THE APPRAISER TRAINEE DILEMMA
WHAT ARE THE TRENDS FOR 2023?
Welcome to 2023 and to season 7! That’s right, my friends! Because of you, we are entering the 7th season of this podcast which, in all honesty, has been a life changing experience and effort for me. I’ve talked many times in past episodes about what this podcast has meant to me, what kind of work goes into it, how it forces me to be in a constant state of research, creative thinking, note taking, learning, growth, and building habits that support this kind of content creation. I’ve been podcasting and making videos for more than a decade now and its one of my favorite mediums for getting my thoughts, ideas, and teachable point of view out into the world.
If you haven’t heard the origin story of this podcast, I’ll give you the abbreviated version. I started a small local appraisal podcast back in 2014 to talk to my market about appraisal related topics. I had been podcasting in the martial arts space for years already and had built one on of the largest Aikido podcasts in the world, so I already some of the equipment, the experience, and the editing chops to crank out some short podcasts on topics I could speak with some expertise on. The idea was to become the go-to authority in my market for appraisal work. I was already on that path with doing monthly office talks and presentations in my market, but I wanted to do more, so I started the podcast.
I think I got about 10 episodes in and was so bored out of my mind that I simply stopped doing it. My business was growing and super busy, and I simply had zero interest in talking about local market trends, housing stats, and appraisal related stuff. Not saying, by the way, that you shouldn’t do that, it’s just not my cup of tea. Nevertheless, I stopped and didn’t restart it until sometime around later 2017, but this time talking about things I wanted to talk about. Five years later and here we are, season seven, about 300 episodes, and several additional streams of income as a direct and indirect result of the podcast.
The reason I bring it up at the opening of the show is for two reasons: first, to say thank you to all of you for being loyal listeners of the show. Without your feedback over the years about the different topics I talk about, I’m not sure if I would have kept going. I get messages from some of you after each episode that, quite simply, make it very enjoyable to continue doing this. The second reason I bring it up is to highlight just how important I believe it is to be creating content going forward into 2023 and beyond. I believe those who choose to stay in the dark ages and continue using the excuse that they’re just not tech, content, or social savvy will suffer from commoditization the most.
Although I was unclear when I started this podcast what it would lead to, I was very clear that it was a method to get my thoughts and ideas out to the world, it would force me to grow and learn something each week, not just once or twice a year like a CE class, and, if done right and done well, it would develop an audience of authority for me, which would allow me a level of freedom and choice in business that isn’t offered to everyone else whose voices go unheard. And that’s exactly what it has done for me.
I am not saying that everyone needs to start a podcast this year. What I will say again though is that, if you’re not creating some kind of content in 2023, you will slip even further into anonymity, which is the kiss of death in a highly commoditized business or industry. Those of you in the real estate sales and lending side of the house, this goes for you as well. Differentiation must be the focus for 2023. If you’re not becoming the go-to authority, the most trusted advisor, and one of the most visible to your market of clients and customers, you will be a faint soft voice screaming in the wind amongst a vast sea of competitors. Granted, there will be fewer competitors in 2023 in all three of those industries than there was in the prior 10 years, but a sea of competition, nonetheless.
The other option is simply to go to the other side of the spectrum, which is to simply be the low-cost provider. No need to do much else in that scenario except to be the cheapest and fastest. Not knocking that business strategy at all, by the way. It’s a business strategy that works quite for many businesses. As long as you know your numbers really well, and you know how to use leverage, being the low-cost provider, or the fastest and cheapest can work. The beauty is that you get to decide which it’s going to be.
Nevertheless, friends, today I want to have a conversation with the appraiser trainee contingent, primarily. This would be anybody is has already taken their appraiser licensing classes, maybe you’re thinking about taking those classes, maybe you’ve already secured a mentor and have some of your required experience hours under your belt. Whatever the situation is for you, I want to commend you and encourage you to remain strong and steadfast as there is a battle ahead.
As most of you already know, times have always been tough for people trying to break into an industry largely run by gatekeepers. I don’t use that term in a negative way, necessarily. Any industry that requires some form of apprenticeship from a veteran of that industry can be said to have gatekeepers, even if the gatekeepers don’t perceive themselves as the keepers of the sacred keys to the kingdom. If you can’t enter an industry without the explicit blessing of, and guidance from, those very key holders, there’d better either be a very nice incentive for the gatekeepers to want to mentor the apprentices, or some kind of requirement under threat of punishment that the mentors take on new entrants to the industry every so often or else.
