In our Appraiser eLearning survey, real estate appraisers across the country report more work than ever before, a few savvy adaptations, and a shift in life priorities.

We had more than eighty responses from appraisers all over the United States. Respondents were split nearly 50-50 between folks whose main source of income was assignments from AMC vs. assignments from lenders, with a few reporting that they mainly do litigation support. More than half work as solo practitioners and about one-fifth in firms of 2-5 employees. Most respondents said they had not retooled their firms for remote work — presumably because many solo entrepreneurs already worked from home before the pandemic. A few did retool how and where they worked, at least partially, and some said that prompted them learn new tech and new ways of delegating — and allowed them to become more productive than before.

Here’s where it gets interesting. More than half — 57% to be exact — reported having more work in the past year than they did before the pandemic. Lots more. “We inspected 450 properties in 2020,” said D Lawson from Texas. “That is 150 more than our normal year. And nobody in my 3-girl office got Covid.” And TMM, also from Texas, wrote, “The pandemic has been the best cash cow in 16 years in business.”

Several people reported doing more desktop and drive-bys this year, and many said that costs were down and income was up, or WAY up. “We are able to choose work and raise fees with little pushback,” wrote Greg, an appraiser in Texas. “Business is great, and I haven’t changed anything because of the pandemic. “We had already changed to a work from home situation. Our costs have never been lower and fees are the highest ever.”

Below, we’ll break down the numbers and dig into some of the detailed responses that people sent in. We think you’ll find it fascinating and illuminating, and probably familiar.

Thanks to all who took the time to answer this survey!

How did your work/income change over the past 12 months?

What are some ways you adapted your appraisal work or business strategy to this pandemic year?

Which of these professional challenges did you face over the past year?

“People are chasing appraisers on foot and in their cars. They beat on the appraiser’s window, windshield and other parts of the car. If the appraiser opens the window, they hit the appraiser repeatedly in the head. They file false police reports that the appraiser threatened them. I was in an online class where everyone had a similar experience weekly. It’s unsafe to be an appraiser now.” —Sandy (CA)

How will you prepare for future unknowns that affect our industry, such as recessions, interest rate hikes, housing crises, or other global emergencies like COVID?

Going forward, what will change about how you do business after the pandemic

“I think that we will continue to support our staff working from home and likely downsize our investment in facilities in favor of technologies to continue to support our network.” —DRD (MO)

“We sold our office building during the economic crash of 2009, over 10 years ago and while it hurt at the time, it wound up being the best decision we ever made. We consider ourselves blessed to have made that decision when we did. We worked off a remote server, communicated by phone and email constantly and met regularly, but never missed a beat. It was different but helped us get ‘lean and mean’ opening up the budget for better equipment and higher salaries.” —Victor Andrews (TN)

“Roll with the punches.”

—Scott Cullen (MN)

I concentrated on local lender clients that value my services (as opposed to AMC’s). I added additional services for them (evals and restricted desktops); this was much more lucrative and rewarding.” —MWW (AL)

“This past year I took off more weekends, which allowed me to de-stress and actually do some relaxing. I tried to look at 2020 as a “gap-year” where I accepted less work, but was able to have more downtime.” —Linda K (TX)

Going forward I’d like to incorporate more technology and get a trainee on board.” —MER (MO)

Were there any surprise revelations for you this year—the good kind? Lessons learned, shifts in priorities?

These answers were wildly variable. Lots of people said, simply, “no.” Others spoke of gratitude — for having a livelihood still when so many did not, and of being able to do the work safely (for the most part). Several appraisers mentioned taking much-needed down time during 2020 and enjoying time spent with family. A few were disappointed with how they were treated by clients and the people whose homes they inspected, while others saw their faith in humanity renewed by kindness.

“Who knew that the housing market would be booming during a pandemic?”


