Appraiser Qualifications Board of The Appraisal Foundation

1. Appraiser Qualifications BoardofThe Appraisal Foundation Florida Chapter of IAAO Fall Conference October 29,2008 Rick O. Baumgardner, AQB Member

2. Appraiser Qualifications Board Who Else is Involved? • State Appraiser Regulatory Agencies • Appraisal Standards Boards (USPAP) • Appraisal Subcommittee (Federal Oversight)

3. Appraiser Qualifications Board Primary Role of the AQB To provide minimum qualifications that should be maintained in order to ensure public trust in work of the appraisal profession.

4. Appraiser Qualifications Board Directive and Authority created by Title XI of FIRREA Financial Institutions Reform, Recovery, and Enforcement Act of 1989

5. Appraiser Qualifications Board Congressional Authority of the AQB Authority under Title XI of FIRREA: • Set the minimum state certification requirements for real property appraisers. • All state certified appraisers must pass the National Uniform Appraiser Examination issued or endorsed by the AQB.

6. Appraiser Qualifications Board AQB Organization • Currently six (6) members • Appointed for one to three-year terms • Maximum of eight (8) years of service • Appointed by The Appraisal Foundation’s Board of Trustees

7. Appraiser Qualifications Board Current AQB Members • Gary Taylor – Chair Brooksville, FL • Scott Seely – Vice Chair Lufkin, TX • Rick Baumgardner Elizabethtown, KY • Wayne Miller Tampa, FL • Jeff Lagrew Lexington, KY • Chad Campbell Seattle, WA

8. Appraiser Qualifications Board AQB has jurisdiction to set minimum qualifications for the following mandated classifications: • Certified Residential • Certified General

9. Appraiser Qualifications Board The AQB also offers minimum requirements for the classifications of: • Licensed • Trainee Note: At this time, the criteria specified in these two classifications are only recommendations.

10. Appraiser Qualifications Board Minimum requirements include the following: • Education • Experience • Examination • Continuing Education

11. Appraiser Qualifications Board AQB ‘Tools’ Criteria Interpretations Guide Notes

12. Appraiser Qualifications Board AQB ‘Constituents’ State Regulators Appraisers Education Providers

13. Appraiser Qualifications Board Evolution of the Real Property Appraiser Qualification Criteria

14. Appraiser Qualifications Board In 1991, the original AQB Criteria was adopted in and included classifications for: • Certified General (mandatory) • Certified Residential (mandatory) • Licensed (optional)

15. Appraiser Qualifications Board • In 1993, additional Criteria were added for the Trainee classification (also not mandated). • In 1994, revisions to all four classifications were adopted, effective in 1998.

16. Appraiser Qualifications Board Two major revisions were made in 1994: • 15-Hour USPAP course requirement added to Certified Residential, Certified General and License categories; and • Experience requirements were increased as follows: • Certified Residential from 2,000 hours to 2,500 hours • Certified General from 2,000 hours to 3,000 hours

17. Appraiser Qualifications Board In 2004, the AQB adopted a major revision and rewrite of the Criteria, to become effective on January 1, 2008.

18. Appraiser Qualifications Board 2008 Criteria Changes – General Remarks • Public feedback strongly favored higher standards • Six (6) exposure drafts covering a period of 2½ years • Existing certifications would be ‘grandfathered’ • 2008 date seemed remote but necessary

19. Appraiser Qualifications Board Did You Know? The United States has the lowest qualification standards for real estate appraisers in the world? Even with the 2008 criteria in place!

20. Appraiser Qualifications Board 2008 Experience Changes • All experience must be obtained after January 30, 1989, and must be USPAP compliant. • Plus…changes in Trainee and Licensed Residential Criteria (currently at the discretion of the states).