Since I am not a proponent of such mandates to require someone to take on a protégé under threat of punishment, the only thing left then is the voluntary mentorship route that currently exists. As you all know, what that requires is somebody willing to take on the risk and costs associated with that path. Rest assured, appraisers in training, this is not a low-cost proposition for the one willing to take on that massive responsibility. There is a huge time commitment on the part of the mentor, there is a slowing down of their own production to teach and train properly, there is the potential loss of business from letting trainees work on business previously handled by the expert, there is the very good chance that, as soon as the trainee is well trained and becomes licensed, they will leave the mentor and start their own business, thus becoming the competition to the one who trained them.
Just as it has gotten much more difficult for even the veteran appraisers to get good clients and well-paying appraisal jobs in the current market, it’s gotten even more difficult for those seeking to enter the appraisal industry and secure some kind of mentorship. We must all keep in mind that almost nobody chooses to hire or bring on an apprentice out of purely altruistic and noble motives. None of the mentors in the appraisal industry wakes up one day and says, “ya know, I’m not doing enough for the industry at the moment, I think I’ll slow down considerably to bring on somebody who knows nothing about the process of what I do so that, maybe one day this great industry can be filled with younger, fresher, and better talent to replace me. I’ll use my own money, my own business, and my own time to help the next generation of appraisers get a shot!”
No, that’s not what they say. That’s not to say that some of you do have noble intentions regarding helping the next generation, but it’s not the driving motivation. People who take on an apprentice do so first and foremost based on economic decisions. They realize they could use some help because they’re extremely busy. They realize they could teach somebody to do the inspection portion of the appraisal. They realize they could increase their capacity by having a trainee helping them be more efficient with their time. They realize that they can scale their operation by having more appraisers and often the best way to do that is to train those appraisers from scratch instead of trying to find a well experienced, but potentially jaded, crusty, and set in their ways 15 or 20-year appraiser for whom you’re likely to butt heads with constantly on the right way to do something.
Those of you hoping to have a career some day in the appraisal industry, let’s quickly recap some of the things I think you need to be focused on if you plan on pursuing this industry as a career. After we go over those, I will add my updated advice given what I’m seeing going on the world today.
I talked in an episode last year that you absolutely need to become intimate with the specific problems of the people you’re seeking to learn from. This is true, by the way, if you’re in any business and want to be the best at it. If you can’t speak the language of the people you’re trying to sell to, you’ll go hungry for sure! As an appraiser, if you don’t know what the biggest pain points are for lenders when it comes to the appraisal process, you’re always at the mercy of the market and the competition. If you don’t know what the biggest pain points are for Realtors in your market, you’ll never be able to speak their language and you’re always at the mercy of the lending environment. Realtors are the gatekeepers of the non-lending side of the appraisal business, so it behooves every one of you to be studying what those pain points are. Know what keeps appraisers up at night worrying about and then learn how you might solve those problems for them. If you don’t know what keeps them up at night, ask them!
We get emails from potential trainees all the time in my business. Although we get back with all of them, we invite an extremely small percentage of them into a conversation. 99% of what we receive from people looks like advice they got from Monster.com, or some other job-hunting website. A generic plea for a job, an attached resume, and some BS about how they want to be an asset to our organization. This is not the way you secure an opportunity my friends. Going about this process in that way leads to people going on some Facebook forum and exclaiming they’ve reached out to 100 potential supervisors and got crickets! No creativity, no imagination, and nothing that would make you stand out and make the potential mentor stand up. Know the problems experienced appraisers face every day and find creative ways to speak to those problems if you want to even be heard.
The next bit of advice is to learn how to use appraisal software. I don’t want to offend anybody listening to the show who uses one of the smaller brands of form filling software, but forget trying to decide which one to learn, just download AlaMode Total and use the sample version to get familiar with how it all works. They’re the biggest and have the most training videos out there, so learn some of that stuff before you attempt to secure an apprenticeship.
I recommended in that episode to do your research and learn the appraisal process. If you’re reaching out completely green and with none of the language or process knowledge that an experienced appraiser uses each day, you’re email goes in the trash. Make yourself the easiest person to bring on and add value in the shortest amount of time and you may have a chance. Again, I don’t necessarily agree with the way the apprenticeship model is set up in this industry, but until something like PAREA is available as an alternative to what exists now, this is the way it is. You can go on YouTube and search out the appraisal process, you could call around to potential mentors and offer to pay for breakfast or lunch and interview them.
I don’t want to assume that all appraiser trainees are college aged young men and women, so those of you who are older and already in career, but maybe seeking a move into the appraisal industry, you already have some experience out in the working world. Use that background and experience dealing with other busy human beings to create an opportunity. If you’re doing things today that maybe worked 20 years ago, like emailing and sending out resumes, good luck to you. I’m not saying that won’t work, I know there is somebody out there for whom that’s exactly how they found their opportunity. But they found it during the busiest time in history for appraisers, agents, and lenders; they found it when the mentor needed a trainee the most in order to be more efficient and make more money, and they did it when the threat of having the trainee leave at some point and become competition didn’t faze them because there was an overabundance of business anyways. That isn’t the case today, and likely will not be the case again for a long time.
