Mentoring Fellow Appraisers

by Phil Spool, ASA

I never had a mentor. But I wish I did. I wonder, was your experience like
mine? In the beginning of my appraisal career as a trainee, I was told what
information to put in the appraisal report and dont ask questions; just do
it. I had taken appraisal classes that taught me about appraisal theory,
particularly the three approaches to value and the reconciliation process. But
the classes never taught me how to research comparable sales, select
comparable sales, make adjustments or how much of an adjustment to make
and the reconciliation process.

My appraisal class taught the Cost Approach in one day. I was never taught
when the Cost Approach is appropriate or applicable, how to get land sales
or if there are no land sales, how to use the extraction method. I was never
taught how to obtain the replacement cost new for the subject and the proper
way to calculate the three types of obsolescence (physical, functional and
economic). Classes never taught me real life experiences. Supposedly, I
learned all of that from my first supervisory appraiser. When I started doing
the appraisals on my own, it didnt matter if my supervisor was correct, why
he chose the sales he selected or how to make the adjustments. He gave me a
list of adjustments to make and apply them in the sales comparison
approach. He never bothered telling me the proper procedure for anything.
Does this sound familiar?

It took a few years and several supervisors to realize that each appraiser has
their own way of doing things. Eventually I got the hang of it through the
help of seasoned appraisers, by looking over their reports and by asking
questions. But since the beginning of my appraisal career, I set my goals to
constantly improve myself to become a better and better appraiser. I have
been appraising since 1973, which will be 45 years in February 2018.

I started teaching beginner appraisal classes for Miami-Dade College as an

adjunct faculty member in 2003. Two years later I also began teaching the
advanced appraisal classes for those trainees who wanted to become a
Certified Residential Appraiser. Some of the students in the advanced class
were students from my beginner classes but the bulk of my students were
trainee appraisers. At that time, there was a great demand for Certified
Appraisers.

I started to realize that many of my students had never learned the

application of appraisal theory and were just form fillers. I had to convince
them that they are responsible for the information in their report and their
conclusion of value even though a Certified Appraiser was reviewing their
work and signing off. These trainees were doing a minimum of five
appraisals a week and some as many as 10. Ironically, some of my students
started questioning their supervisors, which resulted in the supervisors
seeking my advice on how to handle certain appraisal assignments they had.

By 2007 I became an expert witness for the Division of Real Estate for the
state of Florida. When a complaint Fall 2017 Working RE 33 was filed
against an appraiser, I had to review the appraisal report and workfile to see
if there were any violations of the Uniform Standards of Professional
Appraisal Practice (USPAP). Eventually I decided to also represent
appraisers when charges were made against them, if they were unjustified.
That rounded out my experience as an expert for the plaintiff (against the
appraiser) and for the defendant (for the appraiser). Either way, I strove to be
impartial. I stuck to whether the appraiser violated USPAP and I did not get
involved in the appraisers opinions unless they were unjustified.

Mentoring
It was at this time that I realized even a seasoned appraiser may not
understand how to write a supportable appraisal report, how to explain the
reasoning in their report, or how to justify their reasoning in their workfile, if
it had not already been explained in their appraisal report. It seemed that
many appraisers were taking shortcuts and would only examine things when
a complaint or lawsuit was filed against them.

I began to mentor ex-students and others who got into trouble with their
appraisal reports. I chose to limit my mentorship to only five Certified
Residential appraisers at a time because it can be time consuming and I dont
charge for my mentorship services. The payback is seeing their improvement
and appreciation. I dont mentor state-registered trainee appraisers as I
believe that is the responsibility and purview of their supervisor, no matter
how good or bad he or she is.