“I continue to be amazed at the lack of knowledge in general about what appraisers do. Literally no one cares about us. They didn’t care if we got sick; didn’t care if we spread Covid to the universe; plain flat didn’t care. I contacted CAL BREA to see if we had any kind of special dispensation to receive the vaccine and they could have cared less whether we lived or died … I never received a single order that did not require me to do an interior inspection. Very disappointing!” —Allison (CA)

“Our biggest surprise of the past year was the amount of work out there for the appraisers who wanted to challenge themselves and not just take cookie cutter assignments. I personally learned that family is important. The year brought challenges due to elderly parents and providing care for them while trying to keep a business running smoothly.” —D Lawson (TX)

“Realized that remote workflow with tech tools and delegation works great. Actually increased productivity and volumes dramatically this year. Perspective changed with new model.” —Glen Calderon (MD)

“Learned to be more efficient and streamline the appraisal process. Was able to spend time on education and learning new systems. This year is starting off good.” —Norman Jones (KY)

“I don’t look half bad on Zoom.”

—dcs.value (NC)

“I was surprised how many people had no problem or issue with me coming into their house during a pandemic as long as they can get that lower interest rate. I had only a handful of borrowers cancel when they found out I had to come inside. I also finally realized that the work will always be there, take some time for yourself to recharge. Step away, put yourself as ‘on vacation’ or ‘out of the office’ with your clients. The time you missed out on doing things you love and just being with loved ones because you had deadlines, can’t be retrieved. It’s gone. Make some money – but don’t forget to make some memories”. —MER (MO)

On a scale of 1 to 10 (with 1 = maximum concern & 10 = extremely optimistic), how do you feel about the near future of your business?

Bryan Reynolds asks appraisers to consider a retirement phase-out plan that may benefit you, aspiring appraisers, and the community you serve.

I was teaching a live CE course recently, and a gentleman in the audience said, “This is my last rodeo. This is it.”

I said, “What do you mean?:

“I’m done after this one,” he said.

“Oh, you’re planning on retiring before your next requirement for CE,” I said. “That’s exciting, congratulations! What’s your exit strategy?”

He said, “My what?”

What’s your exit plan? Or do you have one? Are you planning to just turn off the lights off, shut the door, and say “I’m done?”

Maybe you ought to reconsider that. What if you created an exit strategy that might help you, might help others, or may just help the community in which you’re providing service?

I have this conversation a lot when I’m coaching, consulting, and teaching. I bring this up often. And I’m surprised to find that many folks have not planned for their retirement. When I say, “What’s your exit strategy,” most of the time the answer is, “Well, I’ve got a will.”

Don’t get me wrong — you need to plan for that exit strategy as well. Have you named beneficiaries? Do you have a will? It’s all about planning ahead. My mother has done a great job of planning ahead. She bought me a cemetery plot, and I said, “Thanks, Mom!” She’s got various policies so that she’ll never have to go to a nursing home. She’s got a plan of action to bring in home-care. She thought ahead and made a plan.

That’s what I’m suggesting that appraisers should do with their businesses, instead of just closing the doors. Most appraisers run small firms. They do everything themselves. They’re the president and the janitor. There’s nothing wrong with that. But instead of just closing up shop and moving to Costa Rica, what about a different plan?

Phase Yourself Out, Bring Someone In

The biggest obstacle to people getting into this profession is finding a mentor. I genuinely believe that once we’ve been in this business for awhile, if the business has been good to us, why not give back to the profession?

We need to help others. After all, someone took a chance on you, didn’t they?

Maybe we should explore this idea. Maybe you could bring someone in and start molding them. Maybe two or three someones. Yes, it’s going to take a little time. Yes, it may increase your liability a little bit. But maybe it’s an opportunity for you to say, “When I’m done, we’ll create a company for you.” Maybe you put a tail on that. I mean, how cool would it be, while you’re on the beach, to get a check once a quarter? So early on, Trainee, I’m gonna take the lion’s share of the income, and you’re not gonna make much. But eventually, you’ll make most of the money, and I’ll walk away. Like my mentor George always told me, “Bryan, you’re gonna do all the work, and I’m gonna take all the money!”

But I learned more about appraising from that gentleman than I ever learned from any book or class. There’s no way I could ever truly pay him back. Except, maybe, to pay it forward.

