Underwriting vs. Appraisal

Which is the better career path? Which is better to start your career path in overall? Highest comp? I'm currently in Underwriting for a lender but having second thoughts. They both seem like similar career paths with comparable hours and comp (correct me if I'm wrong) but part of me thinks Appraisal would be better to start in cause the exit opps seem much more broad, and think I may learn more technical skills there (correct me if I'm wrong again). I'm looking for good worklife balance and higher comp (would like to be $200k+ eventually, wouldn't mind even more obviously). Looking forward to hearing from those that have experience in these roles. Thanks.

 

I generally don't recommend the appraisal industry to people and I definitely do not recommend being on the fee side of appraisals. The money can be decent early on but when you're on fee split if you aren't working you literally aren't making money. Fees are generally trending down too which makes it harder to make more money than the previous year. The management side is slightly more tolerable but to get there you have to invest several years in the industry.

Even if you end up getting your Certified General and MAI, people outside the industry could care less - you're better off getting credit training from a well respected bank and see where you can take that. Chief Credit Officers get paid more than Chief Appraisers - think about that.

 

It may be more entrepreneurial and theoretically have more income potential than salaried, but success is dependent on your business dev/sales skills. If you already have an entrepreneurial mindset and sales/business dev skills, it would be silly to go into appraisals. Those are some of the most valuable skills in this industry, and you can make 10x an appraiser if you put those skills to use in brokerage and even more than that on the ownership side.

So, if you already have business development skills and an entrepreneurial mindset, the entire appraisal industry is wrong for you and you will likely be miserable. Valuations gets incredibly boring and repetitive after a few months on the job. Especially for those with other skills.

 

OP - What do you want to do long term? Sounds like not underwriting.. But Underwriting and Credit can be a great place to start. Sounds like you're already in an entry-level type role, likely right out of UG. Making $200k+ and having good work/life balance is great, but everyone wants that

We need a bit more. What type of product do you work on now? What don't you like about your job? What do you like about it? What would you prefer to be doing? I'm talking high level, so we can give you some guidance as to how you can pivot.

From Underwriting you can go up; from Analyst to Underwriter to Management in Commercial/CRE Banking, which can be a very cush gig. You can also do the same thing on the sales side, in Commercial/CRE Banking. You could also try to pivot to REPE, IS, Principal/Operator Side, Property Management, etc.

 

Sorry for the delayed response. I'm currently in uw for GSE lending. I would like something more entrepreneurial overall to where I can still make good money but control my workload (to some degree).

I also feel like I would have better exit opps down the road in appraisal. I feel like I would gain more skills and knowledge overall in appraisal to where I could pivot 5+ years in if I wanted to, whereas in UW for lending I feel like I could only jump to originations.

I could also go from appraisal back to lending whereas if I'm 5+ years in lending I couldn't just jump into appraisal because of the licenses you need to obtain early on. It would be too far of a step back.

 
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Underwriting is considered more 'pure finance' than real estate, not say that you don't need to know a lot of real estate to do it well if underwriting real estate loans. Thus, the career paths tend to be within banking, lending, debt finance, etc.

Appraisal is more hardcore 'real estate' from a services/analytics side. As the above commenter says, it takes time for appraisal to get good. Pretty much all my friends from undergrad and grad who went into commercial appraisal have left the field. The good news is they are all in development, investment sales, and private equity. So the exit ops can be good but I think you have to be pretty aggressive and tactical to make those jumps.

That said, I know some older appraisers who only do expert witness and litigation appraisals and they are very, very well paid and happy. That is a tough specialty to get to, but there are places where it seems to be enjoyable and well paid. I do not think fee work for banks (the bread and butter of a lot of appraisers) is one of those fields, so breaking out if it key.

 
redever:
That said, I know some older appraisers who only do expert witness and litigation appraisals and they are very, very well paid and happy.

I'm interested in hearing more about this, what sorts of situations would this be needed in? It would be great if they could do an AMA on here.

Quant (ˈkwänt) n: An expert, someone who knows more and more about less and less until they know everything about nothing.
 

Litigation appraisals and testimony will be needed in any dispute where the value of real property is part of the damages, those where the value itself is at dispute will require the most effort.

Cases I can think of where value is material or at dispute: 1. Eminent Domain (these cases are literal battles of appraisers and valuations) 2. Partner disputes (like GP vs. LP, or partners in GP. vs. each other) 3. Lender vs. borrower 4. Divorce 5. Bankruptcy 6. Tenant vs. landlord 7. Insurance disputes 8. Business liability/general damages (where real property is damaged or affected) 9. Property tax value disputes (like getting a property assessment lowered)

Sure there are more.

 

I did appraisal straight out of college. Great base for learning modeling and research (dealing with tax authorities, public records, city/state development offices, environmental, court records, etc.) and I use those skills even now, but I found it felt more like a job to me than a career because of the limited upward mobility after you become licensed/get the MAI designation.

Of the 5 young people at my old firm, 2 are still in appraisal (they are directors at larger national firms) and 3 are in other areas of RE (one in development, one in brokerage and I’m at a debt fund). I would mention that the 3 of us that left appraisal had to really hustle for chances to move into other areas of RE and I’ve seen similar things for a lot of people in appraisal trying to move back onto the debt/equity side over the last decade. There is a bias against appraisers in the industry so getting a chance takes more work.

If you are already planning exit options, then I would encourage you to really think about where you want to be long term and go that direction instead of making a pit stop in appraisal that you may never leave.

 

basically if you go into commercial valuations appraisals for a big firm your starting is 90k-100k base mark and then in the company I'm at usually they get 25%-40% of the fees from reports they write up. You have to usually write up 3-5 jobs before you hit bonus. Valuers i know in a hot market clock up 300-350k total comp. Once you've got a few years experience and in fast growing company only 1 yr experience you can get to more head of valuations in a certain state. Which will pay you 250k and bonus. Its pretty easy to climb up the ladder if you have a post grad. Valuations is good if you're entrepreneurial and want to have that extra free time to invest in your own deals/developments. Pretty good pay in commercial vals and quite interesting as you learn the market. 

Underwriting and acquisition roles i hear have similar hours to ib analysts with same pay as Val's. And you don't really get that extra free time to source your own investments. If you love hard-core excell shit then be an acquisitions analyst but if you want a good pay packet and want good work life balance availability to climb the ladder and invest in own deals then do valuations. Commercial appraisals is an understated career path but pays very well and most commercial appraisors don't really care about the prestige of working in big name pe or ib firm in real estate and invest there money and spare time in own deals. Don't get me wrong commercial appraisors rack up 50+hours most max out at 70 hours. 

 

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