Mentoring vs. Training

Mentoring is not the same as training a person to become an appraiser. The
appraiser you are mentoring already has experience as a state-certified
appraiser, whether it is one year or ten. Your job as a mentor is to help this
seasoned appraiser change any bad habits, whether it is researching for
comparable sales, comp selection, understanding what verification is about,
knowing what to look for when doing the subject appraisal inspection or
observing the comparable sales, adequately describing the subject and
comparable sales when out in the field, writing up the report, making
reasonable adjustments or understanding how to reconcile the sales
comparison approach to arrive at a conclusion of value.

Observation at the Subject

Sometimes the best way to mentor an appraiser is to separate the process
into different components. Rather than providing guidance on all aspects of
the appraisal process at once, start off by going with the appraiser to the
subject property they are appraising.

A house is probably the best starting point. Since the appraiser is usually by
themselves when out in the field, start off by observing the appraiser
measuring the house. See if they square off the measurements. Squaring
off is adding the dimensions on the front of the house and comparing it to
those on the back side of the house. The same goes for both sides of the
house. See if the appraiser looks at the condition of the exterior for potential
deferred maintenance issues. Does the appraiser observe what kind of
property is behind the subject house? See if the appraiser writes up adequate
field notes about the interior and asks questions of the owner, Realtor or
whoever let the appraiser into the house, regarding updates, renovations and
possible roof leaks and/or plumbing problems. See if the appraiser is looking
at the ceiling for signs of water stains. Make sure that the appraiser observes
every room in the house.
(story continues below)

(story continues)
Observing the appraiser at one of their assignments is better than the
appraiser observing you at one of yours. You dont want the appraiser to be a
mini you but rather see if you can improve on what they already do and
know.
Observation- Comps
It is very important to observe the appraiser as they make notes at the comps.
Most appraisers I know use the local Multiple Listing Service (MLS) data
sheet as their primary source of information when they are looking at the
sales they select as comparables (comps). Make sure the appraiser takes
adequate notes about the comps, such as observable condition of the exterior,
and most importantly, if there are any changes to the house or landscaping
that are different from whats in the MLS data sheet. As a mentor, you have
the experience to know what to look for and this is the best time to give the
appraiser your suggestions.

In just about every case where I was an expert witness, the appraiser who
was in the hot seat had a workfile that had either no notes or inadequate
notes taken at the comparable properties and/or no indication of who they
spoke to when verifying the sales. When that is the situation, the defense of
their appraisal report is diminished tremendously. Help them understand the
importance of note-taking on their data sheets.

Workfile Review
The appraisers workfile should be adequate enough to re-create the
appraisal report. See what the appraiser has in their workfile. Make sure an
exact copy of the appraisal report which was sent to their client is in the
workfile and make sure it is signed, not left blank. If left blank, that is a
USPAP violation as that appraisal report is not an exact copy of the appraisal
report sent to their client, which was signed.

If the appraiser prepared the Cost Approach for the assignment, see if there
are any land sales or if the extraction method was completed and placed in
the workfile. The same goes for the replacement cost new for construction
costs. After all, the appraiser has stated in their appraisal report that they
either relied on land sales or the extraction method and cited their source for
the replacement cost new. Citing their source in the report does not mean
they actually have it in their workfile. Some appraisers dont have a printed
workfile. They keep their workfile in the cloud or in a PDF format. Thats
fine. However, when it becomes necessary to support the value indicated in
the appraisal report, one way or another, a workfile has to be presented in a
printed format.

I realize it is time consuming for the mentor to review the workfile but if you
are serious about helping this appraiser, take the time to look over their
workfile and offer suggestions to help them to provide the evidence to
support their appraisal report. If the appraiser resists, I would move on and
mentor another appraiser who wants to improve their reports.

In conclusion, mentoring appraisers is both time consuming and rewarding.

Dont think about the appraiser being competition to your business but
instead, think about the legacy you are providing.

Success is in our Own Hands

Few years ago, I was eager in practising my appraisal profession. I asked my friends,
lecturers on how to startup my newly found career, but I was told to look for client from
the sphere of influence. I was frustrated, but I later understand that in business, some
player dont want to add competitors. Like any starter in appraisal, I was struggling to
find a client.