So maybe you bring somebody in and you mentor them. Maybe you keep a certain percentage for a few years, whatever you two negotiate. Buy you’re still a phone call away. You’re a consultant, an advisor, a mentor. Remember, the learning really starts once you’re certified. You don’t know everything you need to know once you pass that national exam and get your license issued.

We should all be lifelong learners. And when I learn something, I want to share it with others.

So instead of closing the door and moving to a warmer climate, maybe you can take a few steps and leave that door open. Maybe you set yourself up to get a residual income and help a person build a business. And you’ve helped your community by finding your replacement, someone who can carry on providing the service you’ve provided for a lifetime.

Something to think about instead of just saying, “I’m done” and closing your door.

A Parallel Strategy for Trainees

Meanwhile, for you trainees out there, or for anyone thinking about entering the profession: You need to change your approach to mentors. Don’t call and say, “I need a mentor. I need hours.” Most likely, that business owner doesn’t care what you need! I give to charity already.

But here I am in danger of contradicting myself — I do believe that we need to give back and provide opportunities for other people. But this is a two-way street: Don’t approach a supervisor saying, “I need I need I need.” Let them know what you bring to the table, what value you can add. How you can assist them in making more money.

Think of this as your onboarding strategy. Why not ask them, “How much longer are you going to be in this business? What’s your exit strategy? Maybe I can help you transition out. I’ll do the heavy lifting now, and when it’s time for you to retire to the beach, you can keep mentoring me in return for a little piece of the pie.”

Trainees, that might just be an opportunity for you to get yourself a mentor. Get an onboarding strategy. And veteran appraisers, think about your exit strategy. Both categories: Plan ahead. And maybe, on occasion, those plans can come together — to everyone’s benefit.

About the Author:

Bryan S. Reynolds, CDEI™ is a KY/TN Certified General Real Property Appraiser, a registered agent with the TN State Board of Equalization and an AQB Certified USPAP Instructor. He has testified in various courts, planning and zoning boards as both an expert and as an agent making valuation arguments before local and state hearing officials and Administrated Law Judges. Reynolds is the owner of Bryan S. Reynolds & Associates, Reynolds Appraisal Service and a partner in Appraiser eLearning. He provides residential and commercial valuation services, educational offerings, mentoring, consulting, and litigation support services throughout the country. He is available for lectures and is well known for his Think Outside the “Check” Box approach.

Bryan shares a story about how a little extra forethought might head off major headaches down the road.

The Trainee

Recently, my trainee Kelsey told me she had an appraisal ready for me to review. I asked her about the two busy roads that abutted the property. “Did you make an adjustment for that?” I said.

“No, I didn’t,” she said.

“I wouldn’t have either,” I said. “But did you make a comment about it?” She did not.

And then I suggested that we probably should. “And now I’m going to tell you why.”

And so I told her a story about one of the very first appraisers I helped who had a complaint filed against her.

The Complaint

This is the story: I had an appraiser contact me, and she’d had a complaint filed. The reviewer alleged that she did not analyze and report that the subject property’s area, the whole subdivision really, backed up to a railroad track. And she called me and told me about it. And I said, “Stop talking. Let me talk.”

“If you missed it,” I said, “if you didn’t realize that the property backed up to a railroad, and you didn’t analyze that it could impact the marketability, you need to raise your hand and say, ‘I missed it. I made a mistake.’ You need to ‘fess up to that and accept the consequences, if there are any, and use it as a learning experience, and move on.”

That’s what we need to do. We need to be honest. And we need to tell what we did or didn’t do. When we make a mistake, we need to have the courage and the honor in saying, “I made a mistake. I’m human.” Because we all make mistakes. No one’s perfect. Practice makes better. There’s no such thing as perfection. Practice doesn’t make perfect.

On the other hand, if you did know that rail was there, if you did analyze that, if you did opine that there was no adverse condition as a consequence of that subject’s proximity to that rail, I don’t think you did anything wrong.

