[Commercial Grade is a weekly post by John Cicero, MAI who provides commentary on issues affecting real estate appraisers, with specific focus on commercial valuation. Today John talks about the brain drain of appraiser talent the current licensing law and lender-appraiser client structure has created.
Disclosure: John is a partner of mine in our commercial real estate valuation concern Miller Cicero, LLC and he is, on a good day, one of the smartest guys I know. …Jonathan Miller]
In Jonathan’s recent post When Machines Take Over The Earth, Or At Least The Appraisals [Soapbox], he talks about some of the problems facing our profession today. I would like to expand on one of themthe drain of competent appraisers to other fields.
Having been doing this a long, longlong time, I look at where some of my colleagues are nowthose that started with me as an appraiser trainee in the mid-80’s. I am happy to say that many of them are doing very well – but most are not in this profession anymore.
A large number of my fellow appraisers were ripe for the picking when the CMBS field opened up, and scores of bright, talented and hard-working professionals left appraisal to find fortune with the investment banks. And fortune they found! The appraisal profession cannot compete with the compensation of the investment banks (no, I’m not going to start complaining about fees again, but clearly that is part of the problem). And all they needed was their honed appraisal skills and a strong work ethic. Other appraisers have “crossed the line” to become lenders and underwriters, asset managers and development.
Fee shops and institutions alike complain about the difficulty in finding talented, competent appraisers to employ. Many trainees that I interview talk about getting into the field because they understand it’s good training to become a developer, or a good stepping stone for the investment banks. (I applaud their honesty, but I am only going to take the time to train someone if I think that they’re going to stick around a little while.)
Though I don’t know the statistics, I understand that membership in the Appraisal Institute is down dramatically over the past decade. The challenge for the professsion is to retain the appraiser before he/she goes off to greener pastures.