Friends, the market has changed, the industry is changing, and the world is changing quite rapidly. The real estate, lending, and appraisal industries are going through an extinction acceleration event right now. What I mean by that is that the current market conditions are accelerating the extinction of a certain segment of the population of all of those industries. Some prognosticators believe the sales side of the real estate industry will lose between 25% and 35% of the agents over the next year. That’s roughly 400,000 to 500,000 agents. The appraisal industry will shrink, the mortgage lending industry will lose half of its professionals over the next year or so, home inspectors will be forced to rethink careers and it will have a cascading affect that touches many other industries on the fringe of real estate and lending.
If you haven’t been keeping up with the job market news, many sectors of the economy are suffering from the hangover of overabundance from the last decade. The tech sector way over hired to handle demand and now has to let tens of thousands of employees go. Amazon, Facebook (Meta), Salesforce, Slack, Twitter, Tesla, Shopify, Microsoft, Netflix, and those are just the big players. Thousands of other smaller companies have had to collectively layoff almost 200,000 people worldwide and will continue to do so until they reach the lean operational status they think will get them through.
Things are changing, friends, and I won’t blow smoke in your face to fool you into thinking things are all roses, they’re not. When times are difficult for appraisers, times are even worse for those looking to get into the industry. When companies are laying off staff to survive, why would they want or need to bring you into the fold and add more potential costs and inefficiencies? If you’re not solving the big problems, you’re potentially one more of the problems. Figure out a way to not be one of those additional problems and you may have a chance at a new career. Don’t figure that out and you’ll simply be one more person who ends up in a completely different field with a story to tell about how you almost became a real estate appraiser.
So, here are my updated thoughts for those looking to break into the real estate appraisal field. By the way, experienced appraisers follow along because all of these things will potentially help your business as well. The first trend to consider is the shift from professional service firm to professional knowledge firm. Most appraisers consider themselves some form of professional service provider. The bank has a service need in the form of an appraisal order, so the appraiser takes the order, performs a service, and provides the appraisal. This is the very process that has ultimately been commoditized over the decades and for a variety of reasons. The shift in a bunch of industries, however, is the shift from people viewing themselves as service providers to them viewing themselves as knowledge providers. Those who continue to view themselves as service providers will continue to have work, but with shrinking fees, little control over their businesses, little control over who they work with and for, and little control over who they compete with.
The next generation of appraisal business will fall primarily into two camps: the low-cost service provider doing very rapid, high volume work; and the knowledge professional doing more complex, high end, lower volume, but higher profitability type work. The great thing about this is that you get to choose which one you’ll be. Go back and listen to the episode called ‘We Will Specialize…’, where I talk about this very thing. As somebody looking to break into an industry, you’re simply going to have to come in with a much higher level of game, so to speak, than previous generations. You’re going to have to come in with more knowledge, more creativity, more imagination, more prior experience, and add more value than the potential cost and risk of engaging with you than in previous generations.
The next generation of appraiser will either be sitting at a desk all day doing data entry and analysis type work with no customer service skills needed, or they will be a Swiss army knife of skills that include public speaking, B2B sales, customer service, pro networker, and trend follower. Those are the two primary camps the industry is falling into, with some smaller subcategories within those two. You will either be a service provider providing very specific services at dictated fees, or you will be a multi-faceted, open minded, knowledge professional able to attract and manage different segments within your business while selling on value, not your time. Both will be viable businesses; one will just make more than the other and have more options available to them. For the trainees listening to this, if you have a background or skillset in something that could bring great value to an existing business, it may behoove you to bring those ideas to a potential mentor.
The second to last trend I’ll mention in this episode, and this too is for both the experienced appraiser, as well as the appraiser trainee, is the option of working for a larger firm. When I came into the industry 22 years ago, I worked for a much larger firm that had efficiencies, systems, processes, and some things figured out. There were a bunch of companies like that back then. Over the years, there was a move away from the big firm and toward the independent appraiser. Not judging as good or bad, just recognizing the trend.
However, as all things move in cycles, the trend is again back toward the larger firm due to the front office and back office efficiencies that can be created to handle higher volumes, quicker turn times, better communication, and less hassles for both the appraiser and the client. Instead of your clients have dozens to hundreds of unconnected independent appraisers to contact for updates, revisions, and problem solving, they now have some options to get all the information from one source for 20 or 50 appraisers in several different regions.