To have a wider network, I decided to join an appraisal activity in Manila. Some

organizational leaders opposed my decision to join, but my enthusiasm pushes me. In that
activity, I met a woman, later on I found out that she is the owner of an appraisal
company. In our conversation, she asked me to head the dormant branch of an appraisal
company in Cebu. In which I eagerly accepted.

The first assignment I had and my partner was the appraisal of a warehouse in Mandaue.
It was my baptism of fire. Then another assignment follows, from house and lot, to
vacant lot and commercial properties. Thus in my first month in appraisal practice, I
already appraised more than twenty properties.

Over the next few years I took as many assignment as possible and during that time
several of my clients began noticing the quality of my work. As a result, I began
developing closer relationships with them and shortly thereafter began receiving new
requests for more complex assignments.

Networking with fellow appraisers and practitioners begets more clients. I was asked to
appraise the properties of the biggest cooperative in Cebu, the Cebu CFI Cooperative, on
which I appraised their properties nationwide. I also appraised properties of the whos
who in Cebu business.

The decision to stand my ground and focus on quality appraisal reports actually resulted
in my being added to several preferred or elite status lists which then led to even more
work. I was asked to sit as appraisal commissioner in Lapulapu regional trial court. At
first I was hesitant knowing the character of litigation and the risk involved. But with the
accumulated experience I had, I gained the respect of the different members of the
commission.

The experience that I had was my passport to be accepted as a teacher in the prestigious
business school in town. I accepted the teaching job in real estate with the purpose of
continiously raising my knowledge in the industry.

I was also invited in different forums to speak on my analysis and experience in real
estate appraisal. It expanded my network and in return more referral for appraisal work.
It wasnt that long ago that I was struggling to find appraisal work and when I did it
always seemed to be at very low fees. Even at night before heading to bed, I made sure
my iPhone was right next to my pillow to increase my chances of being first in line to
accept any new broadcast appraisal assignments should they became available in the
middle of the night.

I set up a special email address that would immediately notify me whenever an email
from one of my AMC clients with a potential order would come through. Many nights I
would lay asleep and my iPhone alert would go off, after which I would jump up, grab
my phone, and log into the clients system as quickly as possible to accept the assignment
before it was gone. If I hesitated a moment or even took the time to look at the address, it
usually was too late and the assignment was gone.

This was a process I went through every day and every night. I kept my phone by my side
at all times because if I was away from my phone for even a moment, Id inevitably hear
that ping, and I knew it was already too late.

Finding myself both emotionally and mentally drained, I finally realized this was no way
to sustain a business and that I certainly wasnt living the life I had imagined when I first
became an appraiser. So it was time to decide whether I would get busy trying to change
my business and life or stick with the same frustrating road Id been traveling.

Education
Over the next few years I took as many continuing education courses as possible and
during that time several of my clients began noticing the quality of my work. As a result,
I began developing closer relationships with them and shortly thereafter began receiving
new requests for more complex assignments.

The decision to stand my ground and focus on quality appraisal reports actually resulted
in my being added to several preferred or elite status lists which then led to even more
work. I was even recognized nationally as an Extraordinary Appraiser by one of the
national AMCs, based on a metrics that measured overall quality, including fewest
revision requests, turn time, and more. This resulted in additional new lender clients.
Soon after, I was able to be much more selective with the clients I worked with and I was
also able to narrow down my coverage area which significantly improved my overall
efficiency.

