Better in what terms? :) That's a very broad question!
Join a REIC.
My suggestion is Realtor because you can always take classes on appraisal techniques and, for the most part, appraisers gain a smaller skill set since they don't have to do marketing and sales. However, if you get with an appraisal company then you would have a more immediate income source. (It took me 6 months to close my first sale)
In making this calculation, you need to be aware of the very different levels of commitment involved. It is far, far quicker, easier and cheaper to get a sales license than it is to become an appraiser.
For example, becoming a licensed residential appraiser, at least in my state, takes about 200 hours of training and about 2000 hours (a full work year) of being an apprentice, in addition to the exam.
By contrast, 75 classroom hours, the exam, and a payment to a broker to hang your license, and congratulations, you're in real estate sales.
I considered this decision last year.... I chose the to be the salesperson. It is a tough route to go for sure but it can be rewarding. Getting your salesperson license is the easy part. If you choose the Realtor route it will take a lot of patience, hours prospecting, monthly expenses to your broker and Realtor association, marketing, etc. As for your Realtor schedule....It is totally up to you. I have closed 2 sales in 6 months, nothing to write home about but I have built relationships with 3 high net worth individuals who are interested in partnering with me for fix/flip. It is a people business, treat everyone you meet as a potential client or business partner and you can build a solid base for future real estate investing.
I felt the appraiser route is a little more clear cut. You get your license, become an apprentice, work your scheduled hours and get your weekly paycheck. I have some appraiser friends who work at home, or from the office. As long as their piles of reports get filed on time everyone stays happy :)
I did both and you will find that a lot of appraisers are also Realtors. Talk to someone that has done both in your area. Both have tons of CE requirements and with USPAP you want to be aware of what it means to have both credentials. I was first licensed as an Agent, then immediatley took the appraisal classes and did my required work. It took all together 2.5 years ( you will not be able to do it much sooner). I did General, so I could appraise Commercial. As an apprentice, you may or may not be paid. Now you need a college degree, and the classes are not always local. Also, finding someone to work under can be very difficult. People do not want to take the time, it takes away from them appraising. Most of the small firms are family oriented and no desire to bing in someone. As an appraisal, I had full access to properties (just like realtors) because we belong to the same Realtor Association that grants MLS access, etc. So there was no need to contact agent for access, etc.
Once you get your license, it then takes time to get on Bank List so that you can be engaged to appraise properties(if you have a desire to go solo and not work for anyone else). It is a process, and sometimes you might not get paid. Agents are paid at the closing table, appraisers are paid outside of closing, and some people (individuals, banks, AMC, you name it)don't honor their commitments. Things have gotten better, but like any industry/retail, non-payment fees are an issue. This happens more often on the Residential side, not Commercial so much. I love having both and learned aspects I feel I could only understand having both and worked as both.
You have to decide what is best for you & your pocket. With CE, E&O Insurance, split fees, and marketing; it can cost a great deal. With TX being non-disclosure (like MS) I believe if you can work under a good appraiser, you will have access to commercial data & sales that will not be in the MLS and in pubic records. Good luck!
Appraiser. I have my sales license, but put it in escrow (not my cup of tea). Unlike the agents' comments above, you can gain a lot more experience in appraisals than in brokerage, in my opinion; it depends on the license you go for. I am a certified general real property appraiser, which means I can appraise anything as long as I am competent to appraise it. There are very few agents or brokers that have the depth of knowledge that a seasoned appraiser has just by shear scale; we look at thousands of properties per year instead of a few dozen or even hundred. I mean no offense in any of these statements, please do not misunderstand (I just love what I do). There have been times in my career when I was looking at oil refineries and single-family residences in the same day; caves and farms; restaurants and churches; 4-plexes and golf courses; anything type of property.
In agreement, the above comments are more than correct on time and investment to becoming one. It is hard to become an appraiser, as opposed to an agent that is not too challenging. Each has rewards, so you will have to decide for yourself, but for me...appraisal. The most challenging thing, by far, to becoming an appraiser is finding someone to train under who knows what they are doing; this is the same with any mentor situation.
Well, both career choices have its own pros and cons. If you are talking about servicing the residential real estate market, then the commission per sale is obviously a lot more than doing one appraisal fee.
But the time and stress to close a real estate sale could be a lot higher for being an agent. On the other hand, as an appraiser, you'll still get paid regardless of whether the transaction goes through or not.
Being a residential appraiser is more like a volume play. The Appraiser Trend Study shows that an average appraiser would have done 243 appraisals in the past 12 months. Furthermore, many states have a shortage of appraisers in these few years, so could be the right timing to enter the market and fill up the demand.
However, to differentiate your practice from competitors, being a commercial real estate appraiser could be the way to go. This allows you to appraise any real estate. (i.e., golf courses, hotels, wind generating plants, marina, oil refiners, federal or land acquisition.) Your scope of practice is truly unlimited.
I know this is an older post but this an ongoing question for those that want to get into investing but also want to make a weekly paycheck while working on their REI business. I am both a realtor and working towards my Certified General. IMO, appraisal is the absolute best way to start in the industry. Just like others have mentioned, you are doing several site visits per month of all property types. Plus, you will speaking to brokers, developers, owners, tenants, zoning officials, etc on a weekly basis. Why limit yourself with residential doors and all those headaches. Personally, I would rather partner up with a group of folks into a single commercial NNN asset rather than multiple residential properties with multiple tax bills and management.