The Argument

Keep in mind that all of her comparable sales were in the immediate area. So if the subject suffered from some negative influence because of the nearby railroad track, all of her comps would have suffered a similar influence. Her value would be unchanged. She wouldn’t have made any adjustment. So really, we’re just talking about a reporting issue.

Now, maybe I would have handled it differently. Maybe the members of the regulatory commission would have handled it differently. Maybe the investigator would have handled it differently. However, we’re not here today to discuss whether this individual used best practices. We’re here to discuss whether the person met the minimum requirements of USPAP.

You see, if we talk about the pre-printed form, under the site section, it says, “Are there any adverse conditions or external factors, yes or no?” Well, in her heart, if she didn’t believe that had any impact on the subject, if she analyzed that and said there was no issue, she doesn’t have any obligation to report anything. The obligation is to report if it does have an adverse effect.

One of the things I argued on behalf of this client was, if you think she’s trying to hide that this property backed up to a rail, why didn’t she white out the railroad on her location map? The map clearly showed a railroad there. She wasn’t trying to hide it. She just didn’t think it had a negative impact.

Her case was dismissed. What I told her was that in the future, she could avoid this problem very easily. All she would have to do is say, “Hey, client. The subject property, the subdivision, backs up to a railroad track. I’ve analyzed this, and in my professional opinion, I don’t think there’s any negative impact.” That way, she tells the world, the client, that she didn’t miss it. She knows it’s there, she just doesn’t think it has an impact.

The Moral

The moral of this story is, if you think ahead, you can put this fire out before it begins. If she had said, “Hey, everybody, there’s a railroad track back there, but it’s not impacting the marketability,” then no one could have pointed at her and said, “She missed it.”

Now, you can argue about whether or not the railroad affected value. That’s a matter of opinion.

So what I suggested to Kelsey was this, in an effort to head off any problems, why don’t we say that the subject property backs to Carter Road, side to Southtown? Both of which are somewhat well-traveled, but an analysis of this revealed no negative impact. Because there’s areas of Carter Road that do affect marketability but up here, not so much. At least, that’s our opinion.

I was going to buy a house one time, and I thought, “I’ll get a good deal because it backs up to a bypass.” The bypass sat back a ways, and I thought, “That’s the Owensboro Beltline! That’s got to have a negative impact. I’ll be able to negotiate a good price on this.” No. It didn’t appear to impact the price at all. I wasn’t able to buy that house.

I get it. This is a case-by-case issue. You’ve got to look at your market, that segment of the market, and analyze your data to see whether there’s a market reaction or not.

The Dead?

What if your house backs up to a cemetery? (And by the way, what’s the difference between a cemetery and a graveyard? What does “Saved by the Bell” mean? To get the answers, you’ll have to listen to the episode!)

Either way, acknowledge the cemetery and analyze whether it has a negative impact. I certainly wouldn’t mind the quiet neighbors, but other people might be creeped out and might not want to buy that house.

The Fix

Just a thought: Let your client know, “I’m aware that the property is adjacent to a cemetery, or a well-traveled road, or a railroad track. And here is my analysis of whether or not that thing affects the value.” That way, nobody can point a finger and say that you missed it. That way, you can say you noticed it and then offer your opinion about the impact of its proximity.

External obsolescence — a loss of value caused by something outside of the property lines — isn’t something you can fix. All you can do is acknowledge it and analyze its impact on the property.

Be transparent about your thinking and your analysis, and you’ll head off a lot of problems before they ever arise.

Want more like this?

Check out Bryan’s webinar (below) about covering your appraisal (CYA) and his Cover Your Appraisal course at Appraiser eLearning.

Bryan Reynolds reflects on why we appraisers should focus on our top abilities and delegate the tasks we aren’t so great at.

Have you looked in the mirror lately? I mean, really just stood in front of the mirror and taken a long, hard look at yourself?

Do you like what you see there? The wonderful thing is that if you don’t like what you see, you have the ability to change it.

