2006 leadership development & advisory council.

THE APPRAISAL INSTITUTE'S LEADERSHIP DEVELOPMENT & ADVISORY COUNCIL HAS SERVED AS A SOURCE OF LEADERSHIP TRAINING AND EDUCATION FOR THE APPRAISAL INSTITUTE FOR OVER 36 YEARS. EACH YEAR, APPROXIMATELY 100 APPRAISERS AND OTHERS ARE INVITED TO WASHINGTON, D.C., TO PARTICIPATE IN THIS FORUM.

The purpose of LDAC is to create a dynamic environment in which participants develop leadership skills by debating current issues impacting the appraisal profession with their peers, providing recommendations to the national leadership for strategic planning purposes regarding the issues discussed, and lobbying the legislature as representatives of the Appraisal Institute. The council is comprised of individuals located throughout the country who have been identified as future leaders within the appraisal profession.

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This year's LDAC was held May 16-18 and included the following topics:

* "The AI and State Regulators: Can a Partnership Exist?" presented by Craig Benton, MAI 

* "AI Reports: The Next Step," presented by Kevin Harden, SRA 

* "Facing a New Era: Future Role of Chapters," presented by Juan Jimenez, MAI

* "AI Conference--If We Build It, Will You Come?" presented by Chuck Crider, MAI

In addition to breaking into four-groups, each of which debate each of the four roundtable topics, the group as a whole pays a visit to Capitol Hill, where attendees lobby their representatives on specific issues. This year's issues regarded legislation for responsible lending (H.R. 1295) and the valuation of conservation and historic preservation easements (H.R. 4297).

This year's recommendations will be presented by discussion leader Jimenez at the November 2006 national Strategic Planning Committee meeting. For more information on LDAC, visit www.appraisalinstitute.org/membership/events/LDAC.asp.

The Appraisal Institute and State Regulators

State regulators enforce education and experience requirements, in addition to other licensing issues. The Association of Appraiser Regulatory Officers is a group of state regulators (many of whom are appraisers) who work together to find out what procedures work and how they can be streamlined and implemented throughout the country. State regulatory boards base their actions on the minimum requirements set by the Appraiser Qualifications Board as well as state legislatures, which establish laws containing appraisal requirements, etc. While some state boards seem reluctant to work with the Appraisal Institute for fear of being aligned with one group over another, others work closely with local AI chapters, using our expertise whenever possible.

Since the Appraisal Institute is considered to be the leader in the appraisal industry, with the largest membership of all of the appraisal organizations, we have the responsibility to take the lead in working with state regulators to enact positive changes for the appraisal industry. Among the actions the organization should take include:

* Support AARO through sponsorships and possibly joint meetings.

* Work closely with state appraiser coalitions and help to set them up in states that do not currently have a coalition.

* Encourage local chapters to get state regulators to attend chapter meetings and get local appraisers and chapters to lobby with state coalitions and individually. Some ideas for lobbying would be making sure appraisal licensing fees stay in the appraisal division, approval of AQB issues, etc.

* Work with all appraisal organizations (and nonaffiliated appraisers) to create a policy and procedure manual for training of appraisal regulators and for enforcement and investigation.

* Work toward creating education and certification minimums for state investigators and regulators.

* Expand the number of appraisers on the Federal Registry and work toward changing state laws so that states can use it more easily and effectively.

* Create a paid position to be a liaison with state real estate appraiser boards. This job would include creating and maintaining a "matrix" of state requirements including education, experience, fees, renewal cycles, online education acceptability, etc. This matrix could be provided to all appraisers as a service of the Appraisal Institute (for marketing purposes).

* Offer services to state boards, like review of cases or help with investigations. States concerned with "alignment" issues should look to the IAAO for guidance on how to make this work.

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In conclusion, the AI needs to begin looking for and fostering opportunities to work closely with our state regulators in the form of coalitions and sponsorships. Additionally, a lead needs to be taken to help the appraisal industry set standards and minimum requirements for the training and enforcement activities of our state regulators/investigators and to assist our state regulatory agencies with legislative tasks and a stronger state coalition for possible streamlining.

AI Reports[TM]--The Next Step

For the past 20 years, residential appraisers have grown accustomed to using Fannie Mae's Uniform Residential Appraisal Report for a wide array of residential appraisal assignments outside of mortgage lending work. Fannie's URAR form was revised and released in November 2005. This "new" form, along with other Fannie/Freddie Mac forms released in January 2006, is clearly and specifically for mortgage finance purposes only. While use of the "old" URAR for purposes other than mortgage work has continued, this is primarily for a lack of a "better" or alternative form.

In July 2004, the Appraisal Institute formed a project team to develop a series of appraisal report formats--AI Reports[TM]--to be used in a wide variety of appraisal assignments. The project team consists predominantly of residential appraisers to ensure that the appraisal report formats are flexible and use/user neutral. Uses for AI Reports[TM] include, but are not limited to: insurance purposes; tax appeal; estate/financial planning; all types of litigation from dissolution of marriage to construction deficiencies; property owners wanting professional assistance on the listing of a property; potential buyers wanting an unbiased opinion on the value of the home they are considering; nonconforming loans; eminent domain; and investment purposes.

