How to Become an Appraiser
An assessor or appraiser evaluates a piece of property and calculates its value to create a report that conveys the estimated worth of the property, as well as the basis for the calculation. Some assessors or appraisers specialize in real property, including residential or commercial real estate. Others focus on determining the value of personal property, which may include cars, boats, antiques, and jewelry. Others specialize in the assessment of business property, which includes tangible business assets, such as machinery and equipment, and intangible business assets, such as trademarks, patents, and intellectual property. Assessors and appraisers play a particularly important role in the real estate market since the value of a parcel of real estate must be estimated whenever it is bought, sold, taxed, mortgaged, or insured.
Assessors work on behalf of local governmental authorities; they estimate the worth of property for the purpose of imposing local property taxes. Appraisers, on the other hand, work for private, independent clients; their value estimations may be used to set a selling price for a house, fix insurance premiums and coverage limits, or determine the amount a bank is willing to loan a homebuyer. Because they generate valuation estimates for different purposes and use different methods in doing so, assessors and appraisers may sometimes come up with different values for the worth of a single piece of property.
Duties and Functions of Assessors and Appraisers
Assessors are generally public employees who work for state, municipal, and local governments and focus primarily on determining the value of real estate. The chief tax assessor of a local government unit, such as a city or township, is generally an appointed or elected official. A large proportion of local government budgets are funded through the collection of property taxes from owners of real estate whose property is located with the borders of the local jurisdiction. Tax assessment is the practice of evaluating real property and calculating its value for the purpose of determining the amount of property tax to be imposed. Although tax assessors generate opinions of the value of single pieces of property, they often calculate their estimates using mass appraisal techniques applied to entire blocks or neighborhoods. Only when property owners challenge the estimate used for taxation purposes will a tax assessor use single property appraisal methods to calculate the worth of a piece of real estate. Tax assessors generally reassess the value of property within their jurisdiction on a regular basis in order to account for changes in the local real estate market, improvements made to properties, and depreciation of houses and other structures.
Appraisers generally work in the private sector as employees of private companies, including banks and real estate agencies. Self-employed appraisers may work directly for individual or business clients. Appraisers who work for real estate agencies may determine the value of a house or parcel of land for the purpose of fixing a sale price. Banks and other financial institutions may request a report from an appraiser before deciding whether to give a customer a mortgage and how much money to lend. Insurance companies that issue homeowners’ policies frequently rely upon appraisers to determine coverage amounts and policy premiums, as well as payouts made to policyholders in the event of loss. Unlike tax assessors, who often use mass appraisal techniques, appraisers of real estate generally value one piece of property at a time and often specialize in one type of real property, such as commercial real estate or residential real estate.
Factors Considered by Assessors and Appraisers
A tax assessor, an appraiser who works for a real estate company, and an appraiser who works for an insurance company may all reach different conclusions about the value of a particular piece of property. This is because a single real estate parcel may have a different value for tax purposes than it does on the open real estate market or when being insured against loss. Tax assessors and appraisers who work for different private entities have different objectives and use different methods for making calculations. However, in the context of real estate valuation, there are many similarities in the way these professionals work.
Assessors and appraisers must be familiar with the local area in which they conduct property evaluations. This familiarity with the local area includes awareness of environmental factors that may raise or lower the price of a house or piece of land. Such factors could include proximity to the beach or lakeshore or presence of endangered plant life on the property. In addition, both assessors and appraisers should have a grasp of the mechanisms underpinning fluctuations in the local real estate market. They should understand the importance of proximity to highways and public transportation, as well as other public amenities, and how these affect real estate value. When it comes to evaluating houses and other structures, an assessor or appraiser should be able to evaluate the quality of the construction and any subsequent repairs and renovations, as well as take into account any defects, damage, or deterioration when reaching a value estimate. When conducting an evaluation, an assessor or appraiser may take photographs of the property, including pictures of the interior and exterior of any buildings, and consult records from previous appraisals, as well as records of recent comparable home sales in the area.
Assessors generally spend much of their work time in an office environment doing online research and drafting valuation reports. Assessors generally work in the local city or town hall, courthouse, or other municipal building. A significant portion of an assessor or appraiser’s workday is spent conducting on-site visits to properties that are being evaluated. This is especially true of real estate appraisers who focus on in-depth evaluations of single properties as opposed to assessors who use mass appraisal methods that may be based as much on data and previously issued reports as upon inspection of individual premises.
Education and Certification
Although the work done by assessors and appraisers is somewhat different and they sometimes use different methods, prospective assessors and appraisers generally take the same types of courses in school to learn similar skills. Educational requirements for assessors and appraisers vary from state to state based on each respective state’s licensing requirements. However, most have at least a bachelor’s degree, even when a four-year degree is not explicitly required. Accounting, business, finance, economics, or equivalent fields are common majors for individuals who go on to work in the field of assessment and appraisal. Studying mathematics, English, real estate, or computer science will also provide a strong background for the prospective assessor or appraiser.
