or reports which are in direct violation of USPAP. As for those complaining about fees, how is it fair to my business if I have lower costs and can complete the assignment at a lower fee than you? If you do not like the fees in the residential market work on the commercial side. Education requirements do not make an appraiser, years in the field do. Like my FHA business, I can see a day when my LR license will no longer be adequate without any consideration given to the fact that I have over 20 years in the business and have tried to better my skills and report writing each year.
-by Jarrod R Rayner
Why not a vocational alternative? Are apprenticeships that bad? I can work on an aircraft with your life in my hand but I can’t tell you how much your house is worth? Those noses are at about the same altitude as those planes.
-by Pete
I have been in the insurance industry for nearly a decade. I complete insurance appraisal valuations for the leading insurance valuation company in then US.
-Currently i am taking the required coursework to become a real estate appraiser. Given then long road ahead of me…i need to go to school and obtain a BA. I can understand the need for some college experience as this does provide a certain level.of proffessionalism and dedication towards becoming an appraiser. That said…its very discouraging to someone who has led a very proffessional.career that will need to spend 10’s of thousands of dollars to enter the proffession…and then see posts like those in this thread that outline bad fees and pay in the end…with high risk of retaining your license. I am dedicated and will make this happen for me…but honestly the requirements pose a huge issue. This venture will take over 4 years of dedication for me. I believe with the required education and training period before i even make a living is enough to couple with an associates degree. I am all for the drop in the college degree to some level. If the industry wants proffessionals it should set it up for just that. Just because a 24 year old holds a bachelors does not make them proffessional…or trust worthy in the publics eye. Experience…training and qualifications do. I hold all but a bachelors. Im 35 years old…4 kids and eager to take the steps in becoming an appraiser.
by Donald J. Martin, SCRP, RAA, GAA, CDEI
The problem is not the education, but the fee wee are getting paid. Pay a decent fee and they will come. In 1982 we made $225 for an Appraisal. If you figure COLA (cost of living adjustment) at 4%, monthly compounding for 34 years since then, that fee for the same job should be $874.66. It’s not the same job, yes we have computers, but we do far more now, then we did then and it takes for longer to do an Appraisal today, then it did then. The fee for an Appraisal should easily be $1,000 for what is required today, to do the job the right way. Raise the fees, you will have no problem getting well educated people in the business, and they will receive good training, when the fees finally catch up to where they should be. The stakeholders don’t really want Appraisers or Appraisals. Appraisers and Appraisals are just an impediment to the ability of the stakeholders to make many of the loans they shouldn’t be making.
-by Scott Williams
Experience requirements were set in place because of a lack of formal education requirements (college degree in the field of practice). Established professions usually have significant formal education requirements (bachlelors, masters or professional degree in the field), but fewer experience requirements. Professions with fewer formal education requirements usually have heavier experience requirements. Note that “appraisal classes” outside formal education (e.g. professional association classes) do not replace formal education degree requirements.
The long range expectation was that eventually (within decades) there would be degrees offered in appraising, or at least real estate, that would allow new entrants with college degrees to meet reduced experience requirements. Unfortunately, however, there are large stakeholders who seem to prefer no formal education requirements and few experience requirements. Expecting state credentialing authorities to ensure the public of competency of credentialed appraisers with neither of these two requirements would put them in an impossible situation.
It is unfortunate that some “large stakeholders” seem to value neither appraiser competency or value accuracy. They are still on a quest to prove that with sufficient clerical staff on their end they can transmute a poor inaccurate appraisal into a good accurate appraisal. So far their quest remains unfulfilled, but they seem to be having more success in completely screwing up the appraisal profession.
-by Greg
Common sense book smart does not a great appraiser make. Experience with the older appraiser at the inspections is much more a teaching tool, problem is many trainees are going out without supervising appraisers here in Illinois. As for AMC I dig my heels in constantly with fees coming over as low as 125.00 for a 1004 and they do not stand up to the lender they just tell you to do it or don’t get paid. I am dealing with one right now that demands it on the wrong form because thats what the lender wants. I told them no and they resigned it and refuse to pay for my time. I am moving over to private lenders more and more. After 30 some odd years I have seen it all, and this year has been one of the worse.
-Greg
by Russell Estes
Marc hit the nail on the head. AMCs are the primary problem. I will never ever do any work for them. I am certified general and refuse to do secondary market residential.
-I am a college grad and feel that is needed to be for our industry to be professional.
The bottom line is that fees need to be in line with what our profession should expect.
by Doug
AQB a few years back: we want this to be a real profession with a high barrier of entry and the highest level of professionalism for maximum public trust.
AQB now: we were just kidding.
-by Ryan Couch
I am for the removal of the B.A degree. As Licensed Appraiser, Father of two and full time student. Having more time to focus on business and my family would be great. However, several Appraisers made great points the (Fees) need to be addressed! And there has to be specific field / appraisal experience required to become an appraiser. The AQB should establish an appraisal minimum fee. Say $325. And have a scale $325 – $500 and FHA $425 – $650. If you want competition in the market place there has to be a scale for the fees fall into. I have to constantly turn down $220 fees for full appraisals. Criminal what AMC’s are doing….
