Are Appraisers more Qualified than Agents?
Depending on the services you are looking for Real Estate Agents should be more qualified in marketing and negotiating the sale of your home, while appraisers should be more qualified in providing an opinion of the value of your home. This does not mean that ALL agents are experts in marketing and negotiating. In my previous discussion, I explained the process for obtaining your real estate license. In this discussion, I will lay out what an Appraiser must do to obtain an Appraisal License.
What is involved in obtaining a Certified Appraisal License?
If you are interested in becoming a Real Estate Appraiser, you can find all the requirements on the local state appraiser commission website. I have provided a link to the Missouri Appraisal Licensing requirements here.
The first requirement is having completed college education in any of the following:
1) Bachelor’s Degree in any field of study;
2) Associate’s Degree in a focused field of study, such as business, economics, or real estate;
3) Successful completion of 30 college semester credit hours in specified topics;
4) Successful completion of College-Level Examination Program (CLEP)1 exams equivalent to a minimum of 30 semester credit hours in specified subject matter areas; or
5) Any combination of #3 and #4 above that includes all of the topics identified.
6) A LICENSED RESIDENTIAL appraiser who has been licensed for a minimum of 5 years and in good standing for at least 5 years with no disciplinary actions that would affect the individual’s ability to appraise may upgrade to CERTIFIED RESIDENTIAL without completing any college coursework.
In addition to completing 30 hours of college credit hours you will need to have completed 200 hours of appraisal specific qualifying education. These courses include;
Basic Appraisal Principles – 30 hours.
Basic Appraisal Procedures – 30 hours.
15-hour National USPAP or Equivalent.
Residential Market Analysis & Highest and Best Use – 15 hours.
Residential Appraiser Site Valuation and Cost Approach – 15 hours.
Residential Sales Comparison and Income Approaches – 30 hours.
Residential Report Writing and Case Studies – 15 hours.
Statistics, Modeling and Finance – 15 hours.
Advanced Residential Applications and Case Studies – 15 hours.
Appraisal Subject Matter Electives – 20 hours.
Finally, to obtain a Certified Residential Real Estate Appraisal License, you will need to complete 1,500 hours of supervised experience hours in no fewer than 12 months under the guidance of a Certified Residential Appraiser. The number of experience hours was recently reduced from 2,500 needed hours. You will need to keep a log of all your appraisals and submit them to the State Licensing Board for review. A maximum of 10 hours can be applied to each residential appraisal and a maximum of 15 hours can be applied to 2-4 unit dwellings. So if you only completed residential appraisals, you would need to complete a minimum of 150 appraisals under the supervision of another appraiser. The Missouri Certified Residential Appraisal Application can be found here. Page 9 outlines the experience log requirements.
Why Should You Care About Licensing Requirements?
If you are thinking of buying or selling a home, you are likely considering hiring a real estate agent for assistance. As outlined in my previous post, the requirements for obtaining a real estate salesperson license are very minimal. This does not mean that all agents have no experience or are not skilled in properly pricing your property. You have to be diligent in choosing the right agent. The agent can assist you with pricing your home for or determining what to offer when making a purchase. The agent however has a vested interest in the transaction.
If you are hiring a real estate agent to sell your home, you may be interviewing multiple agents and getting their price suggestions. Some agents may tell you unrealistic price opinions in an effort to win your sale. Agents get paid more if the home you are selling lists for more, or if you pay more as a buyer since they get paid a commission based on the sale price of the home. It is imperative that you list your home properly when you put it out for sale. Markets have changed dramatically over the past few years. You are much better off to list your home slightly lower than market value to create demand for your home. I will discuss this in another post. On the other hand, if you are buying a home, the buyer agent has a great benefit to getting a home under contract for you. If an agent can find you a home quickly without multiple days of showing the house, they make more money per hour. In many cases, they may be influencing you to purchase a home that may not be the right fit for you. Or even worse, advising you to pay a price that is over market value.
Agents are not well educated (at least initially) in proper valuation techniques. If you are thinking of listing a home, you can always get a pre-listing appraisal. You can hire a licensed appraiser to give you an unbiased opinion of value on your home. The appraiser is paid by the job. The fee is not based on the value of your home. In fact, to charge an appraisal fee based on price is illegal. If you are thinking of making an offer on a home, you could hire an appraiser to complete an appraisal in advance of your offer. This would force the appraiser to give a value opinion without having any contract or offer information available. Appraisers could complete a desktop report relatively quickly and give a value range for you to work with. So if you are thinking of buying or selling a home, reach out today and see if we can be of service to you.