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[Commercial Grade] The Appraisal Profession: A Future Undefined, Without Remedy

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 an uncertain future of the appaisal profession.

Disclosure: John is a partner of mine in our commercial real estate valuation concern Miller Cicero, LLC [1] and he is, on Thursdays, one of the smartest guys I know. …Jonathan Miller

In the Spring 2006 issue of The Appraisal Journal, Donald H. Bleich, Phd., a professor in the College of Business and Economics at California State University Northridge published an article titled Factors That Influence University Student Interest in the Appraisal Profession. Dr. Bleich surveyed 166 students in the University’s Department of Finance, Real Estate and Insurance. Each student filled out a questionnaire that measured their psychological profile, value systems, financial reward expectations, academic performance, appraisal education and personal contact with members of the appraisal profession.

The result is that the appraisal profession consistently scored at the bottom of the list of 13 real estate disciplines in terms of “desirability” of the profession, students’ interest in joining the profession and financial rewards. Coincidentally, I read this article on the same day that I was officially notified by the administration of New York University’s Real Estate Institute that they will no longer be offering Valuation as a concentration option in their Masters program, due to lack of student interest.

Though Dr. Bleich indicates that these negative attitudes can be changed by greater exposure to the profession, in my opinion the problems run much deeper than lack of exposure. Part of the reason for low student interest was described in the same issue of the Journal where a report was given regarding the status of the Appraisal Institute’s Professionalism Project Roundtable. It was noted that as a result of state licensing “less experienced appraisers are offering lower fees in order to compete with more experienced appraisers.the quality of reports and professionalism offered from non-designated appraisers may be below that of designated appraisers.(and that) state licensing boards are not providing the disciplinary teeth to ensure quality.”

The fact that the “Appraisal Institute will continue to research these issues and consider possible remedies” does not give me much confidence about the future of our profession.