As a business coach, I often tell clients: If you’re not performing at your peak ability, maybe you should look in the mirror and say, “You’re fired.”

I say quite frequently there are no two pieces of dirt on the planet exactly alike. No two pieces of real estate are the same. That’s what makes real estate so different from other goods and services that we buy and sell every day. Each property is unique, just like we are as human beings. We all have strength and weaknesses. And we, as human beings, resist change.

Extinction Is Not Inevitable. Case Study: One-Hour Photo Labs

But no matter how much we resist, change keeps happening anyway. We can be ready for it, or we can push back. Remember those old one-hour photo places? How many of those are still standing? Well I know one that adapted to change. It belonged to a guy named Eddie. He started working on digital cameras, selling them, converting old DVDs and VHS tapes to digital formats, taking old torn photos and making them look brand new. When my mom was on husband #2, after my dad died, she had a photo taken of all her grandkids. Her brother’s son was in the picture with his new wife, who did not last long as part of the family. My mother took this picture over to Eddie, and she said, “Eddie, you see that girl standing next to my grandson? That was his wife. Can you make her disappear, and move my other grandson over a little bit?” And he did it! I was like, “Mom! You can’t just make people disappear!” But I guess in a photograph you sure can.

Or at least, Eddie can. And he’s still got a thriving business, while all the other one-hour photo labs are long gone.

So here’s what I want you to think about: We resist change, external change and changes within ourselves. It’s human nature. But sometimes, we do ourselves harm by refusing to change.

Do You Need a Trainee?

I want you to ask yourself: Are you performing at the highest level that you could be? In my coaching practice and my appraisal classes, I talk to a lot of people. A guy approached me after class once and said he was thinking about bringing on a trainee. He’s in his 70s and had health issues but was still in business.

Let me just pause here to say that I’m a big-time supporter of trainees, and I’m all for YOU bringing on a trainee. I’m creating the Trainee Committee and the Trainee Network for the NAA. I want us to do all we can to support trainees and supervisors, and if you want to expand your business, it’s something you should think about.

But you need to be sure you actually need a trainee. Because may need another kind of hire altogether.

So I said to this man, “Sir, I don’t mean to be rude, but you don’t need a trainee yet. You need a helper.” He was making all the phone calls to schedule appointments. He was handling all the requests from lenders to prepare and send bids, accepting orders, starting the files, and setting them up in the appraisal software.

“That’s kind of a waste of your time,” I told him. He didn’t need a trainee for all that. He needed a helper: someone to answer the phone, reply to emails, schedule his weeks, take all that busy work off of his shoulders.

Triage Your Time

I’m not saying he, or I, or any of us are too good to do these things. I’m not too important to answer my phone. I DO answer my phone, in fact. I’m no better than anybody, and nobody’s better than me.

It’s just that these things are not the highest and best use of your time.

I wrote an article many years ago about a dentist, a surgeon, and a head chef. The whole premise is: identify what only you can do, and DO THAT. Over and over, every single day. Then build a team to back you up, so you can take the busy work off your schedule and let a highly organized person do that for you.

When I suggested this, the man’s eyes lit up.

I’m excited to see where he takes his practice. And maybe you should be having this same conversation — with yourself.

“Identify what only you can do, and DO THAT. Over and over, every single day. Then build a team to back you up, so you can take the busy work off your schedule and let a highly organized person do that for you.”

So look at yourself in the mirror. Maybe you should fire yourself from the work you shouldn’t be doing, work you should hire someone else to do — so you can do the actual work of appraisal and analysis.

Maybe you should fire yourself from the part of the work that you don’t like doing, and get someone else who has that expertise to step in. I could try to figure out accounting, but I don’t want to. So I hire a professional accounting firm. I don’t want to schedule all the appointments and make all the phone calls. I’ve been there; I’ve done that. And it’s not that I’m too good to do it; I’d just rather use my time for something else.

Look in the mirror. Take an assessment. And don’t be afraid to make some changes. Don’t be afraid to implement some new ideas or strategies. Worst case, you can always go back to the old way if you want to. But there’s a part of me that would bet that you won’t want to.