Giant Leap
Even though I was now equipped with a steady flow of lender work from better paying
clients and saw a bump in my overall revenue, my business still plateaued and became
un-scalable at a certain point. In an effort to find improved and more efficient ways of
running my business, I joined my state appraisal coalition (ICAP), began reading every
appraisal article I could get my hands on, joined an appraisers Facebook forum, and
consulted with other professionals in the industry.
But I knew I needed more help to go to the next level. I hired an appraiser marketing
expert (Roy Meyer) to assist me in hiring a Virtual Assistant (VA) including signing up
for and going through his Outsourcing Boot Camp. Within six weeks I had a full time VA
on board who not only helped with the day to day operations of my business but who also
took the lead in marketing my business for non-lender clients. Looking back, I cant
imagine going back to the days without her because not only is my appraisal business
much more efficient but the value of my time has greatly increased as well.

What I didnt realize was that hiring a virtual assistant was only the beginning of what I
was about to learn in regards to growing my business. I hold a Bachelors Degree in
marketing from Eastern Illinois University but I had much to learn about appraiser
marketing. I completed Roys Appraiser Insider program and I now feel like I have a
Masters Degree in appraiser marketing.

In regards to growing my business, Ive learned the importance of knowing how to create
an online presence, how to coordinate offline marketing efforts with online marketing
efforts, how to create and utilize videos and blogging strategies in my business, lead
generation and SEO tips and tricks, how to set up systems and automate my business,
how to manage and nurture client relationships, how to network, speak at real estate
offices and networking events, how to capitalize on those opportunities, and more.

The marketing team built a new custom website for me, BestChicagoAppraiser.com,
which, as of this writing, is ranked number one on Google organically as well as number
one in the Google 7-Pack for the keyword Chicago Appraiser, even though Im located
in an extremely competitive market area which is heavily saturated with appraisers.

Ive learned that not only is having a website critical to my business, but also having a
website that looks professional, ranks with Google, AND most importantly, that converts
visitors into actual paying clients! I think also that it is easier to command higher fees
with a professional looking website. I now receive multiple inquiries every week from
new non-lender clients which has allowed me to further transition my business away from
more restrictive lender work. In fact, I now have more appraisal work coming in than I
can handle and my average fees have never been higher.

Moving Forward
Although Im still not where Id like to be, at least now I can see the light at the end of
the tunnel and I have a roadmap for success. I was just accepted to the Veterans
Administration panel on my third try, providing an additional boost to my business.

I plan to continue building and maintaining my online presence, to begin speaking at

local real estate offices on a regular basis, and to continue transitioning my business into
more and more non-lender work. I also plan on continuing to network and share
information with like-minded appraisers who are also looking for ways to improve their
business.

Everything Ive learned and implemented over the past few years has taken me from the
long days and sleepless nights of the iPhone by my pillow, to my being able to choose
who and how much Ill work for. Ive learned that by seeking to learn from others and
becoming more efficient, running my appraisal business, on the worst day, is manageable,
while on the best day is extremely rewarding.

There is a lot of negativity in the appraisal industry and without question, certain things
need to change. However, there are also a lot of positives appraisers can focus on to
improve their business. Its certainly not all roses in my business, but Im light years
ahead of where I was just a short time ago and I now have renewed hope and high
expectations for the future.

Training the Future

by David Brauner, Editor

Conventional wisdom is that the appraisal industry faces a serious challenge attracting
new blood to its ranks. The why is no mystery to most appraisers. Here is a quick look
at the issues and a (possible) grassroots fix.

Roadblocks to mentoring appraisal trainees have been around since licensing and before:
training the competition is always a concern, along with the time and effort involved in
mentoring newbies properly, a process which can be thankless and unprofitable. Then
there are the professional and personal risks of opening your business or home to an
unknown quantity.

On the other side of the equation, for the trainee, the hours of apprenticeship required
have always made it difficult for newbies to support themselves through the two-year
plus process. But even with all this, like some migrating bird that against all odds travels
thousands of miles each winter to nest, year after year, the appraisal trainee process
continues; there always have been enough appraisers willing to take trainees under their
wing with an eye toward expanding their capacity and giving back to the profession they
love. Likewise, there have always been sufficient incentives for newbies to enter the fold:
a well-paying and well-respected profession at the end of the process; challenging work,
flexible hours and the dream of being an independent businessperson.

