Commercial Real Estate Valuation Career Paths
Hello,
I am currently a college student about to finish undergrad with insurance and real estate degrees. I have felt that I have always been very analytical and interested in the valuation it the appraiser side of commercial real estate but am having trouble looking further into the related career paths. My goal is to learn as much as possible in my first couple years but would like to be around $200k+ by year 3. I know that there are many different paths that you can take to grow and network in CRE but was looking for more details on the compensation and work loads for each role.
Thank you so much for spending the time to respond, I’m sure it will help me and other very much.
To get to $200k on the valuation side by Year 3, you would need to be on the fee side for sure. Probably one of the larger national shops with institutional work.
What market are you in?
Can you really make $200k in your third YOC in valuations?
The truth is that most commercial appraisers on the fee side top out between $90k and $120k - that's not my opinion, that's the Appraisal Institute's 2020 data. That is of course an average and there are a lot of people working in small markets or part time that drag this average down. Having said that, I've also physically seen tax returns of fee appraisers making $800k+. So, yes, it is possible to make $200k in fee split in your third year if you're at a shop with great volume and you are very, very good at consistently crushing work. Is it likely? No. But, possible? Yes. It also is tied to what is going on in the CRE markets where you are working in that particular year. Late 2020 through 2021, if you were a fee appraiser, you should have been absolutely killing it with the deal volume that was out there. Unless the market turns around in 2023, it will be a lot harder to make the same money.
I am currently in Florida but pretty open to any T1 market, possible Texas or Colorado. Do you have any recommendations on which shops have the best training programs or which market you would recommend? Thank you for responding.
You would need to be doing collecting somewhere between 500-600k in fees annually to make 200k after the split.
This was back in 2007, but I did 200k my first year (I didn't make it past year 1). Getting to 500-600k in year 3 should be doable if you are at a big firm with good volume.
Can you tell me a little bit more about how the fee side compensation works from your experience and where you went after you left? Thank you.
Appraisal is like brokerage. You hang your hat under the sign of a big firm and then they take a percentage of the fee in return for use of their name + feeding you appraisals.
My fee split was 35% my first year and then was set to move up to 40% had I stayed in the business for a 2nd year. Not sure what splits are right now, but for my first year, I would of needed to bring in 575k in fees to make 200k.
My general career path has been: valuations/loan servicing, portfolio/asset management with a short stint in underwriting/originations for a now defunct SMA. I current head asset management for a debt fund.
So, first my general caveat to appraisal questions... never an appraiser, worked along side them in prior consulting life, know plenty and thus have good understanding of the industry/careers... thus my thoughts...
- Yes, appraisal is a great place to start for analytical types, have legit tons of options and appraisal can be very highly paid for some if so motivated (I'll note, given some context/details of your post/replies, I'm 95% which uni you are at, and they have TONS of alumni at all the top shops small and independent!)
- Can you make $200k by year 3? Maybe... If you reframe as "annualized at $200k by end of year 3" vs. "$200k total for year 3", then I'd say more possible. The key is all about how fast a firm and your supervising appraiser is willing to let you go "on fee" and work on your own. The second part is how willing you are to work tons and take more and more assignments. like "fee" world is a lot of churning reports for pay, so if you pick up more assignments and give up your nights/weekends some to get reports done... you will make more (just like a lot of the job world!).
- The highest paid appraisers I ever worked with did litigation work (like eminent domain, divorces, partnership disputes, etc.) and other complex "non bank" assignments (portfolio risk modeling, fraud investigations, etc.), if fact, they did near zero standard bank appraisal work as it was too low margin for their time. Doing this work requires being a "junior" to the "senior" appraisers who do these type of assignments (many are independent outside of the major firms, but probably started at one), and will take many more years before you are going to get "lead" assignments (you need MAI, state gen cert, and more YOE to get selected/trusted by the attorneys who hire the appraisers). So, becoming the "highest" paid lifetime appraiser is probably not the same strategy to hitting "$200k by year 3" (which probably means high production turn bank/quarterly portfolio style assignments). If you want to go this route, who you work for (like the actual supervising appraiser) matters TONS more than where. If you want the production route... WHERE matters more (i.e. the big firm will have more assignments to allow you to income max via time trade off much easier).
- Will note, yes you can go from appraisal to pretty much everywhere in real estate. I know people who have jumped to equity acquisitions, asset management, capital markets, research/strategy, development, lending/underwriting, and even IS/DE brokerage. You can pretty much do anything if strategic (can find more WSO threads on that for each).
Hello, this was extremely helpful, thank you so much! Id like to start by asking where you think I go to university (I do think we have a good amount of alumni in the industry and I’ve made connections with a few). My first question is as you worked along side them, what made you not want to be an appraiser. Overall, as much as I would love to start by jumping right in and working a lot of hours for a lot of money I think that finding the right trainer is definitely the best option because I think it’s best to invest in myself and my career as I hope to be in the industry for a long time. I have started to read a lot more about the litigation work and how it differs from the normal bank work, I was hoping that you could tell me more about how your acquaintances gathered their business. For instance, did they do a lot of marketing and deal finding themselves (in litigation or bank work, I would assume you are given more deals doing bank work) or are they mostly sought out for the appraisal or litigation work because of the scarce amount of commercial appraisers in some markets. Thank you so much for your time, it is very appreciated.
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