And if you’ve never read Who Moved My Cheese? by Spencer Johnson, M.D., I highly recommend it. Read it, and then think about making some positive changes that will take some of the headache out of your life. And consider building a team to help you with that.

About the Author:

Bryan S. Reynolds, CDEI™ is a KY/TN Certified General Real Property Appraiser, a registered agent with the TN State Board of Equalization and an AQB Certified USPAP Instructor. He has testified in various courts, planning and zoning boards as both an expert and as an agent making valuation arguments before local and state hearing officials and Administrated Law Judges. Reynolds is the owner of Bryan S. Reynolds & Associates, Reynolds Appraisal Service and a partner in Appraiser eLearning. He provides residential and commercial valuation services, educational offerings, mentoring, consulting, and litigation support services throughout the country. He is available for lectures and is well known for his Think Outside the “Check” Box approach.

Bryan Reynolds suggests two changes lenders should make to help appraisal companies operate more efficiently: Let appraisal trainees do inspections and appraisal firms make assignments.

Listen, lenders! No, I’m not talking about the adorable Listen Linda Kid, although he is absolutely fantastic. But I am gonna rip off his best line: Listen, lenders!

In fairness, I give everybody a hard time: appraisers, agents, underwriters. Today it’s the lending community’s turn — you lenders out there, hear me out.

It’s not news to anyone to say that we’re in unprecedented times. Everybody’s waiting for appraisals. Everyone wants to solve the backlog problem with new ideas and products and hybrids. Everyone has “the solution.”

Let’s look at this for a minute. You know why supervisory appraisers are apprehensive about taking on appraiser trainees? It’s because, what value do they add? If I’ve got to go out on every inspection and hold the trainee’s hand, they really don’t add any value to me as a business owner.

USPAP, Fannie Mae, Freddie Mac, your states all allow appraisers to send trainees out on their own, after a certain period and once you feel the trainee is competent . But the lending community continues to push back on this. If the lenders are willing to send an insurance agent out to do inspections, why in the world are they not letting me send my trainee out to do an inspection without me?

Lenders, just listen a minute: A lot of these problems would be solved if you let us appraisers do what USPAP, Fannie Mae, Freddie Mac and our states allow for. Let me teach a trainee the proper methods of observation, and let me send them out. I can hire three trainees! I can expand my book of business!

But if I have to accompany them on every inspection, why would I bring someone on to train at all? Dustin Harris makes the point beautifully on his blog at

“Our clients (AMCs and Lenders) have made it next to impossible to take on a new recruit. Most of the engagement letters I receive have the following little statement attached, ‘The Certified Appraiser must physically inspect the property, all comparables, and complete the appraisal report. The use of Trainees for this assignment is not allowed.’ So, let me get this straight: I can hire and train a new appraiser, but they cannot do anything to help my business grow until they are fully Certified. Gee, sign me up!” —Dustin Harris, The Appraiser Coach Blog

Well said.

Here’s another thing, lenders (and maybe this goes out to AMCs as well): If I want to hire three certified appraisers, and now I can hire three trainee appraisers for each of them, that’s nine more trainees and three certified appraisers. I have an army now! I’m ready to take on lots of work. But here’s the problem: The lender is going to send the appraisal request to the specific appraiser. Why don’t they send it to the firm? Why don’t they send it to me?

For instance, I have an appraiser. Matt. You send an order to my firm, I could say, that’s outside of Matt’s immediate area. He services that area, but that’s an hour drive. Let me send Kelsey! She’s ten minutes away from that property. So let me assign it based on what makes more business sense. Or maybe Matt’s two weeks behind and Kelsey doesn’t have anything to do. Doesn’t it make sense that I, the business owner, make the assigning decisions, for efficiency purposes?

Listen, lenders. We can solve a lot of problems if you do two things:

1. Let appraisal companies make assignments.

Start assigning the appraisal to the firm, and let the firm decide he best person for the job. Think about it. You send over a fourplex. Kelsey’s only done one in her life. Matt’s done 400 in the last three years! Wouldn’t it make sense for me to assign that multiplex to Matt? I as the business owner know how to delegate those assignments a lot better than you do.

