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Educational Considerations in Regulating
The Valuation Profession

VAT News Vol.4/2000

James R. Park
Director of Research and Technical Issues

This past August I had the privilege of traveling to Thailand at the request of the Keenan Institute Asia (KIAsia), which is part of the US Agency for International Development's Acceler-ating Economic Recovery Program (AERP). The purpose of the trip was two-fold. First, establish contact with appraisal professionals and users of appraisal services in Thailand and secondly to provide advice as Thailand recovers from a difficult economic crisis and considers regulating the appraisal profession.

The Appraisal Foundation is the congressionally authorized purveyor of appraisal standards and qualifications in the United States. The Foundation accomplishes its mission through the work of its two independent boards, The Appraisal Standards Board (ASB) and the Appraiser Qualifications Board (AQB). Its congressional authority was established in 1989 as a result of a banking crisis in the United States, commonly referred to as the Savings and Loan Crisis. This calamity, in which thousands of American savings and loans failed, exposed a need for closer scrutiny of the appraisal profession. It is a widely held theory that, while appraisers were not to blame for the bank failures, overvaluations of commercial property certainly exacerbated an already difficult situation.

As Thailand recovers from its own banking crisis it appears that some form of appraisal regulation is on the horizon. If Thailand opts for regulation, numerous issues will confront those writing the law as well as the practitioners and users of appraisal services. The purpose of this article is to focus on one aspect of appraiser regulation that Thailand certainly will have to address, education.

Education is the cornerstone of most professions in the world. Professions such as accounting, law, and medicine have relatively well defined educational curricula that provide users of these services with a certain degree of confidence that a practicing attorney, accountant or doctor has taken classes and passed exams that qualify them within their profession. Unfortunately, for the appraisal profession, neither the profession itself nor most countries have a well-defined educational path for professional appraisers.

The appraisal profession in the United States is engaging in an ongoing debate about education. No one questions the fact that meaningful educational requirements are fundamental to any successful appraiser regulatory system. However, many people question and disagree over the level of education required of appraisers. In the US, there are three levels of licensure;
• licensed residential appraiser
• certified residential appraiser
• certified general appraiser.

The AQB currently requires a minimum of 90 classroom hours of education to qualify for the lowest level of licensure, licensed residential, and 180 classroom hours to qualify for the highest credential, certified general. The AQB minimum criteria also require appraisers to take at least 28 hours of continuing education every two years. Many appraisers and users of appraisal services in the US feel that these requirements are too low. These criteria were established at the outset of the licensing era in the US and were purposely kept somewhat low due to fears in the marketplace that a strenuous educational requirement could lead to a shortage of licensed appraisers in the country. Now that these requirements have been in place for several years, it appears that it may be time to raise the educational requirements for qualifying and continuing education.

In 2001, the AQB will be taking the first steps toward rewriting the current qualification and continuing education criteria. Many of the issues the AQB will consider have direct parallels with issues that Thailand must also confront.

• How much qualifying education do appraisers need?
• How much continuing education do appraisers need?
• Who teaches the appraisers?
• Who teaches the teachers?
• Should a college degree be required?
• Will classes for qualifying and continuing education include exams?
• Is the purpose of licensing to get people into the profession or keep people out?

When the AQB originally wrote the education criteria, significant concerns existed in the regulatory community about possible shortages of appraisers. Therefore, the educational criteria were designed to allow the majority of appraisers to qualify. Now, many appraisers and users of appraisal services feel that the educational requirements were (and continue to be) too low and defeat the initial intent of licensing.

Thailand is now faced with the same questions and likely the same possible answers. Should Thailand make appraisal education onerous to the degree that many appraisers are unable to attain a license? Will appraisers and regulators fear that this will cause an undersupply of appraisers? Should Thailand make the educational requirements easily attainable so that most appraisers currently practicing will remain in practice? Who will determine the criteria, appraisers, regulators, the public, or a combination of these groups? These questions may appear to be rather broad and indeterminate. However, in order for a regulatory system to work effectively these questions and others must be considered at the outset. It will be up to the Thai people to decide where they want the appraisal profession to exist.

Do they expect appraisers to be professionals and therefore undergo rigorous educational and experience requirements that are in line with these expectations? Alternatively, do they expect the appraisal business to be more of a vocation where education and experience are less important? Once the answers to these questions are satisfied then a meaningful and successful regulatory system for appraisers can be established.

As stated earlier, the AQB will begin the process of re-writing our criteria next year. I hope that as we examine some of these fundamental questions articulated here, appraisers in Thailand and the US can share thoughts and opinions on the possible answers for appraisers in both countries. Although our countries are literally on opposite sides of the globe, during my visit to Thailand I was struck by how similar our appraisal professions are. I heard many of the same issues discussed, complaints made, and dreams for the appraisal profession articulated in Thailand that I hear on a daily basis in the US. The Appraisal Foundation looks forward to working with appraisers in Thailand and sharing our mutual experiences in order to benefit appraisers around the world.

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