Then along came the Home Valuation Code of Conduct in May of 2009- five years ago.
In its aftermath, the benefits of appraising have diminished along with the positive
calculation for mentors and trainees.

Most appraisers know what makes taking on a trainee so difficult these days for all but
the largest and/or commercial shops: the downward pressure on fees for mortgage work
has shrunk the pie, making even the fairest fee split untenable for either party. To add to
the misery, many lenders these days will not accept an appraisal where a trainee has
assisted, removing a big incentive for having trainees in the first place.
(story continues below)

(story continues)

Furthermore, unlike the old days where an appraisal office had the relationship with the
client, today, with appraisal management companies, the relationship, if there is one,
tends to be with each individual appraiser on the panel and not the business; so why
build a company or work for one?

The already rigorous training and education requirements are kicked up a notch as well,
leaving many to wonder why any college graduate would choose this path, given all the
challenges facing appraisers today. Sadly, most appraisers nowadays say they would not
recommend their once beloved profession to anyone just starting out. And with the
average age of appraisers over 50, many are beginning to wonder about the future of the
profession. One school of thought predicts that the market for new trainees will expand
once enough graybeards retire or go out of business, and demand increases for appraisal
services. Others argue lenders wont wait for an orderly transition; when a shortage of
appraisers begins to clog the mortgage machine, lenders will have the leverage they seek
to expand the use of AVMs, which are cheaper and faster and not subject to pressure.

Mentor Me
Appraiser Deborah Gedney contacted WRE earlier this month, suggesting that we revisit
the topic of sponsorship. It has always been hard to find a sponsor due to the low fees
and high legal liability of supervising trainees. However, now it is nearly impossible due
to the refusal of appraisal clients to have trainees work on their jobs, and the additional
requirements in states like mine (Connecticut) where a sponsor must take a specified
course before being allowed to take on trainees, Gedney said. I have been appraising
since 2005. It took me until 2013, working full and part-time at various intervals, to gain
enough certified experience to qualify for the state certified residential exam. I have
thousands of writing samples and excellent references, including one from the chairman
of the state appraisal commission. Ive taken all but two of the required certified general
classes, and only need about 350 more experience hours. However, when I recently wrote
to every single MAI in my county, I received not one single offer for an interview, let
alone a sponsorship. I thought Id have an easier time finding someone to sponsor me
toward upgrading to Certified General now that a potential sponsor does not have to take
that additional class. But that simply has not been my experience.

Snap Shot
Gedney started a LinkedIn thread on the subject, which may be a good sampling of the
national picture. Just like the past, most mentoring remains a family affair- usually
offered to a relative or friend. Larger and commercial firms are more apt to have a formal
training program in place to recruit new appraisers, and for many it seems to be working.
The best timing for new recruits to join the profession hasnt changed either, it seems to
be either right out school, when there are fewer bills and/or they still live at home or have
another source of income, like a working spouse, or later in life as a second career when
they can rely on some kind of supplemental income such as a retirement.

(story continues below)

(story continues)

For those who take on trainees today, and many still do, some of the best win/win
situations are where trainees are compensated by a mix of salary and commission; a base
to help pay the bills along with an incentive to work long, hard hours to provide some
return to the company.

Gedney has the unique experience of being on both sides of the hiring process and offers
another roadblock for those wishing to hire. She says, I seriously considered hiring a
friend to do data entry for me. She is smart, hard-working and has had years of related
experience (title searching, building construction). And she was interested in learning
appraising. In short, she wouldve been a fabulous addition to the industry. We negotiated
past so many hurdles- fees, coursework, etc. but I could not overcome the fact that she
would be considered an employee for tax purposes. This fact increased her (minimum
wage) hourly rate to me by 50 percent through no fault of hers. I felt Id have to hire a
payroll service to process her unemployment insurance, social security, disability, etc. But
they are too expensive. So, on top of everything else we do I wasnt interested in taking
classes on those subjects in order to be sure I was doing it correctly. We face so much
liability already that the last thing I want on top of that is an IRS audit. So as humble as it
would have been, there is one part-time American job that did not get created last year.
She eventually took a job with a large retail chain where employee benefits are
notoriously skimpy, but light years better than what I couldve offered her, Gedney said.

