Hey! Don't Leave!
"Right Way" to Turn in
A Business Downturn

As a real estate appraiser, I follow numerous appraisal-related social media groups.

 

These groups effectively serve as the virtual water cooler for fellow appraisers from around the world to gather and discuss issues relating to the profession.

 

The appraisers who frequent these groups represent a wide array of backgrounds and specializations within the field of valuation.

 

The latest national figures I was able to find indicate that approximately 60% of real estate appraisers are either Licensed Residential or Certified Residential.

Accordingly, most of the discussion in these groups is focused on issues that pertain primarily to residential appraisers and, more specifically, to appraisals related to residential mortgage lending. 

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Over the course of the past several months, it has become impossible to ignore the growing sense of despair that is pervasive among many residential appraisers.

 

30-year fixed-rate mortgage interest rates precisely doubled from 3.45% in January 2022, to 6.90% in October, and this looks to have had staggering effects on appraisers whose clients are primarily residential mortgage lenders and appraisal management companies.

 

Nearly every day, I see discussions in social media groups where residential appraisers report management companies slashing fees by upwards of 50%, year-over-year appraisal volume (income) down by as much as 90%, and residential appraisers in many markets wondering whether to get a part-time job and try to weather the storm or abandon ship on the profession altogether.

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Many express the desire to find another career path, and many more wonder to what other career paths an appraiser’s highly specialized skillset might be suited.

 

While there may be many options for those seeking a career transition, that is not the focus of this article. 

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My intention is to highlight the often-overlooked niche of right-of-way appraisal.

“What does that mean?” you ask – I’ll spare the finer details for another time, but in short, most of the appraisals my firm performs involve the acquisition or disposition of real estate by a governmental or quasi-governmental entity (departments of transportation, turnpikes/toll roads, counties, municipalities, utility companies/authorities, park systems, etc.). 

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As you may have heard (and regardless of any individual and/or political opinions), the federal government passed the $1.2 trillion Infrastructure Investment and Jobs Act (IIJA) at the end of 2021.

 

While the full impact of this legislation has yet to be realized, I have spoken to several people within the right-of-way profession who believe – and I agree – that we are starting to see the early signs of the influx of business which will be brought about by IIJA.

 

Many infrastructure projects - from highways to railroads to local bridge replacements – which had been put on hold due to lack of funding, sometimes indefinitely, are likely to be revived by IIJA, and many of these projects will be required by federal law to utilize the services of specialized real estate appraisers – how’s that for job security?

 

Like the rest of the appraisal profession, right-of-way appraisers aren’t getting any younger, and the looming inflow of projects threatens to create a shortage of qualified appraisers working in this space.

 

Some projects may stall due to an inability to contract enough appraisers. 

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Say you’re a Certified Residential Appraiser who has been contemplating your next move in the face of a sharp downturn in business.

 

There is one major hurdle that needs to be addressed for those considering the leap from appraising for residential lending transactions to right-of-way appraisal: it is nearly impossible to operate independently within this appraisal niche without a Certified General credential.

 

While residential properties are sometimes impacted by these projects, their locations often bring with them questions of highest and best use, legal non-conformances, and other issues which are beyond the scope of practice allowed by the Certified Residential credential.

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However, a Certified Residential Appraiser can co-sign such appraisal reports as long as a Certified General Appraiser supervises and signs the report; in turn, the Certified Residential Appraiser can log those hours toward the experience required for Certified General.

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Now that we’ve gotten the bad news out of the way, I am happy to say there is good news. The appraisers who are already specializing in right-of-way work are about to get insanely busy. They’re going to need help, and no one is more qualified to step in and pick up some of the slack than a competent and experienced Certified Residential Appraiser. 

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While many will initially find right-of-way appraisal reports daunting, and the endeavor will certainly improve any appraiser’s narrative writing abilities, I am here to say that it is not rocket science.

I believe that anyone who has made a living in appraising and is willing to put in the time and effort (and probably unlearn some old habits along the way) can succeed in right-of-way appraisal.

 

An experienced residential appraiser has valuable skills and experience to offer even the most established right-of-way appraiser.

 

This proposed relationship will create a win-win solution for both the residential appraiser and the right-of-way appraiser, allowing residential appraisers to expand their skills while simultaneously enabling right-of-way appraisers to meet the growing demand for these specialized services. 

Derek R. Molen, R/W-AC, SRA, is a Certified General Appraiser currently licensed in six states.

He is Vice President of Vista Realty Services, Inc., where he specializes in appraisal, appraisal review, and consulting engagements primarily involving right-of-way and conservation projects.

He can be reached via email at derek@vistarsi.com.