So why don’t we look at approving appraisal firms instead of individual appraisers. If you need to vet them, I understand that. But approve my firm, let me hire more appraisers, and I’ll delegate the assignments out responsibly.

And then finally, listen lenders:

2. Let trainees do inspections.

Let me start using my trainees to their full potential. Trust me to choose them, then let me trust them to do the work I assign. This helps you, it helps me, and it helps the communities we serve.

Most of all, if lenders and AMCs don’t make it less onerous for us to take on and train new appraisers, then how do they expect new appraisers to enter the profession? Our industry is aging. We need excited, sharp young people to take up the trade. Which means we veterans are gonna need to show them the ropes. But we can’t do it out of charity. There need to be incentives for all of us — supervisory appraisers and trainees.

Just listen!

In the context of a real estate appraisal, what is an overimprovement (or superadequacy)? Per the 14th edition of The Appraisal of Real Estate (p. 624) it is a “…type of functional obsolescence caused by something in the subject property that exceeds market requirements but does not contribute to value an amount equal to its cost…” (ibid; emphasis added).

A swimming pool is a prime example of an overimprovement. What a swimming pool contributes to value is likely far less than its cost new (even after deduction of age-life depreciation). Despite this relationship, it is rare to see a residential appraisal report in which there is a deduction for functional obsolescence because of the presence of a swimming pool.

Consider the issue of size. A 5,000 square foot house in a neighborhood of 2,500 square foot houses is likely a superadequacy. This superadequacy stems from the fact that the extra 2,500 square feet likely do not contribute to value at the same rate as the “necessary” 2,500 square feet.

The appraiser needs to explain any superadequate features of a property in sufficient breadth and depth so the client cannot accuse him/her of conducting a misleading appraisal, and then writing a misleading appraisal report.

Appraisers try to accommodate their client’s interests. There is nothing wrong with this per se.  Appraisers commonly write, “at the client’s instruction…” or “per the client’s request…”, then the appraiser describes what the client instructed or what the client requested, as well as what the appraiser did to comply with the instruction or request.

This language, however, implies the appraiser is trying to do the appraisal, or write the appraisal report, in a manner that pleases the client, a potential USPAP violation. By definition, a real estate appraiser must be independent, impartial, and objective. Such accommodating language not only calls into question whether the appraiser has complied with these three qualifications but also smacks of advocacy.

Omit the offending language.  For example, appraisers commonly omit the analyses of the Cost approach. However, certain clients may request the inclusion of these analyses as part of the appraiser’s value conclusion. Instead of saying, “at the client’s request, the appraiser has included the protocols of the cost approach…”, please consider saying, “the appraiser included the protocols of the cost approach as both applicable and necessary to the formation of a credible value conclusion”, never mentioning the client’s request.

Sometime back a Realtor acquaintance called to ask how much to adjust for a swimming pool. The question implied that we appraisers have access to some kind of secret “book” in which we maintain the dollar amounts of our various adjustments. Would that this were true! I explained to the Realtor© we had to extract our adjustments from market data. The parting comment was something along the lines of, “Well, that would take too long!” And our conversation ended. So, let’s talk about that.

It’s not particularly difficult to calculate a swimming pool adjustment. This can be done by paired-sales analysis or by regression analysis. While I prefer regression analysis, both produce perfectly acceptable results. The results are acceptable not because one or the other is “right” or “correct”. Rather, they are acceptable because the adjustment comes from the market, which must be the source of all of an appraiser’s adjustments. So let’s consider a hypothetical paired-sales analysis to extract a swimming pool adjustment from the market.

Take 10 sales more-or-less comparable with the subject that have swimming pools, and then compare those with 10 sales more-or-less comparable with the subject that do not have swimming pools. You’ll probably end up with 10 indications of the contributory value of a swimming pool. Next, arrange the differences from low to high. Take a look at this range. If there are one or two numbers that are obviously outliers, delete them. Now consider this range to determine if there is a central tendency. For example, is there a contributory value indication that repeats itself? This would be a modal value. Is there a range of contributory values that repeats itself? If so, somewhere within this range is the likely contributory value of the swimming pool.

