Is it worth it to pursue an Appraiser Trainee license?

Question

Hello, I am brand new to REI, at this point a little over a month in. I've been researching and networking like crazy in the last month and what I'm beginning to realize is that everything starts and ends with comps/numbers. As they say, "you make your money when you buy."

To start, I think my strategy will be to invest in multi-property units and then eventually try my hand at flipping or wholesaling. I have no relevant experience in real estate and want to get to the point where I see a property and can say, this is worth X if you fix A, B, and C (basically ARV).

It got me thinking, why not go for an Appraiser Trainee license. Properly appraising a property is a valuable asset in any form of REI. There is an online course I can take for roughly $700, totaling 60 hours. All in all, investing in yourself is never a bad thing. However, it leads me to a few questions below...

• Is comps/appraising just a matter of experience and getting out into the field and seeing properties for myself?
• Is there enough free resources online and on BP to figure out comps/appraising for myself or do I really need real world experience?
• If you were starting out, is this something you would do?
• I feel like I have a solid understand of the REI concepts and fundamentals, I felt like practicing on comps was the next logical step to take, should I be doing something else or am I on the right path?

Any feedback would be greatly appreciated!

FYI, for your reference below is a description of both courses I've been looking at.

Basic Appraisal Principles

This four-day course will introduce you to real property concepts and characteristics, legal considerations, influences on real estate values, types of value, economic principles, market area analysis, highest and best use, and ethical considerations. The course will provide a solid foundation in basic appraisal principles no matter what appraisal specialty you pursue.

Basic Appraisal Procedures

The course will take you step-by-step through the valuation process including identifying the problem, collecting and analyzing data, reaching a final opinion of value and communicating the appraisal. You will learn about the three approaches to reaching an opinion of value-income capitalization, cost, and sales comparison-and apply them in true-to-life case studies and problems. After examining income capitalization methods and formulas, you will learn how rates and multipliers are derived. Through case studies you will discover the steps and concepts involved in the cost approach-how appraisers estimate the cost of constructing a reproduction of or replacement for an existing structure; the three major components of depreciation and methods for estimating and allocating depreciation; and land and site valuation. The course will guide you through the sales comparison approach including researching the market, verifying information, selecting units of comparison, conducting a comparative analysis, making adjustments, and reconciliation. You also will complete key sections of an appraisal report. In addition, the course provides an introduction to property description and construction and design basics.

David T. · Answer

Mark, it is impressive that you're looking to better your situation like this, but appraisers are not highly regarded by Investors generally speaking, it's the nature of the business. My two cents worth is that a Realtor or General Contractor License would serve you better, especially with your location. Realtor is relatively easy and GC is much tougher and both can be much more lucrative, especially if you go for quality over quantity.

Appraising is a numbers game based on research and a bunch of rules that becomes a formula. Most Investors will tell you appraisers "know nothing" but I wouldn't be so harsh - most of them know their own names.

Best of luck whatever you decide.

Appraising is a numbers game based on research and a bunch of rules that becomes a formula. Most Investors will tell you appraisers "know nothing" but I wouldn't be so harsh - most of them know their own names.

Best of luck whatever you decide.

Account Closed · Answer

To your original question, the answer is no. If you want to get the basic concepts, do what @Zach Mitchell is suggesting. In my experience, there are only a few great commercial appraisers in a given area - and they are all in demand. They also think and speak more like investors (and likely network with investors or are also investors themselves). It is not only the education, but the years of experience that are needed to understand how commercial property works and how to prepare and defend opinions of value.

Investing isn't just about numbers - its about networking, determination, and the ability to put together and sell a deal. You don't learn about that in appraising.

Zach Mitchell · Answer

@Mark K. You are definitely doing the right thing trying to learn the basics before you jump in, like most beginners do. However, I would not spend they money on those courses unless you plan on pursuing a license. You can find the same information in a lot of different places online. The first thing that came to mind was YouTube and a quick search of Appraisal Practices and Procedures brought up a full course. Here's a link to the first session.

https://www.youtube.com/watch?v=WKBI4NXtAFU

Look for courses on the sales comparison approach after you watch these. They will dive deeper into the process of how to pick the right comps, making adjustments, etc.

Moving into your investing career just keep in mind that knowing all of this will be very helpful but when you actually do your first deal you could get an appraiser who has a different idea on the right comps to use and could still come up with a completely different value. Appraising is completely subjective and almost every appraiser will come up with a different value than the next (within reason). Good luck.

Sonya Stovall · Answer

I agree with @Zach Mitchell . If you are only looking to invest in Residential and not work full time as an appraiser, it can be costly and timely. The courses you outline are the initial course to be a trainee. After that, there are so many more, which might not all be local, to be licensed. I am a Commercial Appraiser (have not appraised now for 4 years), but the knowledge does help me when I am looking in Multi family properties I want to invest/buy. So if you want to venture into Commercial, consider it or the CCIM designation. If you will strictly be residential, and never appraise; I would not bother. Good luck and Happy Investing.

Mark K. · Answer

Thanks everyone for your feedback. Just to be clear, I do not plan on going into the field or ever actually getting a license. I want to take the courses for self knowledge so that I can "eyeball" properties in person and online and come up with an informed appraisal for it.

Additionally, the main reason I want to do this is for comps and ultimately deal making. Right now I have no clue how to do any of that. My research and networking has lead me to this point. Basically, I'll be spending around $700 and 60 hours to get a formal education in appraising which I feel will be a good foundation to start out with when analyzing deals. Then again, I am a total newbie and that's why I wanted your feedback.

James Wise · Answer

A license as an Agent would serve you better than an appraisal licesnse.

Bill Gulley · Answer

Yes David, I agree and that comes from ignorance and the investor not properly assess values which simply leads to disagreements and deals killed as a result. Some lenders use to stay away from some appraisers like the plague until the rules changed, same thinking by loan officers.

Yes, appraisal understandings and techniques can be very valuable. You will probably save yourself money simply by knowing what will appraise out and what won't. Such knowledge can be useful in dealing with an appraiser from constructive point of view without appearing as if you are trying to unduly influence their opinion. I'd say your input would be welcomed as you'd be able to provide more useful data.

Now, as to the price, rather high to me, but it may not be at all, I don't care for online schools, but sometimes it's the only alternative. I'd look at the ability to ask questions and what kind of personal attention there may be. It looks like you'll be exposed to more of the business side of the education than you could put together yourself, there is certainly value to that, but most everything necessary as a prerequisite can be found on line, may take awhile to track it all down.

Investors here (most) jump in at the strategy level as if they are dealing in widgets to move through some system (guru approach) and is far from being an intelligent approach to investing, but can't convince the masses for various reasons. It's not that hard.

You don't need to be an economics professor to start out with, you do need to begin by understanding the functions of economics to understand how valuations are formed for anything. You don't need to be a finance whiz to understand that valuations are what financing is based upon and once you understand that financing is the key to the door of real estate, a better education should be obvious.

Lastly, I don't think appraisal techniques can be self taught, it's more than a math problem. The evaluation of markets at the MSA level is where a valuation begins and then drill through to a municipality, to a neighborhood to a subject property, this is where most investors and Realtors may have issues with selecting comparable properties.

Appraising is an art and a science, you can't paint a master piece with a paint by numbers set. So, get a conventional, more formal and acceptable education in the industry.

BTW, you might get some part time work while you're at it! :)

Is it worth it to pursue an Appraiser Trainee license?

Is it worth it to pursue an Appraiser Trainee license?

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