Switch from banking to appraisal?
Hi all, I am an underwriting associate at a Berkadia/W&D/Lument firm doing agency MF underwriting. I have been presented the opportunity to join an appraisal team as an associate at a CBRE/JLL/Apprise firm. I'm just wondering what is yalls take on this move? I feel like I may enjoy the appraisal life more than the transactional nature of banking. The comp will be around the same or slightly more than I make now. I'm looking for the career path that produces the best WLB, job security, and eventually a $200k+/year or so comp. Thanks!
bump
You can make good money in Appraisal. $200k - $400k is what I hear from most senior-level appraisers at quality shops with a solid pipeline of business. These are appraisers who also have their MAI, which typically means they get a higher split. So it can take a bit to get there. You'll generally have a busy season (Q4) and a slow season (Q1) for commercial appraisal. You might work 60-80 hours a week during the busy season, and then maybe 25-40 hours during the slow season. so it ends up balancing out.
The actual work falls into a few buckets:
1. Financial Analysis of the project
2. Researching & Vetting comps - so finding out what deals (sales & leases) recently transacted, then calling property owners to get comps, usually based on some confidential quid pro quo arrangement
3. Site Visit of the property
4. Writing the report
5. Discussing and arguing with banks and property owners, respectively, on findings (sometimes)
The main disadvantage with appraisal, in Texas at least, is the licensing timeframe. Believe it is currently 18-months with 3,000 hours before you can take the test(s). You won't make a ton while you're getting your appraisal license. I've heard appraisal analysts making anywhere from $40k to $75k, and appraiser trainees making anywhere from $50k to $90k, depending on the quality of their work and how much they can manage. When you compare that to the income opportunities elsewhere, generally it dissuades people with other options.
Another large disadvantage with appraisal is the fee compression occurring in the industry. People want more rigorous reports, for less money, and on a quicker turnaround than has historically been accepted practice. Segments of the CRE Tech / PropTech movement have been targeting the appraisal industry, which is the reason for the fee compression. Will this trend continue? No idea, but that's what I hear from my appraiser colleagues and peers in the industry.
Finally, given the disadvantages, there is an advantage...the disadvantages dissuade people from pursuing appraisal as a career path, which means the competition is lesser for high-performing candidates. A quality commercial appraiser will be called on as a resource, get the scoop on new-to-market opportunities to invest, and is generally the "go-to" person for market insights. The top appraisers I know are some of the sharpest people I've met in real estate, and they generally earn $500k a year or more, due to the fact that their business becomes less about actual appraisal work, and more focused on business development.
So, in summary, it can be a good gig, but you gotta go through growing pains just like any other gig. Hope this helps.
Super helpful. Thank you for the write up!
I worked in real estate consulting before moving to a development shop, did a lot of litigation work along slide appraisers. Personally, I'd look to move towards the litigation appraisal world (at least learn more along the way to consider), as it seems the most interesting and very very well paid. You will need to be pretty experienced, so starting with a CBRE/JLL type shop is smart, but I found the "top" appraisers worked for smaller, independent shops (including on their own) and generally avoid the mainstream "bank" work. Instead do more custom, specialized valuation work for major companies, tax/estate purposes, eminent domain, partner disputes, general litigation matters, you name it.
So yeah, this can be a very very profitable field (with tons of flexibility) if you are smart about it.
Thanks, redever. Always value your input!
Appraisal is a grind from what my contacts in it tell me. You're going to be guided towards a valuation and it's extremely repetitive work. Imagine visiting and writing appraisals on the same type of 6 story residential property with ground floor retail twenty times a year.
If you really want good work/life balance, go debt brokerage and make connections. One of my producers made mid-six figures on a single transaction in three weeks and he was on vacation for two of them.
Appraisal is a dead-end career path. If you want to do it, then make the jump. But if you think its going to be a good WLB think again. You are at the whims of the actual decision makers in the industry on the equity and debt side. Also, appraisal is being automated away. It won't happen tomorrow but it will happen before the end of your career.
I wouldn't mind working long hours during a busy season. I like the WLB because I know the flexibility of the job. I have heard it directly from the MD who I will be working under and I have heard it on this forum. My comp package has a higher base than my current position, and I get paid time and a half for hours worked overtime. If I was working longer hours, at least I would know I would see that pay on my next paycheck rather than waiting for an annual bonus like I do now. I think my comp should come out higher than what I make now, with the earning potential in the same range or slightly higher than if I stayed in UW.
Also - kind of a big assumption to say appraisal will be fully automated. Zillow was just proved to be a huge failure and they were valuing SFH's. I would say we are very far off from commercial appraisal being fully automated. Also, if appraisal can be automated, then what I do sure as hell can and would be too eventually.
I've already done it. So not its not "a long way off".
