Expert Witness Testimony, Litigation Support, Market Studies, Appraisals
Re-thinking Qualifying Experience, Qualifying Education, and Continuing Education
Author: Richard Knitter, MAI, CPM, Great Realty Advisors
Summary of Suggestions to the AQB Regarding Qualifying Education Requirement Changes
Change from a butt-in-seat model requiring x amount of hours to a competency-based exam model. With no requirement for the number of hours to sit in courses where the student might already know the material, this will encourage individuals who are intelligent, hard-working, and knowledgeable in the real estate profession to quickly and successfully obtain their appraiser certification. Using new technology, case-studies, and competency-based education, improvements will be gained in student learning and measuring that the student knows the required material. This will be more efficient to both the student and to the provider. The modules for the competency-based program would be similar to the current courses but would have minor additions, not require butt-in-seat time, and would simply require the passing of a series of modular exams.
This change in QE would be completed in conjunction with the change in experience requirement by eliminating the experience requirement. The current experience requirement is not working in attracting young, educated, desired individuals to the appraisal profession. The current experience requirement is not working in properly educating trainees and testing their understanding of basic appraisal knowledge. The change to a competency-based education and exams model would measure student learning rather than simply measuring time in courses learning or not learning correctly and years completing reports correctly or incorrectly. The competency-based education and exam model makes use of new technology, simulated experiences, and allows the student to progress at their individual pace.
Summary of Suggestions to the AQB Regarding Continuing Education Requirement Changes
Change the CE requirement from 14 hours per year to 28 hours per every pair of years and reduce the 7-hour USPAP Update requirement to 30 minutes every cycle that USPAP changes. This would encourage appraisers to take 27.5-plus hour courses every 2 years to expand their skill sets, enhance their knowledge base, and expand into new practice areas.
The Valuation Article
The over-whelming graying demographics in the appraiser world clearly show the need for more young people to enter the profession. Over 70% of the current licensed and certified appraisers are over the age of 50.
The demand for young, educated, hard-working individuals to become appraisers is very strong as evident by want ads and job postings. Yet college graduates do want to take on trainee-pay, the cost of obtaining the current requirements of 300 hours of qualifying education and wading through the 3,000 hours of required experience to be a certified general appraiser.
The Appraiser Qualifications Board (AQB) held a panel discussion in October, 2015 to discuss an Alternative Track to the Experience Requirements.
This article will examine the need and make suggestions to the AQB’s Qualifying Experience, Qualifying Education, and Continuing Education requirements, as they are inter-related.
If one would remake the appraiser qualification criteria, what would it look like?
The bottom line is demonstrated competency. The concept of demonstrated competency was included in Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). Demonstrated competency is the desired outcome of states licensing and certifying appraisers that began in the early 1990’s.
Instead of requiring 300 hours of butt-in-seat time, the requirement should be passing a series of competency-based exams for the given modules. If the student knows the material, there is no reason to require the student to sit in a chair for x number of hours when they can pass the competency-based exam. The current course time requirement discourages and is a dis-incentive for the smart, knowledgeable, people that the appraisal profession needs to attract.
The competency modular exams would include case-studies applying the knowledge to real world appraisal assignments.
If a person lacks the knowledge to pass a given modular exam, the student makes use of the latest technology to go at their needed pace to learn the material, complete the case-studies, and the on-line material is available when the student is available.
This change to competency-based education and proof of competency leads to the proposed change in the experience requirement.
Many individuals give-up entering the appraisal profession as they can secure a trainee position with a firm willing to hire them. It is a substantial commitment from the individual as well as the hiring firm to take on the 2 to 4 year time commitment. What is learned from the experience requirement that cannot be learned through quality education making use of the latest technology. Controlled case-studies can provide experience that is useful and correct. As oppose to some other working experiences where the training may be improper.
The current qualifying experience requirement is difficult to measure from both a quantitative and qualitative perspective. The state enforcement appraisal officer reviewing the work may or may not be knowledgeable in the reports submitted for experience review. Evaluating the trainee’s competency is difficult as the reports submitted have shared responsibility with a supervisory appraiser. One person can subjectively can the judgement on approving an appraiser’s qualifying experience and different states can have different approaches to reviewing experience. To complete a competent review of an appraiser’s experience is a very time-consuming ordeal that sometimes only a limited number of people are qualified to complete.
Hence the need for the 3,000 hours of experience to demonstrate competency should be retired as it is difficult to measure, it is often difficult to obtain correctly, and does not clearly indicate the demonstrated competency of the trainee.
Competency-based modular exams need to include case studies so the trainee can demonstrate their competency in applying the learned skills to appraisal assignments.