As many of you know, in addition to running my own appraisal firm, I also work for a large national firm called True Footage. True Footage wasn’t created to start a new trend, it was created because the CEO and leadership team saw a trend forming with the GSE’s and big lenders. Its already happened in some other countries where less than 10 major appraisal firms do the vast majority of appraisal work for lending purposes. Do I think that’s what will happen in the US? Unfortunately, I don’t have a crystal ball. However, I am in a position these days to be in conversations with entities I wouldn’t have had the opportunity to be in previously, and we are seeing a general move toward those entities preferring to work with larger firms because of the efficiencies that can be created.
I don’t believe that means independent appraisers going away any time soon, but it is a trend that speaks to the pain points of some of the larger players in the industry. Be upset about it, stomp your feet, go on Facebook groups and bitch about it, and get it all out of your system because none of that stuff changes the trend. You don’t have to judge the trend to be aware of it and plan accordingly. If somebody is screaming at you that they aren’t happy with something, as a business owner, it doesn’t benefit you to yell back at them that they’re wrong. It benefits you as the business owner to ask yourself where the opportunity exists in the trend.
How this trend relates to the trainees listening to this episode is simply that the larger companies are another option for finding an opportunity. Companies like True Footage or Opteon or RSDS might not be your preferred option, but there is a trend toward, and opportunity in working for a larger company going forward.
The last point I’ll make regarding trends and opportunities for trainees going forward is the issue around the time requirement to get licensed. Most people entering the industry know down to the hour how many experience hours and classroom hours they need in order to become licensed or certified. Why do they know this? Because it’s all part of the education process and path to enter the industry. Most of you know these numbers because it’s the primary motivator for you to enter the industry, and I’m not here to tell you you’re wrong to be motivated by those numbers. The problem with being hyper focused on those numbers is that, those hours are the very thing that makes potential mentors not want to bring on a trainee.
When somebody knows that they only need to work for somebody for one year and then can go out on their own and become an independent appraiser, or essentially competition for their mentor, they are corrupting the whole purpose of the mentorship process, which is to take someone under their wing for several years at a minimum and teach them everything they might need to know to be good at their job, to be proficient at their job, to have all the tools necessary to make a nice long career out of something, and to be part of something and help it grow.
If you want to have an opportunity to have somebody mentor you in a business or trade, my suggestion is to get really cool with commitment. My belief is that trainees should be committing to their supervisors for a minimum of three years, regardless of the number of hours needed to become licensed. I was with my appraiser mentor for 5 years before making a change, I was with my martial arts mentor for 20 years before he passed away, and I have been with one of my business mentors for almost 30 years. Personally, I really value true mentorship, and I also value loyalty, so those things have been very easy for me. I know the trend today is more of moving at the speed of TikTok, which is not conducive to true mentorship. Real mentorship takes many years, and so does learning the appraisal business.
Getting fully licensed in one or two years has almost no correlation with being qualified to go into the appraisal business, or even being qualified to complete good appraisals on your own. It takes years to fully grasp many of the nuanced skills required to be a good appraiser. If you’re out in the world looking for a one-year internship so that you can then start your own competing company, I’d strongly suggest looking into something else since you’ll probably be looking for a long time. Remember, we talked about understanding the pain points of the people you’re looking for an opportunity with, and this is a big one!
Ok, I know I said that would be my last point, but here’s a little bonus trend for all the trainees and potential trainees out there. There is a trend toward having another job to pay your bills while you’re learning the ins and outs of the business, and I can’t say that I disagree with it. Taking on a trainee can be a huge time and financial commitment for a mentor, which is a pain point that keeps many from undertaking such an endeavor. While I don’t think it’s ideal for the trainee to have to do that while learning, if it’s the only way forward, it might be something to wrap your head around. I am not suggesting that you work for free (although that’s an option too), I am suggesting that greatly limiting the downside to the potential mentor by reducing their financial commitment might be a way to attract somebody to mentor you.
Not that this means anything to anyone, but since I learned about the mentor/protégé relationship via the eastern view, which has 7000-year history of mentorship in almost every career and industry, the protégé knows going into the relationship that it will be a long, hard slog, but the benefits will be great. I spent several long and grueling years studying under a Zen and Aikido master, all while paying for my training, room, and board. I had a job outside of the dojo so that I could afford to receive the mentorship under this person. Again, while I am not necessarily advocating this for you, if I was in your position today, knowing what I know about true apprenticeships, I would most definitely offer myself up as a loyal apprentice with no pay, at least until I could prove myself worthy of pay and a real value add to the business. But that’s just me.
Until next week, I’m out…
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