Zillow automated valuation didn't fail, the fact that you think that proves you don't actually understand what happened there. Their purcahse execution is what failed. They physically didn't understand the nature of the rest of the process. Also commercial is far easier to appraise than SFRs. Commercial basically stems down to two things. What is the deferred maintenance or replacement costs, and how much NOI does the building make.
DISCLAIMER - I don't have direct experience as an appraiser, but I do work with Appraisal professionals since I am on the originations side of the business..
With that said, my first thought is if your goal is to get away from the "transactional nature" of banking/underwriting... I don't know that Appraisal is going to be much different. Those guys absolutely crank out reports. All the appraiser's I work with are incredibly busy right now. There's an appraisal for every deal you work on and the fees are usually lower on appraisals than on the origination side (on a per deal basis). With that said, I don't know what your splits look like as an UW, but I know we generally make more per deal than our client's pay for appraisals
Taking that into consideration, I would think you'll likely be doing more deals as an Appraiser to make the same income as an originator? This may not be correct, but just thinking about it, may not be the right move if you are looking for less transactional work
Whenever someone talks about improving their WLB, I always think about management positions. I work in the same line of business as you but again, on the originations side. Management roles are fairly coveted here as there are obviously less chairs. They don't typically run as many deals, they usually kick them down to their producers, and definitely have a more manageable schedule compared to producers, at least at our shop.
How does a UW management role look compared to the actual underwriters working on reports? That may be something to consider
Just coming back to add some more color after reading some of the new comments and OP's responses...
IF you don't like UW and don't see it as a long term career path, that is a totally different story than wanting better WLB. Coming from someone who has changed career paths before and pivoted thereafter, it is a lot of work. You will be dropped down a few rungs and will need to put in the hours to get back to where you want to be. It can be very rewarding though, I'm very happy I made the changes I did and now feel very thankful to have the career path and future opportunities that come with it.
So if you feel Appraisal will be a better long term career path, go for it, but understand you will need to put in a lot of time to get to where you want to be. This is unlikely to produce a better WLB in the meantime, but could certainly work out great for you long term
My original comment above is primarily relating to the scenario where you enjoy UW and just want better WLB. If that is the case, then using your experience to pivot to a management role or moving to another shop with different culture/expectations could very well be the better option
I don't necessarily think the whole automation thing is going to be an issue for those of us in the business now. Talent drain in IB/CRE/Finance is real, many people are going into tech and social media or other fields, who 5-10 years ago would've gone into IB/CRE/Finance. I think Zillow is a great example. Automation is definitely happening, but will just increase the velocity of transactions and compress fees. There will still need to be someone running the deals and companies that produce them
When I made my career change into CRE, many people told me that underwriting (which is where I initially switched to) was a dead end and would be automated one day. It is definitely happening, but you still need a warm body in the chair to manage the deal flow. My opinion/outlook is that eventually the people who are currently in those seats will be at the top of the hierarchy and while the company structure may look a little different than it does now or did 5-10 years ago, it will still be a profitable career where you gain expertise in managing real assets.
This is one of the main reasons I work in CRE - It is basically training for asset/money management. I'm in my late 20's and frankly have much stronger financial/business acumen than most of my peers and even family members who have had long, successful careers in other fields. You can still learn those skills on the side while working in another field (tech, law, medicine, engineering), but we learn them every day during our 9-5. For someone who started at $0, has nothing to fall back on with a number of family members that do or will depend on me, this is very important
The reason I am adding all this is because our generation tends to job hop a lot. I don't think it's as big of a problem as many older folks make it out to be, but do recommend people put a lot of thought into making career moves. Momentum can really help you and it's hard to gain/keep it up when you're jumping around every 2-3 years.
I'll get off my soapbox now. Hope this helps. Best of luck OP
Great advice, appreciate the write up!
Just to add some color -
Not sure if you are referencing skill/knowledge or title/comp. If the latter, I'm getting a title bump and comp is going up slightly. If the former, you're probably right, but will have a lot of support and supervision when I'm first starting out.
I definitely do at this point. It's not ONLY about the WLB or comp. I like the company, my manager seems like they are very cool and supportive, and think I will have a lot of growth potential in the role. I think I would learn more transferable skills than UW'ing the deals I am now as well.
All very true. I'm only about 2.5 years into my career after college, all in CRE MF underwriting. I think if I am unhappy now, it is the best time to move and try something else before it will be harder to do so later. If I get 2.5 years into appraisal and don't like it for whatever reason, I think I would have a really good skillset in both banking and appraisal to be able to switch to something else, or just go back to banking. Whereas if I stay in banking longer and still don't like it, think I would have issues finding other roles without having to take a title demotion or comp cut.