Look at the average and median differences as well. Frankly, you probably want to avoid the average contributory value because of the inherent differences there are in swimming pools. An average weights all of the numbers in the array the same. Since the market likely does not do this, it’s best to avoid it. The median value represents the absolute middle of the range, but is not affected by extremes or outliers.

You started out with a rather wide range of contributory values, but via the above analyses you have likely narrowed it. This narrowing process is exactly what you’re looking for from paired-sales analysis.

Suppose that your analyses indicated a reasonable range from $10,000-$15,000. Out of this range you are going to choose your adjustment (even though a range is far more indicative of the market’s thinking). Also suppose that the swimming pool at your subject is relatively “plain vanilla”. For this reason, you would probably go with the low end of the range, say $10,000. On the other hand, were your subject swimming pool rather ornate, large, and/or came with an overly large patio and pool deck area, you would probably go with the higher end of the range (although, that would be your judgment call).

The point here is that you did not “guess” at the contributory value of that pool, etc. You did not try to cost out a pool as if new and then apply a depreciation factor. You did not apply a “rule-of-thumb” to determine your adjustment. Rather, you went to the market and, via analyses of the available sales within a market comparable to that of the subject, teased out of it a reasonable approximation of the contributory value of the swimming pool.

Please understand that the best you can do is approximate the contributory value of the swimming pool. This is because individual buyers and sellers react to such an amenity differently. As a result, your adjustment of, say, $10,000 does not mean the market sees the contributory value of a pool to be merely $10,000. Via your analyses, you demonstrated that the market sees a range of contributory values. From that range you, the appraisal expert, concluded that an adjustment of $10,000 approximated the contributory value of the swimming pool at your subject.

In other words, you supported your conclusion. This is all a client can ask for. Your client may not agree with your conclusion. However, your client must agree that your adjustment is based on logic, reasoning, and market evidence. That’s really the best you can do.

So, the point here is, while you may not be able to prove exactly how much a swimming pool contributes to the market value of a specific property, you can show the range of that value. Then, from it, you choose an individual number, even though that range makes more sense in the market. It’s your opinion that the swimming pool at the subject contributed $10,000 to overall value. You base your opinion on market data, therefore your opinion is well-formed. As such, you have formed an independent, impartial, objective, and credible opinion of the contributory value of that particular amenity. That’s what appraisers do.

Complexities in appraisal work come up periodically, depending on the market you work in and the types of properties that are common to the area. I office in Colorado and have had the opportunity to appraise in rural and extremely remote areas. In the case of one particular market area, the trip one-way takes over two hours and is over 1,500 square miles; in this particular market, you’re lucky to have 30 sales over any two-year period – and that’s counting all residential properties, whether on a lot in town or a large-acreage parcel, a 90-year-old small house or a custom log house. You can bet there are complex assignments in this area. However, it doesn’t take a remote area to result in complex appraisal assignments.

Typically, complexities originate from two sources:

  1. Physical or locational characteristics of the subject property itself, and/or
  2. Limited sales or uniqueness in the area.

Complexities are a double-edged sword. If you only have two dozen sales in the entire area over a multi-year search period for selecting comps, and your subject is not located in a subdivision, you have to decide whether the glass is half-full or half-empty. Likely, there is no “model match” to your subject; however, you don’t have too many sales to sift through to choose which will give the best perspective in evaluating the subject’s value.

An appraiser doesn’t need to cover rural markets to experience similar dilemmas. All it might take is that 3,000 square foot GLA over-improved house in a subdivision of 1,500 square foot GLA houses, or the house with an indoor pool in the area with only starter houses, to appreciate that complex assignments area a test of our appraisal abilities.

But complexities are not an automatic reason to decline an assignment. Let’s be sure we’re prepared!