21. Appraiser Qualifications Board • With the new Required Core Curriculum, each component of Qualifying Education will already have been tested, meaning new exams now focus on a candidate’s ability to apply the knowledge learned • Current exams are application-based, including many “scenario” questions where candidates will have to study problems and determine how to apply the correct solutions • Current exams allow six (6) to eight (8) hours, depending on the classification level • Current exams consist of 165 questions, including 15 “pretest” items not scored

22. Appraiser Qualifications Board • Three exam vendors applied for and were approved to administer the new exams: • AMP • Pearson VUE • PSI • Examination developers and state appraiser regulatory agencies may also develop exams and apply for equivalency to the AQB

23. Appraiser Qualifications Board Sample Question (2008 Exam) Scenario: An appraiser is asked to appraise an apartment complex consisting of 120 units broken down as follows: • Thirty (30) 1-bedroom units, renting for $500 each • Sixty (60) 2-bedroom units, renting for $750 each • Thirty (30) 3-bedroom units, renting for $1,000 each The complex has historically had a vacancy and collection loss expense of 3% and operating expenses/replacement reserves of 35% of effective gross income. Assuming the vacancy rate and all expenses are forecast to remain constant in the foreseeable future:

24. Appraiser Qualifications Board Sample Questions (2008 Exam - continued) 1. What is the Potential Gross Income for the complex? A. $75,000 B. $90,000 C. $87,300 D. $56,745 2. What is the Effective Gross Income for the complex? A. $75,000 B. $90,000 C. $87,300 D. $56,745

25. Appraiser Qualifications Board Qualifying Education Classroom Hours Previous2008 Trainee 75 75 Licensed 90 150 Certified Residential 120 200 Certified General 180 300

26. Appraiser Qualifications Board Qualifying Education was: • Educational offering - must be at least 15 hours, including a closed book examination. • “Qualifying Education” included those hours of an educational offering that were related to appraisal education.

27. Appraiser Qualifications Board Qualifying Education in 2008: • Appraisal education must be further categorized and associated with Required Core Curriculum modules (subject matter headings)

28. Appraiser Qualifications Board Definition of Required Core Curriculum: A set of appraisal subject matter areas (known as ‘modules’) which require a specified number of educational hours at each credential level.

29. Appraiser Qualifications Board Required Core Curriculum • Specified Number of Classroom Hours in Individual ‘Modules’ Example: 30 Classroom Hours in Basic Appraisal Principles

30. Appraiser Qualifications Board Subtopics in Guide Note 1 • Further elaboration of recommended content in modules of ‘Required Core Curriculum’ • All subtopics considered appropriate material for National Uniform Licensing and Certification Examinations • Individual states may, or may not, require education to be accountable to this level

31. Appraiser Qualifications Board Categorizing Appraisal Hours into Required Core Curriculum Appraisal education can be presented in different ways and in different orders.

32. Appraiser Qualifications Board While providers may opt to format their courses so that they are readily identifiable with Required Core Curriculum modules, this is not required.

33. Appraiser Qualifications Board …Education that layers or combines different modules or subject matter areas into one course (integrated methodology) is equally acceptable as qualifying education.

34. Appraiser Qualifications Board States approve education – • It will be the individual state’s decision on what they will require in course applications, what they will approve, and to what degree they will require classification of qualifying education within the Required Core Curriculum.

35. Appraiser Qualifications Board College-level education required for: • Certified Residential Associate degree or higher • Certified General Bachelors degree or higher Degrees can be in any course of study.

36. Appraiser Qualifications Board In lieu of these degree requirements, a minimum number of college course work hours can be utilized: • Certified Residential 21 semester hours • Certified General 30 semester hours Coursework for this requirement must be in specific areas of study.

37. English Composition Economics Finance Higher Mathematics Statistics Computer applications Business or Real Estate Law Appraiser Qualifications Board Required subject matter for “in lieu” courses for the Certified Residential level includes:

38. Appraiser Qualifications Board Required subject matter for “in lieu” courses for the Certified General classification is the same as Certified Residential, with the addition of: • Micro and Macro Economics • 2 additional electives in: • Real Estate • Business Management • Agricultural Economics • Accounting

39. Appraiser Qualifications Board • Development of further Interpretations of the Criteria • Development of additional Guide Notes • Implementation Guide

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41. Appraiser Qualifications Board Student has taken three courses: • Basic Appraisal Principles…………30 Hours • Basic Appraisal Procedures………30 Hours • Influence of Mold on Res. Val.…….15 Hours

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44. Appraiser Qualifications Board Communicating with the AQB and The Appraisal Foundation is easy: • Internet: www.appraisalfoundation.org • Phone: 202.347.7722 • Fax: 202.347.7727 • Address: 1155 15th Street, NW, Suite 1111 Washington, DC 20005

45. Appraiser Qualifications Board Questions & Answers