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Alphabet soup.

What's Behind Real Estate Designations Like CCIM, CPM, MAI, NAIFA And SIOR?

Realtors are pushing for recognition of professional designations in keeping with physicians and their M.D.s and college professors and their Ph.D.s.

However, a quick flip through the yellow pages of the telephone book requires a translator to sort through an alphabet soup of designations issued through a variety of real estate organizations.

The designations are so plentiful that any random string of three letters is likely to stand for something -- or so it seems.

Does confusion reign supreme over the meaning and requirements of the various designations?

"Of course," says Bob Balhorn, executive vice president of the Arkansas Realtors Association. "But the designations reflect a certain level of education or expertise a person has attained."

Many non-industry types don't know what various professional real estate designations mean and what criteria is required for attaining membership.

Two of the most well-known designations were produced by the Chicago-based National Association of Realtors. These are the CCIM, certified commercial investment member, and CRS, Certified Residential Specialist.

Both require a series of courses, tests, demonstration reports and continuing education requirements.

There are 23 card-carrying CCIMs in Arkansas of the 3,000 or so nationwide. The professional distinction doesn't come, cheap either, especially when taking into account out-of-pocket costs to attend as much as 200 hours of classes.

"You can spend $12,000-$15,000 in a hurry," says Rollin Caristianos, executive broker at Prudential McKay Properties in Little Rock. "I took my comprehensive review course in San Diego and my final comprehensive exam in Las Vegas."

The annual fee for a CCIM is $300. The yearly fee for members of the Society of Industrial and Office Realtors (SIOR) in Washington, D.C., hits $1,250.

The interest of SIORs overlaps somewhat with CCIMs, but SIORs deal more with industrial properties and have more stringent requirements regarding experience.

Some commercial Realtors like Dickson Flake of Barnes Quinn Flake & Anderson in Little Rock are members of both.

"In most all of these groups, the advantages are fourfold -- networking among members around the country, ongoing education programs, association and mutual stimulation with others and the recognition of both peers and clientele," Flake says.

Select Company

Perhaps the rarest real estate designation belongs to members of the American Society of Real Estate Counselors, with its $750-$800 annual fee.

Dickson Flake and Richard Stephens of Richard Stephens & Associates in Little Rock are the only two Realtors in Arkansas to have the designation. Around the world, there are about 950 members.

Members engage in counseling and consulting practices of real estate. This involves feasibility studies of new projects, assisting a company on deciding whether to expand current facilities or relocate, evaluating alternative sites for a client and recommending appropriate courses of action.

This work is performed with a non-contingent fixed or hourly fee and performance bonuses, as opposed to a commission structure.

Entry into the group is by invitation, although a few self-sponsorships are allowed. Qualifications are based on experience and evaluation of judgment and integrity.

Candidates must pass muster through a lengthy personal interview and reviews of clients and records.

Despite confusion over what the designations mean, more and more real estate players are opting for affiliation with one or more of these groups to separate themselves from the pack.

"You will see that trend continue out in the future," says Darren Newsum, vice president of the commercial division at Danny Thomas Management Co. of Little Rock. "But right now I haven't allocated the time and energies to go after one of those.

"The designations do indicate a level of competence, if not expertise, and that can certainly be a competitive advantage."

However, marketing isn't the only motivation for attaining a professional designation.

"The primary benefit I've seen is the rigorous education requirements," says John Flake, a CCIM member since 1977. "The classes help you keep up with trends in the industry."

The Institute of Real Estate Management (IREM) oversees the issuance of several designations that include:

* ARM, accredited residential managers, who work with apartments.

* CPM, certified property managers, who work with retail properties.

* AMO, accredited management organization, which teaches the mechanics of operating a real estate office.

Except for appraisers, all professional real estate groups are affiliated with the National Association of Realtors (NAR).

Appraising The Situation

Designations abound in the real estate appraisal business, too. One of the best known in commercial circles is MAI, Member Appraisal Institute. There about two dozen MAIs in Arkansas.