Major steps have been taken by the AI to enable market absorption regarding AI Reports[TM], including all major vendors having the forms available to their clients. With that under way, LDAC set out to discuss the next steps to ensure continued use and relevance, including:

1. How/when do we partner with other users of appraisal services?

2. How do we get the users to request these forms?

3. Who/what is the AI's competition regarding AI Reports[TM]?

4. Is there a trend in the commercial arena toward standardized formats?

5. If yes, what are some proactive steps the AI can take to serve its members?

6. Would members appreciate the AI negotiating on their behalf regarding standardized formats? If so, how?

In terms of residential appraisals, there was widespread misunderstanding regarding the potential misuse of the revised URAR for nonmortgage transactions. Several suggestions were recommended to remedy this problem, including developing chapter-level seminars regarding AI Reports[TM] and the new revised Fannie Mae reports; teaming with other educators in the appraisal industry to educate regarding the potential misuses of the revised URAR; teaming with state licensing boards to ensure the information regarding the potential misuse of the revised Fannie Mae forms is included in their newsletters; and inviting users of appraisal services (CPAs, insurance companies, lawyers, ABA, etc.) to attend forums hosted by local AI chapters regarding AI Reports[TM].

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To increase the visibility of the product, it was suggested that the Appraisal Institute include AI Reports[TM] in every AI class/seminar education packet; when working with other educators, get them to include it in their packets; and to run ads in various trade publications.

In terms of commercial transactions and the subsequent development of a suitable form for such assignments, the general consensus acknowledged that there was a trend toward standardized formats, but also that a very strong resistance to them existed. At the end of the day, however, there was an apparent consensus that the AI needs to take the initiative to open dialogue with users of commercial appraisals to ensure a flexible standardized format. A similar commercial-oriented form would address the emerging desire for standardization within the industry.

Facing a New Era: Future Role of Chapters

Recognizing that the needs and challenges experienced by chapters with less than 200 members are different from those of chapters with over 400 members and that chapters with different ratios of designated versus nondesignated members have different needs and challenges, LDAC explored the opinion that current regulations and procedures do not necessarily recognize that "not all chapters are equal."

Participants recommend grouping chapters based on total number of members or membership distribution, and to survey the needs and challenges of each group. In addition, they recommend the creation of a formal forum where chapters with similar needs and challenges can share success and failure stories. This forum could be a bricks-and-mortar location (conference once a year) or virtual (blogs, chat rooms, bulletin boards, etc.).

The discussion groups also recommended exploring the possibility for national to assign financial and administrative support to the smaller chapters. Specific recommendations included revenue/profit sharing and a reward/incentive program for smaller chapters so that they could operate effectively and efficiently, adding value for members of the smaller chapters.

Considering that chapters are the primary point of contact for members seeking services, national should allocate more resources to chapters. Initiatives like the visibility campaign, having a state government relations person in the D.C. office and having a "chapter go-to" person in the national office are steps in the right direction. Increasing the funding for these initiatives and permitting chapters to coordinate government and public affairs issues directly through the national office and with national funding were also recommended.

It was felt that chapters are doing well in their current role as local education providers, which allows chapters to generate income for their operations and provide the flexibility to coordinate only those offerings that are cost-effective and support the needs of chapter members. However, more flexibility in the process of ordering education materials is needed, specifically the current policy of not being able to return excess material, which discourages the chapter from over-ordering, which in turn limits the number of walk-in students that can take a course.

Furthermore, the concern of national's online education cutting into local profits was raised: as national increases the number of online courses, including basic qualifying education, those course offerings could impact chapter educational initiatives. However, the resources of national to develop courses was recognized and it was felt that it should develop seminars in conjunction with other nonappraisal professional organizations (such as lawyers, bankers and accountants). These multidisciplinary seminars could increase the number of potential students and provide excellent opportunities for promoting the profession, the organization and our members.

AI National Conference ... If We Build It, Will You Come?

Armed with the knowledge that only 2 to 4 percent of the membership attends the Appraisal Institute's national conference in any given year, this discussion group focused on what is keeping that number so low, and what can be done to remove or overcome those obstacles. It was decided that the major contributing factors to the low attendance were a lack of information about the event, cost, time, location, frequency, and lack of pertinent education and networking opportunities.

While e-mails are considered cost-effective for advertising, they are a poor method of communicating since they are easy to pass over, delete and remove from a hectic schedule. Instead, the AI should communicate by postal service, which requires increased diligence to get rid of. Furthermore, they might consider making the paper pink so as to stick out on the recipient's desk.

Cost was seen as a major obstacle particularly for associate members. Cost is divided into three categories: opportunity cost at work, travel costs and conference fees. Therefore, it was recommended that there be discount rates for associates. If associates are in the habit of attending conferences and meetings, they are more likely to do so once designated. Also if an associate from an office is going, other associates and designated members may also attend. Furthermore, there was the idea that regional conferences could be held to cut down on travel costs and the time associated with getting to the conference.

Another major factor was the lack of a perceived need to attend, whether due to lack of nonappraiser networking opportunities (beyond socializing with other appraisers) or the fact that the education offerings are often considered unnecessary for designation and/or irrelevant to increasing productivity. Associates are already often taking coursework toward a designation and don't need nonessential courses. To enhance networking, it was recommended that conferences be held with mortgage bankers associations, trial lawyers, FNMA, FHA/HUD and other professional or government organizations. Education-wise, rather than educate through lectures, the AI should set up roundtable discussion groups similar to the format of LDAC, featuring one- to two-hour sessions. This type of discussion would promote individual involvement and the opportunity to interact with other participants, including potential clients, not just other appraisers.

With regional conferences, the national conference could then be moved to a two-year cycle; with fewer opportunities to attend, the "I can go next year" attitude is also reduced. Additionally, reunions could be added to the national conference cycle, be it reunions of LDAC attendees, a chapter presidents reunion, or others; all were seen as incentives to attend a future conference.

by Karen Oberman, SRA, 2006 LDAC Chair, and the 2006 LDAC Discussion Leaders.