Assessors and appraisers typically obtain a license or certification to practice their specialty within their state. Each state sets its own educational and training standards for licensure and certification and develops its own procedure for applying for and obtaining a license or certificate. These standards are often complicated and can vary according to the specialization of the appraiser or assessor. Those interested in learning how to become assessors or appraisers should check with the professional regulatory authorities in the state in which they plan to practice. It is important to keep in mind that assessors and appraisers are regulated somewhat differently.
Under federal law, real estate appraisers must be licensed or certified by the state in which they practice. While the criteria for licensure or certification vary significantly from state to state, certain minimum requirements are applied universally. Appraisers of residential real estate must hold an associate’s degree or higher, while appraisers of commercial real estate must hold a bachelor’s degree.
Federal regulations require all states to offer two levels of certification for real estate appraisers: Certified Residential Real Property Appraiser and Certified General Real Property Appraiser. In order to value a residential property with a loan amount over $250,000 or a non-residential property with loan amount under $250,000, an appraiser must have earned the designation of Certified Residential Real Property Appraiser. This certification is awarded only to applicants with a minimum of an associate’s degree or 21 units of course work at the college level in specific subject areas. Candidates must also complete 200 hours of in-class training in appraisal and 2,500 hours of work experience in the two years immediately preceding the application for certification.
Certification as a Certified General Real Property Appraiser enables an appraiser to appraise any type of real property of any value without restriction. This certification requires a bachelor’s degree or 30 units of course work at the college level in specified subject areas. Candidates must also complete 300 hours of in-class training in appraising skills and 3,000 hours of work experience earned over the course of at least 30 months. Half of the 3,000 hours used to satisfy the work experience requirement must involve work related to appraisal of nonresidential property.
The Certified Residential Real Property Appraiser and the Certified General Real Property Appraiser credentials are federally mandated. In addition, most states also offer a third certification credential, the Licensed Residential Real Property Appraiser. To earn this certification, applicants must complete 150 hours of qualifying education credits and at least 2000 hours of on-the-job training over a period of time of at least one year. Appraisers who hold the Licensed Residential Real Property Appraiser credential may appraise noncomplex one-to-four residential units with transactional values below one million dollars and complex one-to-four residential units with transactional values below $250,000.
All certified and licensed real property appraisers, no matter which certification they earn, must take at least 15 hours of coursework in Uniform Standards of Professional Appraisal Practice (USPAP), promulgated by the Appraisal Standards Board of the Appraisal Foundation, a not-for-profit organization devoted to the support and promotion of the appraisal profession. In addition, all candidates for certification must take a statewide licensing examination.
Regulation of assessors, unlike that of appraisers, takes place solely at the state level, with no federal involvement. Federal law requires no specific training or education to become an assessor. In most states, a special board determines what standards of education and professional training and experience must be met before an individual can be licensed or certified to work as an assessor in the state. In a few states, these requirements are not promulgated at the state level; instead, the cities and towns within the state set these standards.
States that require certification for assessors usually impose qualification standards similar to those imposed upon real estate appraisers. Prospective assessors must generally attend accredited or pre-approved schools and take basic courses in appraisal and assessment. Candidates for licensure or certification generally must also pass a state-administered examination and work a certain number of hours in the assessment or appraisal field or complete specific on-the-job training requirements.
Continuing education is required to maintain a license or certification for both appraisers and assessors. Appraisers must complete fourteen hours of continuing education per year, as well as take a seven-hour National USPAP Update course every two years. These are the minimum continuing education requirements for licensed and certified appraisers. States have discretion to impose continuing education requirements above and beyond these. There is no uniform national minimum requirement for continuing education for assessors. The continuing education requirements for assessors vary from state to state.
Salary and Job Outlook
According to the U.S. Bureau of Labor Statistics, real estate appraisers and assessors made an average annual salary of $54,980 in 2018, while the top ten percent made more than $102,590.
Data provided by the Bureau indicates that there were 80,800 real estate appraisal and assessment professionals working in the United States in 2016. Nearly a quarter of those working in the field are self-employed as residential and commercial appraisers.
A full thirty percent of appraisers and assessors work in local government, most of which are employed directly with municipal and county tax assessment offices. The number of appraisers far outnumbers the number of assessors working in the U.S., with government assessor positions often obtained either through public election or official appointment.
Not surprisingly, appraisers are in highest demand in the hottest real estate markets where homes are being turned over frequently and lots of new construction is taking place. Assessor positions are more evenly distributed since just about every county and municipality across the country employs one or more to ensure assessed values align with what homes and commercial properties would sell for based on current market conditions.
The Bureau of Labor Statistics expects appraisal and assessment positions to increase by 14 percent nationwide over the ten-year period ending in 2026. As long as property taxes are collected and people continue to buy, sell, and own houses, there will always be a need for professional real estate appraisers and assessors.