-by Demonta Bush
Ryan I agree with you 100%. I thought I was the only one receiving offers for full price appraisals at discounted prices. Theses AMCS are out of control, we are fighting for independence and reasonable pay and they (amcs) are just ignoring it because some of our appraiser partners are accepting these orders.
-by JoAnne Glantz
This is a desperate attempt to speed up the licensing process due to pressure from “stakeholders”, panicked at the thought of having to pay fair fees if college entry remain in place. The proposal is a hodgepodge of entry requirements that still will fail because the fee issue is the one that needs correction, not an education requirement . Very few will take on a trainee on residential side at current fee levels and few who complete the trainee requirements will remain in the field once they see how limited the options are . The more qualified people are go on to train for the State General License.. This proposal to reduce requirements for residential license is reckless, considering that a residential license can appraise a significantly high dollar amount of property a year, from 50 million to a 100 million a year of property annual for a moderately busy appraiser. One might want to ask why they are willing to dilute requirements to this extent, considering the public trust is at stake for tax payer backed mortgage loans .
-by Mike
JoAnne, that is a good point. Which is why the new proposal eliminates the need to ever work as a trainee. Simply take your classes, pass the test and open an appraisal business.
-by Mike
This is a pretty big change. Especially on the experience side. The ability to become certified without ever having worked in the field is a huge change.
-by Diego
I think it’s about idea to remove the education requirement. Other professions such a CPA , lawyers and doctors require a degree, why not appraisers? I think if you work hard to get a license you’re going towork hard to keep it and the degree acts as a deterrent fofor people that just want to make a quick buck.
-by Seth Knowles
Trainee here. B.S. in Business Admin, 300 plus hours of QE, 3,000 plus experience hours, and an appraisal log that spans a little under two years (99% commercial work and I’ve been licensed as a trainee for over 30 months but my log is less than 30 months). I’ve satisfied every requirement for Certified General in excess, with the exception of the mandatory minimum time period. Of the three core requirements; (education, experience, and time), time is certainly the most arbitrary. I met with my state’s REAB for over an hour last week, with legal counsel, trying to find away around the time period to no avail. As I understand it, I won’t be eligible for CE licensure until February 2017. So I posed the question, “If I went and worked at McDonald’s for eight months and didn’t perform a single appraisal assignment, I would be eligible in February 2017?” and the response was “yes”. Insanity. Basically, I could sit on my hands for eight months and then I would be eligible to sit for the exam. Hopefully these proposed changes go into effect before my February 2017 deadline but I’m not getting my hopes up. Regardless of my personal situation, it’s good to see the AQB taking note of the flaws in the system. I’ll certainly be drafting and submitting a comment to the AQB. Any idea how soon these changes could go into effect?
-by James Black
Seth,
-Curious why you would not get a license or certification and then move on to test for your general once the time requirements were up? Seems a little short sighted to just complain about what you cannot change (and frankly maybe shouldn’t be changed) when there are plenty of other options to jump start your career and test when you can. Time flies and there really is no substitute for the amount of experience you get working in the field.
by Spencer e Paul
It just feels like a no win situation, in terms of keep the idiots out of the professional. The degree gave some separation for those attempting to get for a quick buck on crappy work and poor articulation. I would be naive to assume that a degree would rectify this wholly, but it was an attempt. I feel as though the recent suggestions will water down the profession and the quality of work completed. That being said, I feel the greater part of the industry (UW and Lender/clients) do not care, they just want throw warm bodies at the assignments to get them done, of they go through, good appraiser. If they don’t then it reflects poorly in the appraiser (in general – nothing new, but something to blame it on). Not sure that and of the suggestions are a great solution either (yes I’m a pessimist with no real solution).
I still think, in general with 80/20 split, the college grad going into the profession will yield better results, but really, it just comes down the each candidate and the mentor. It the mentor any good? If the mentor is of poor quality and character, they are going to ingrain the sale old same old nonsense that got us here. Is the candidate any good? Does anyone really ever know until they get the work done and start completing assignments, complex and the like? By our work they will know us.
Personally, I’m still for the degrees and the depth of work/knowledge/experience it take to become an appraiser. I’m proud that I had to take the longer road to get into the industry. I like the idea of college taking care of the work our experience. This takes out the, who do you know element for locating a mentor to take you on as a trainee. This is part of the Good Ol Boy system. I could go on, but I have to work.
-by Steve
When the rules changed that you needed a degree I went back to school and got mine. If they wanted to change anything it would be the certified test, seriously questions about loan points is not appraising. You should turn in work samples and be awarded the next license due to your work.
-by Julia Thayer
Still sounds like a jump through your A$$ routine…BS Glad I’m retiring in 2 years.
juliahta@comcast.net
-by Marc B. Candidi
All of this will be moot unless our fees can be allowed to rise without governmental interference (over regulation) but AMC’s inhibit the Appraiser’s ability to earn a decent living so no matter how much you water down entry level qualifications it will have limited success. The future of our appraising profession was doomed with the advent of AMC’s, nothing short of their elimination will encourage appraisal occupation growth. Appraiser Independence can be enforced without AMC’s. I will not take on any more trainees until AMC’s are gone.
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