New Changes...Disaster or Opportunity?

I've been receiving a lot of inquiries as to where I think the industry is headed and how trainees fit into the picture. Indeed it is more difficult for trainees to make it. The requirements are harder and there are fewer Supervisors now more than ever due to the new regulations. Not only that...they are changing the way that appraisers are going to get jobs. Although it is still unclear as to how this will unfold it is evident that the loan officer/broker relationship to appraisers is going to change. As an appraiser I think this will definitely help with the pressure and ultimately will improve the industry. As a business owner...I am waiting to see how they plan on handing out appraisal jobs.

This country is founded on ingenuity and entrepreneurship. Regulating the amount of business an appraisal firm can get can be disastrous for some and advantageous for others. Let me explain...Because I have an extensive background in sales/marketing/negotiation and business, I have enjoyed a rich client base and ultimately a successful appraisal business. Of course I did good work but more importantly I knew How to get and keep my clients. Most appraisers think that it's too difficult to balance the ethics of this industry and be successful. I constantly hear appraisers (no matter what the market is doing) complain that they lose business to shady appraisers who 'hit' values. How are they suppose to compete is their mantra.

To me...the fact that they are losing (or have lost) business to unethical appraisers is not because the shady appraiser will commit fraud but because they themselves haven't had adequate training in negotiation and lack the mastery of social dynamics and language so they can control their clients' frames. Granted it is a learned skill but is well worth it. Personally...it took me quite some time to do this and I lost a lot of clients in the beginning. But, once I became proficient at it...I rarely lost a client AND I never had to cut corners or inflate values.

Most appraisers aren't even aware of NLP or some of the other business tools that are out there to help...so for these individuals I think the New industry model they are currently putting together is going to help them. They won't have to worry about getting phone calls from LOs/Brokers or Lenders pressuring them or questioning their values.

For appraisers such as myself...this is not a problem. The problem lies in the fact that I may not be able to give the superior service that I can through contact with my clients. And on top of that there is the question of what type of contact 'can' we have with the clients. Don't get me wrong...the jury is still out on what they are planning on doing and I firmly believe that no matter what transpires all one needs to do is adapt their business to the new system and there will be something advantageous with it.

The reality for many appraisers is that if they don't possess or take the steps to acquire the ability to build new income streams and to diversify their appraisal businesses...there will be a cap on what they can make.

Regulating how jobs are handed out sounds very communist to me. Images of standing in a bread line come to mind. Having jobs handed out on a rotating roster is better than the first come first to get the job method. Still...this business is cyclical and waiting around for a job (or better yet a handout) isn't smart business.

The 3 trainee rule is another example of faulty logic. Try telling a lender that they can't have any more than 3 employees. It's counter-intuitive. They needed to implement better standards for training, education, and inspecting instead of limiting the number of trainees. Increasing the required education and requiring a degree doesn't cut it. There are proven training and learning methods that make the 'old' school way of learning obsolete. Take a look at the military. They can download a whole set of skills and transform a persons thinking in 16 weeks not 2 or 4 additional years. I can learn more from mentors than I ever could taking another statistics class. I'm not knocking education but it is not the only solution.

The secret of the military is in their method and their method is through doing and drilling until they get it right not reading and listening to lectures until you fall of sleep. Studies have proven that reading, taking tests, and listening to lectures is the worst way to learn. Who would learn the skill of riding a bike faster...someone who watches 1,000 videos and lectures on how to do it or someone who gets on the bike on day 1?

While I'm at it. What's with the reports? With so much talk of appraisal fraud how come we still do appraisals that have 6 photos on them? I know many of you use more and that's great!...But we're now in the information age. How about Video Appraisals? If a picture is worth 10,000 words what's a video worth? It's easy for a trainee to miss a photo or not disclose that there is work being done on the property...Video the entire site inside and out including the surrounding areas and comps and you've solved a TREMENDOUS amount of error and fraud. How long does it take to video a property? 10 minutes?

The bottom line is that no matter what happens some people will panic and others will reap the benefits. The difference between the 2 groups will depend on who has the most choices available to them with their businesses and who adapts. The more skills and tools you have the more options you will create for yourself.

The rich get richer no matter what the market is doing. They do because they know how to use the trends that they are presented with.

As far as where trainees fit in with this new industry I will give you this advice...

Don't let yourself get sucked into the negativity. Be realistic but keep your mind open. You must understand a system in order to figure out how to benefit from it but make sure you don't become bound by it. Just because someone says there is no other way doesn't mean there isn't. In other words...even if they limit how appraisals are handed out and how many trainees a Supervisor can have there is a solution. There always is.

Ed