The Professional Trade

I’ve spent a lot of time thinking about the direction of appraising, and the combination of the AQB’s First Exposure Draft of changes to the Real Property Appraiser Qualification Criteria (RPAQC) and the go-live of UAD 3.6 and its forms into broad production has me stuck at a curious intersection: What is appraisal anymore – a profession, a trade, or something else entirely? And how does it affect where the RPAQC should go?

It is worth putting some context around the arc of appraisal’s evolution since the days before the passage of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). Prior to FIRREA and its mandate for state administered appraiser licensure, becoming an appraiser required a relationship to someone already in the field and a willingness to learn experientially as an apprentice. While formal appraisal education was available through appraisal organizations, the nuances of appraising imparted through working directly with an appraiser, with experience the main component of how you became an appraiser yourself.

Once FIRREA was passed and the Appraisal Foundation issued its first RPAQC, we began a pivot away from an experience-heavy model to one that included more education (both college-level and appraisal specific) and a national examination. Over time education and examination supplanted experience in terms of total prelicensure qualification volume where, today, a licensed residential appraiser needs only 1,000 hours of experience gathered over a minimum of six months.

To me, the drift from an experience-heavy development model to one focused on structured learning and examination aligns more closely with other professions like accounting and law. After all, appraisers are hired and compensated for their opinion of value, just like other professions. Which makes the proposal from the AQB to remove college degree requirements from all levels of licensure and certification challenging to reconcile.

Yes, there is still appraisal-specific education required as part of prelicensure, but that feels more like the training one receives as part of a trades apprenticeship – focused specifically on the tasks involved with completing a job, and not the broader learning needed to place the context or reason behind the work or to develop judgment. That is not to say a focused educational grounding paired with experience (more on that in a moment) cannot produce highly capable, competent, and qualified appraisers – simply that how we train a workforce tends to inform how we think of those employed therein, both in terms of skill and compensation.

That distinction, between a profession and a trade, is not a mere technicality. A profession focuses on what needs doing, synthesizing everything known and unknown about an assignment and the risk it carries before endeavoring to create and present an opinion. Trades, on the other hand, focus on executing discrete tasks with a degree of skill or craftsmanship. Appraisal toes the line between both worlds, as the appraiser must both define the value problem (and how to solve it), and then employ the appropriate methods and techniques informed by whatever data and tools are readily available.

Perhaps trying to draw a bright line distinction adds little to the conversation, but there are camps on both sides of this conversation today. Those who refer to appraisal as an “industry” often think about it in the context of trades, especially in a post UAD 3.6 world, while others hold fast to the idea of appraisal as profession. Each perspective has valid arguments and weaknesses, creating the dynamic tension that the AQB must unpack as part of its efforts to update the RPAQC.

What makes this more challenging to process is that the elimination of the college degree requirement applies to all classes of license or certification and to all types of appraisal work. Completing a UAD 3.6 compliant residential lending appraisal is inherently different than providing litigation support for a complex commercial transaction – yet the RPAQC treats both assignments under the same rubric. The industry/profession duality is most prominent in these terms.

My own discussions on the topic provided me with two different but equally compelling views on the value of a college degree relative to one’s overall ability to successfully work as an appraiser. On one hand, it was the quality (or lack thereof) of one’s supervisor that had a greater impact on overall minimal qualification and subsequent competence – meaning that quality of experiential learning was most vital. On the other, the view that appraisers working in “courtrooms and boardrooms” need a deeper set of skills best developed in a college environment, and abandoning the requirement would have unintended consequences to the trust placed in the profession in those spaces.

I have yet to pin down exact views on this – or any – of the First Exposure Draft’s proposed changes, but in my time spent doing Gedankenexperiment on this I come back to the same basic place: How does any change affect public trust in the appraisal profession?

Changing the criteria by which one becomes an appraiser does not in itself affect public trust, provided that the changes reflect both the modern state of appraisal practice and can be articulated in a way where the underlying rationale makes sense. So if change alone is not problematic, when do changes present issues for public trust?

The answer is deceptively simple: When the public (that is, users of appraisal services and those affected by the work of appraisers) no longer see the appraisals performed by those licensed or certified under the new requirements as credible, or they see competing options for obtaining collateral values as equally credible. To have public trust, appraisers must be more credible than other alternatives – that’s the lens through which the proposed changes must be viewed.

I know some will reflect the idea that it’s the appraisals themselves and their conclusions that must be credible, and while technically correct it misses the bigger picture as to why any of this exists in the first place. Trust in appraisers was ruptured, and so we created a licensing system with minimums for entry to repair and maintain trust going forward, relying on adherence to standards that allowed for review when credibility is called into question.

There are other narratives around this topic focused on more pragmatic factors regarding the wisdom of proposed changes, and they are no less important to the AQB’s ability to deliver a final work product that upholds credibility and trust in appraisers. Regardless of how you choose to frame the question, it is nothing less than existential – what, exactly, are appraisers anyways? And does it really matter anymore?