A practicum case study module should also be introduced and can cover material that was expected to be learned from the 3,000 hours of experience. Knowledge of how to do field research and field work are very important and can be incorporated into competency-based education and exams. Much of today’s field research is oriented toward including online data which can easily be replicated using the new technology in educational offerings and in exams. The simulated experiences are better able to be tested to ensure the competency of the student and that they have correctly learned what is being taught and tested.
Replacing the experience requirement as part of the competency-based education model and exams will broaden access to the appraisal profession, will bring a consistency to measuring competency, and will encourage the best and brightest students to prosper at a quicker pace.
“Knowing What You Don’t Know”
State licensing agencies have long stated that appraisers get into trouble by taking assignments that are beyond their competencies. Simulated case studies can incorporate disciplines to identify assignment characteristics that require advanced competency. This needs to be incorporated into the new proposed competency-based education and exams. The existing experience model often misses this concept as the supervising appraiser often lacks this knowledge and practice to be able to pass it on to the trainee. For example, a simulated case study of a medical facility can identify aberrations from the typical assignment that require expertise beyond the capabilities of most newly certified general appraisers.
Continuing Education (CE)
The AQB’s annual requirement for continuing education is 14 hours. We suggest that this be changed to 28 hours every two years. While this may not sound like a dramatic change, this would enable appraisers to take a 28-hour-plus course to fulfill their CE requirement and the course may be more advantageous at meeting the desired outcomes of CE.
Uniform Standards of Professional Appraisal Practice (USPAP) Current 15-hour Requirement for Trainees
The concepts behind the ethical rules and valuation standards should be incorporated into the competency-based modules (such as Fundamentals of Valuation Theory), rather than requiring a separate 15-Hour USPAP course at the introductory trainee stage of education.
USPAP Update Current 7-hour Requirement For Licensed and Certified Appraisers Every 2 years
Since the 2008-2009 edition of USPAP and continuing to the current 2014-2015 edition, appraisers have been required to take 28 hours of USPAP updates (4 cycles x 7 hours = 28 hours).
During that same time, we have identified less than five changes to USPAP that impact the reporting requirements that appraisers must follow.
For the purpose of this discussion, a change in an appraiser requirement qualifies if it is in the Rules or Standards of USPAP and is identified as something the appraiser “must do” or the appraiser’s work “must” conform to.
An existing requirement that is edited for greater clarity or is modified to be consistent with other sections of USPAP does not constitute a change in requirements.
Let’s take a brief tour of the last four editions of USPAP with a focus on changes that have an effect on appraisal requirements.
In the 2008-2009 edition of USPAP there were no changes to the requirements that an appraiser must follow. The SUPPLEMENTAL STANDARDS RULE was deleted because it was redundant. There were minor edits to the SCOPE OF WORK RULE and report certifications, but these edits were for clarity and did not impact appraiser requirements.
In the 2010-2011 edition of USPAP there were two changes, one minor and one major. The minor change was that a client no longer was required to have access to the appraiser’s workfile for a Restricted Use Appraisal Report. This is because every appraisal report must contain sufficient information to have intended users understand the report properly, therefore client access to a workfile for a Restricted Use or any other report format was not needed. This requirement has been in USPAP since 1987, so it is a minor change.
The major change required appraisers to disclose if they performed any service with regards to the subject property within the prior 3 years.
In the 2012-2013 edition of USPAP the primary change was that the disclosure of prior services must be added to the report certification.
In the 2014-15 edition of USPAP two changes were identified.
The revision of the reporting requirements deleted the Self-Contained Appraisal Report format, and amended the Summary Appraisal Report to Appraisal Report, and also amended the Restricted Use Appraisal Report to Restricted Appraisal Report.
STANDARDS 4 and 5 were retired because they were deemed unnecessary and potentially a source of confusion for appraisers and clients. The appraiser’s obligations continues as before, but are now addressed in sections of USPAP specific to appraisal or other services where an individual is acting in the role of an appraiser. Even though the requirements existed in prior editions of USPAP, we’ll count this as a USPAP change affecting requirements.
This is summarized here to point out that the changes to USPAP over the last four cycles do not take 28 hours to present and learn. The real-world applications presented in the current 7-Hour USPAP update course are generally restatements of published Q&As. This is information appraisers can readily access for themselves without needing to devote seat-time in a continuing education course and can simply be emailed in a more timely manner. If the 7-hour USPAP Update requirement was dramatically reduced per each edition of USPAP, the CE requirement time could be fulfill taking a course that could expand the appraiser’s skill set, offer new services, and take on new assignments.
Whether you agree or disagree with the suggestions in this article, please take the time to provide your ideas and comments to the AQB (AQBComments@appraisalfoundation.org).