Questions and Answers

Is there a solution? We hope to try at the grassroots level. Working RE/OREP has set up a
new Appraiser Trainee Blog where mentors/sponsors can exchange information on what
is working for them and what isnt, as well as a services offered/services needed
section where trainees and mentors can find each other. A few appraisers complain of not
being able to find qualified trainees in their area. Hopefully this will help some of you
achieve your goals. If its like our earlier efforts, such as the Working RE/OREP HVCC
TalkBack Blog, regulators and others from state and federal government- those who can
make things happen, will be checking in, in addition to tens of thousands of appraisers. If
you want your ideas to be taken seriously, please consider making the comments
constructive, concrete and thoughtful (and please use spell check!). Thats not bad advice
if youre trying to put your best foot forward as a trainee either.

We thought wed give appraiser Gary Lovell the final word about taking on trainees. I
personally interview each (trainee) applicant first, ensuring a college degree. I make sure
they get paid for what they do and that they understand that MY business is the priority. If
orders start falling off so does work for them. I pay them very well, they have to make a
living while training. You have to make money also to cover your additional expenses of
traveling to every project they look at, to make sure they are doing their job completely.
But the most important thing is to be a mentor! Its not about me. Its about the future of
the appraisal profession.

Well check in with you in a few months to see how the future is looking.

Selecting and Managing Trainees

By David Brauner, Editor

The first step to success is making a careful selection, according to Steve Massenberg. If
this is done right everyone wins; the trainee does well and the business grows.

Like many appraisers, Massenberg gets frequent inquires from trainees and finds that the
ones who succeed and stick around long enough to earn their keep typically pass muster
in three categories: experience, education and a willingness to work hard; they possess a
gritty determination to make it in this profession.
By education, Massenberg means that the trainee has to have finished his/her licensing
classes at a minimum. Experience typically means real estate-related, such as sales or
brokering or at least some office-related work. It takes too much to bring them up to
speed if youre starting at ground zero, he said.

They have to know computers, email and have basic office skills. He also learned the
hard way that providing equipment makes expenses too high.

They need their own equipment: a computer, software, digital camera and high speed
connection. I tried supplying all this but found expenses get too high. It nearly cost me
the business.

The willingness to work hard, he says, is usually apparent fairly quickly. I simulate what
its going to be like. For instance, I may ask them to meet me at a property one hours
drive away at seven a.m. the next morning, he said. You can weed out who is or isnt
committed this way.

Availability is also an important element. Clients call and want a quick turnaround. If I
call on a trainee and they are not available for a few days, it does neither of us any good.

Once he selects a candidate, he asks their commitment to stick with it and ensures they
are not still looking for a better offer. He also explains up front that he can not afford to
keep them if they dont produce. I worked in corporate America many years and this is
not like that. It isnt easy for some people to get used to the idea of being accountable for
their production.

On top of all that, candidates also need ability: math and writing skills.

Most want to do this work but they dont write very well. We communicate in writing
with our clients, many of whom we never meet. The writing has to be clear and concise. I
dont have time to re-write work.

Finally, Massenberg says you have to evaluate the candidate quickly and be willing to cut
your losses without hesitation- you are not doing anyone a favor if you keep them around
if they arent making it, he says, and you may be doing your business harm.

To summarize, Massenberg says producing a successful and productive candidate-trainee

depends on three things: making a good selection, watching expenses like a hawk and
evaluating the trainee quickly. And letting them go if they dont have the ability or drive
to make it work.