Being an appraiser and actually churning our reports for commercial properties requires you have a General Certification license. You should take into consideration the licensing requirements before jumping into appraisal, as its probably one the biggest reasons the field is ripe with senior citizens and positioned for a dramatic shift in our lifetimes. Keep in mind the General Certification license varies by state, but usually requires roughly three years of experience as a trainee under direct supervision of a certified appraiser who must sign off on your hours. You need to keep an experience log - which consists of hours worked and what assignments you worked on, as well as what was done on each report. This isnt even mentioning the coursework, and Trainee license required to start logging hours as an appraiser. Just look up USPAP.
Can you expand on that? This was actually a selling point during one of my interviews. Seemed like a good thing for opportunity.
I was told it would take about 1.5 years to become a licensed appraiser, and would start getting part of the fee from each report at that point.
Sure and I do agree that this can be looked at as a positive but you have to ask yourself some questions and I too was fed this pitch "well a lot of appraisers are old so after they retire you will profit from lack of competition". I didnt buy into this because my prediction is after many in the current 55 - 65 year old range retire, then licensing requirements will ease up, thus allowing more people to enter the profession. Likely licensing wont get any harder, given the already limited amount of appraisers it will only get easier but this will take time. USPAP needs people to get licenses, thats how they make money via courses, and material. Wouldn't they do something to make sure there is someone taking their classes? I found that argument a little soft to pitch to a young and educated person with other CRE experience. Also getting certified in 1.5 years isn't impossible, but keep in mind you are at your supervisors whim in that time and if he wants high volume (60-70 hours a week) it'll be tough to dip out for a seven hour USPAP class or to take classes/pass exams. This is a big reason it takes most people at least a few years to get certified. I started in appraisal so I don't want to knock it, I have several close family members and friends who still do it.
What's wrong with the WLB given agency underwriting is one of the best jobs if WLB is important. Comp, sure I can understand but curious to hear about your WLB complaints about agency underwriting.
I think WLB was the incorrect phrase. I probably should have said flexibility.
Already spoke with the MD (my direct manager) and they support flexible working hours as long as work is completed.
Yeah when I think WLB I just think number of hours working and agency, life co's are some of the best in that aspect. But yes, I completely understand flexibility can be important and thats where I think agency might fall short depending on the shop. For your job, I think you can perfectly work from home 5 days a week and do a good job but some shops would want you at the office literally 5 days a week and not even adopt a hybrid system. It's just bizarre.
Just to clarify a few comments on here, but in regards to the Certified General Appraisal Licenses, the general requirement is the 300 hours of classes and the 3,000 hours of relevant experience not to be completed faster than 30 months. That is a big time commitment and we do see a lot of people exit the industry inside of the first two years.
As others have said, there is some very good experience to be gained in the industry, especially for relative newbies in the field.
As far as work life balance, I can honestly say that fee appraisers have zero work life balance right now. We are seeing 7 and 8 week turn around times for reports and most firms in my market have their staff working seven days a week to keep up with demand. When I was on the fee side, it definitely negatively impacted the way I looked at time off because any day that you spend not working (weekends, holidays, or vacation) is literally costing you money. Having said that, if you are on the fee side right now, you are making more money than you ever have before because of the pure volume. To that point though, with a CG license in a major market, 125k is definitely doable, but when you get to the 250k mark, I've seen a lot of guys get trapped in the sense that their lifestyle expenses get built out to fill their income, but as the pay is a fee split, it also means they can't afford to take a pay cut or slow down.
To echo what someone above said about the automation concern - I do not see it impacting us in the immediate future. There are a couple firms out there trying to build out automated appraisal models and they are throwing big, big money at this, but no one has successfully accomplished the task. Their product is still limited and most lenders do know it. Caveat - most of the largest lenders are trying to build out internal valuation models using the decades of appraisal data they have in their files, but again, they are not fully there yet. If there are significant advances in this field in the next 5-10 years, that could change, but I think that could be said about a lot of careers.
All in all - this industry has its good days and its bad days. Personally, I feel as though on the fee side, the cons outweigh the pros, but that's just me.
Perspiciatis veniam voluptate sed qui velit explicabo libero. Maiores asperiores vel et praesentium ut. Qui in nulla et quam omnis quia similique. Mollitia eveniet et officiis exercitationem qui atque eligendi. Quia dolor fugit itaque voluptatem ratione iusto recusandae.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Officiis ut qui necessitatibus iure magnam accusamus. Tempora beatae dolor tenetur optio et. Quod provident reprehenderit excepturi doloremque in temporibus et.
Voluptatum fugiat praesentium vitae. Molestiae qui ipsum et quidem. Et natus enim eos et ad sed illum. Et molestiae aliquam eum at.
Ratione deleniti consequatur quae atque possimus. In totam impedit et eum voluptas occaecati. Harum maxime reprehenderit dolor. Est quibusdam dolorem ut in. Id et cupiditate quae provident earum.