Start a Real Estate Appraiser Business in Orange County
There is a great need for appraisals of real property. When ever a property is sold or refinanced the lender needs to have a written appraisal to be sure that they are not lending too much money on the property. Also, properties are appraised after the death of an owner so her estate can be divided up evenly. And after a divorce, a property may be appraised if one party plans to keep it. Appraisals are also done so that a home owner can prove they have more than 20% equity in their house and stop paying P&I insurance.
Most appraisers do single family residents. They can charge a few hundred dollars for these. Commercial property also needs to be appraised, and these appraisals cost a bit more because you are dealing with uncertainties such as rental value, the prospect that units may go unrented for a while, and determining value at the properties highest and best use. These types of appraisal reports can go for thousands of dollars.
Gone are the days when you could just take a weekend class and then start your appraisal business by ordering business cards.
Financial institutions and the state of California have increased to requirements. During the housing boom of the late 2000s, things got out of control. As real estate prices were going up every year, the accuracy of the appraisals was not that critical. But when the market softened, appraisers were blamed for over valuing a lot of properties.
To become a real estate appraiser in California you need to be licensed by the state of California. There are educational and experience requirements.
Trainee You need to take 150 hours of education in specified classes including 15 hours of the National USPAP course. (Note, the hours of education are based on the state requirements. You may be able to complete an hour of education in less than an hour of actual time.)
Certified Residential Appraiser You need an additional 50 hours of specified education, an AA degree or 21 hours of specified college credit from an accredited university (That’s about 6 or 7 classes. If you were a business major you have already done a lot of these like Econ and Accounting.). You need at least 2,500 hours of experience working under another appraiser. (You will be working as a trainee and can get paid for this.)
Certified General Appraiser In addition to what’s needed to be a Certified Residential Appraiser, you need an additional 100 hours of specified education (300 hours in total), and an additional 500 hours of experience. You will also need a Bachelors degree. If you did not graduate, you need 30 semester hour credits from an accredited university in specified classes. (That’s about two semesters of college. Again, if you were a business major you have already taken some of these courses.) This seems to indicate that your college degree can be in something completely unrelated to this business like psychology.
The requirements and testing procedures are outlined in this California Office of Appraisers Handbook http://www.orea.ca.gov/pdf/2008%20handbook%20rev012711.pdf (This document has been taken off their website.)
So where do you start?
Finding an appraisal school
One option is to take online training. You can work at your own pace and study during your off hours. The key point is to make sure California’s office of Real Estate Appraisers approves the school, and that it has been approved by the AQB–Appraisal Qualifications Board. Otherwise you are wasting your time and money. You can take all your education on-line. You will have to sit for the state exam. Some schools boost of 90%+ pass rates on the state tests and 100% money back guarantees.
- http://www.appraiserlicense.com/ Allied Appraisal School of Laguna Hills. They charge about $1,100 for the complete education package and you need to buy a financial calculator HP 12C for another $100.
- http://www.appraisers.org/Education/StudentResourceCenter.aspx American Society of Appraisers also offers courses on-line.
- Appraisal Institute this is an association of appraisers that provides education for its members. They have classes locally in Costa Mesa. Their local organization is here: http://www.sccai.org/ . The national organization publishes a lot of educational material. Since it is run by local appraisers, they do not have an incentive to get a lot of new competition into the market. When we contacted them we got the cold shoulder. So don’t be discouraged if they tell you to pound sand. From what we have heard, they are a good organization to join if you are already an appraiser.
Become a Trainee
You will need to put in hours as a trainee before you can start your own business. At this time, it appears that there is a great need for certified appraisers with experience, but an over supply of people who want to become trainees. So it might be hard to find someone to work under.
The “enrollment councilors” at the online schools will tell you that getting a trainee gig is nothing to worry about, just send in your money for the class. But it might be a good idea to develop some leads before you pay for your class, or get a guarantee from them that you will become a trainee after passing the state test. Otherwise you will have wasted your time and money.
Appraisals for condos and houses may pay a few hundred dollars, and are relatively easy to do because comparable properties have sold recently. This is also entry level work that’s competitive. To make good money as an appraiser, you need to specialize in properties that are harder to value. Valuation needs to be based on mathematical models. You would benefit from having a four year degree that’s applicable such as Economics.
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