I agree Wes. I am also an agent and am looking to get into the appraisal field. It seems as though everyone can find a real estate agent but everyone is having a hard time with appraisals. Can you give any advise on getting started? I hear from most appraisers that the biggest objective was finding a mentor.
Yes, and it goes both ways. Finding a good mentor who actually cares about your progression is equally hard to find. Some appraisers just want the assistance of doing less admin work instead of teaching a new appraiser to do their own reports. The ROI just isn't there. Also, once you are certified, you can technically go off on your own and do your own business so they are very cautious of this. However, I have been told in several of my Certified General classes the average age of an appraiser is 60+ and they are winding down. My suggestion would be to come up with a list of reasons why you could help the mentor focus on the valuation of the appraisal and less of the front end the admin/research work. That's what they really want. They cant stand the repetitious labor after doing it 20+ years. I can tell you, just starting in commercial appraisal, you will be doing all the basic research for the subject property, comp research, pulling demographic data, macro/micro market research, light report writing, and maybe site visit help so bring this up to them that you wish to do this for them until you are ready to write reports. Given that you have your real estate license means you will have a leg up as opposed to someone starting fresh. Furthermore, when the mentor feels like you are progressing well, they will let you start attempting the full report from front to back while they edit your mistakes and guide you on how to do better. The appraisal report looks something like this- roughly 70-100 pages for bank work, much much less if a restricted appraisal for consumers- The front half of a typical report are important facts/conclusions about the subject property, site data, description of improvements, property rating vs typical market, macro and micro market data, demographics, highest and best use, etc. The second half of a report is all about the valuation and your comps- this is where the Mentor really needs to focus. I also suggest going ahead and doing all your advanced appraisal training before jumping into it. I personally found it too grueling to try and pound out reports while doing my Certified General classes. Its not the easiest material to grasp either. Hope this helps!
PS- If you are not pursuing Commercial, then its much less of a grueling process, but still difficult nonetheless. Residential reports are more like form filling rather than report writing, but you can still offer your services of subject/comp research, zoning research, deed research, site visit and photo taking help, measuring buildings, etc. PM me and I will share on your to do these things really well but some of it you will learn in appraisal school.
My 2 cents as a Certified General Appraiser (mostly residential work) for 24+ years and licensed Agent/Broker for 21 years...oh, and a Mortgage Broker for some of those years...and flipper/rehabber, and longterm OOS landlord
Appraisal will get you the skills to understand the real estate market "under the hood," and keep an eye on current trends, typically, more widely than an Agent/Broker. You will better understand how real estate is valued, what the banks are looking for (financing trends), and you'll constantly see what the market values (meaning, what buyers want and are paying more for). In other words, are 3 bedroom houses selling for the same as 4 bedrooms, or if you are doing a rehab, do you really need to add that extra 200sf of gla, or do you install solid surface counters (Silestone, Quartz, etc), or can you get the same reaction with granite counters, etc. I also will have a good idea if one of my deals may have appraisal issues when I sell. I can anticipate that and approach it accordingly.
You will most likely, also develop a wider area of knowledge, since you may work in a wider area, than if you were a Realtor. So, I see local trends, where people are buying, where they are moving from, what they are buying, what rehabs they are currently doing (which materials and colors, etc, they are using these days). I also see the data telling me which size or bedroom count or amenities buyers seem to be paying extra for, etc. I also learned to analyze that data to see market trends. As an Appraiser, I get paid to analyze the data and do research which has helped me in my own investing. I also got exposed to a lot more people, including flippers/rehabbers, builders, investors, businessman, celebrities, Agents/Brokers, etc. You have a great chance of making many connections.
Now, the negatives are: it takes a lot longer, more money (and making less money to start) and energy to go the Appraiser route (more education, training, etc). Or you can do what I did and get a job with the local Assessor and get fulltime paid training. I probably got the best training available and got paid to learn and gain experience. I was fortunate, for my license, I did not have to do any training hours under anyone or accept a lower fee for my independent work. And I got to see parts of my county I never knew existed and got to know the market, while I got paid to learn. I know where the gla comes from on public records (I may have been the one who put it on there), I also understand, that just because it's on record, doesn't mean it is legal sf or vice-versa. This helps when I buy a rehab, to check the legal gla and not just go by public records. In other words, I can better analyze a potential deal.
Also, the industry has changed and continues to change, making it more difficult to work, more responsibilities, liabilities, and additional work to do on an individual assignments. Pay has generally gotten better over the past few years, but the work required per assignment, has increased as well. This is all mainly for residential, commercial is a whole 'nother animal. And like other parts of real estate, the work cycles, up and down, but there are more opportunities to get work in down markets, then being an Agent.
Now, as an Agent/Broker, I understand how the transaction works, what's involved, the steps, etc. I don't need to do as many transactions to make the same money, or more (as an Appraiser). 1 deal can be equal to 3+ months of appraisal work. But, it may also fall through, at the last minute. But, typically, the work required for me to do a real estate transaction, is less (or feels that way anyway), than an appraisal. It was easy and quick to get my RE license (after my Appraiser License). You can make a lot of connections with other Agents/Brokers, which may help find deals. You learn some tips and tricks to sell and market a house (which also can help in your own investing).
Basically, they are both very different animals.
Well, that's all for my "brain-dump," at the moment. Hope this helps any of you.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you