The Appraisal Institute in Chicago represents a merger of two old-line professional organizations that number a combined national membership of 20,000.

The American Institute of Real Estate Appraisers (AIREA) and the Society of Real Estate Appraisers (SREA) joined together about two years ago.

Both of these groups were formed in the wake of the Great Depression's bank failures, which was caused in part by losses generated by poor appraisal procedures.

AIREA, founded by the National Association of Realtors (NAR), has historically dealt with commercial property.

The Society of Real Estate Appraisers, which deals mostly with residential property, was a product of the savings and loan industry. The SRA designation, senior residential appraiser, is its calling card today through the appraisal institute.

Both organizations became guild-like in their nearly impenetrable entry requirements over the years. By the 1960s, this closed shop atmosphere gave rise to the birth of other professional groups.

"It took me several years to even become a candidate because it was such a closed shop," says Tom Ferstl, an MAI, SRA and owner of Affiliated Appraisers in Little Rock.

MAI and SRA candidacy requirements are more open these days, but the guidelines for membership are still the stoutest of any appraisal group.

An appraiser must submit a five-year track record of work before MAI consideration. Those business records must pass review while the MAI candidate completes course work and a comprehensive two-day exam.

To maintain the MAI designation costs a minimum of $600 per year plus the completion of 50 hours of continuing education every three years, which exceeds state requirements for licensing.

One of the negative products of the earlier closed-door policy was the rise of appraiser mills during the 1970s giving designations.

Dozens of groups sprang up to provide professional designations to would-be appraisers in the absence of licensing requirements across the nation.

In some of the more notorious cases, all it took was a check for $100 to receive a certificate authenticating membership in an appraiser group.

One disgusted MAI appraiser actually put his cat up for membership in one such organization. The appraiser mill dutifully cranked out a certificate of membership for the cat -- after the MAI's check was cashed, of course.

Money was apparently the most stringent requirement for receiving an appraisal designation in some cases. Background checks and professional testing were often completely ignored.

During its heyday, one such appraisal mill had generated 20,000 members -- cash and carry. Now that states across the nation have instituted licensing requirements, this outfit has shifted its emphasis to certifying environmental inspectors and home inspectors at $125 a pop per annum.

Licensing requirements on the state level will no doubt be necessary to correct this situation as well.

Lack of regulatory oversight for appraisers was a contributing factor to the savings and loan debacle.

Too many times, financial institutions relied on appraisals done by men and women who simply paid a fee for a designation and began appraising with little or no training.

State licensing has done away with the need to have a professional designation unless an appraiser is involved in interstate deals.

But membership in appraisal groups is still coveted for the nationwide networking. MAIs typically do referrals with other MAIs.

Then there is the National Association of Independent Fee Appraisers (NAIFA) based in St. Louis. Annual dues vary from $370-$420 depending on the area of specialty:

* IFA, Independent Fee Appraiser -- oriented to residential real estate.

* IFAS, Independent Fee Appraiser Senior -- oriented to commercial real estate.

* IFAA, Independent Fee Appraiser Agriculture -- oriented to agricultural real estate.

* IFAC, Independent Fee Appraiser Counselor -- certified to teach continuing education courses offered by NAIFA.

Continuing education requirements are 10 hours each year.

There are 38 appraisers in Arkansas with one of these designations, with 75 candidates. Nationally, the group numbers 7,300.

And there are still other lesser-known and less-respected designations within the appraisal profession like CREA, certified real estate appraiser; MRA, master residential appraiser; and MFLA, master farm land appraiser.

Educational requirements and state licensing are prime components for the taste test of these ingredients in the real estate industry's alphabet soup.

Other outfits and designations are also in the mix, but there's no room to serve up any more for now.
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Title Annotation:real estate industry letter designations
Author:Waldon, George
Publication:Arkansas Business
Date:Oct 26, 1992
Previous Article:Splitting hairs.
Next Article:Westward movement.

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