Posted on December 2, 2022
The Meaning and Value of CRE Appraiser Licenses, Certifications, and Designations
Trust is an essential ingredient of any commercial real estate (CRE) appraisal report. At LPA, we believe our clients deserve to work with appraisers whose property type expertise, analytical acumen, and knowledge of the latest industry trends are only exceeded by their commitment to principled conduct.
For that reason, we invest heavily in our people’s continuing education and professional development. Many of the leaders of our 8 Texas locations have earned certifications and designations that attest to their honesty, sincerity, transparency, and credibility.
But what do acronyms like MAI and AI-GRS actually mean? More importantly, how do they translate into added value for anyone in the market for CRE appraisal services?
Keep reading to learn more.
Licenses, Certifications, and Designations: What’s the Difference?
First, we need to draw a distinction between licenses, certifications, and designations.
Licenses are essentially permits to practice a trade or profession. They are administered by government agencies, most commonly at the state level. Licensing credentials are not always transferable from state to state. But nearly every state in the U.S. offers some form of reciprocity to real estate appraisers. Under the terms of reciprocity, a licensed appraiser in one state can apply for the equivalent license in another state.
In Texas, The Texas Appraiser Licensing & Certification Board (TALCB) provides education and licensing services, as well as enforcement of state and federal laws governing appraisals of residential and commercial properties. Certified General Appraisers are licensed to appraise all types of real property in Texas regardless of that property’s complexity or transaction value. They are also authorized to appraise both federally related and non-federally related transactions.
To become a Certified General Appraiser in the state of Texas, applicants must:
- Hold at least a Bachelor’s degree.
- Complete a course of study approved by the Appraiser Qualification Board.
- Acquire 3,000 hours of appraisal experience. Half of these hours must involve work on non-residential properties. (The TALCB handles licenses and certifications for residential appraisers differently.)
- Pass a license exam.
- Meet the TALCB’s standards for honesty, trustworthiness, and integrity.
Certified General Appraisers must renew their licenses every two years. Renewal requires additional professional education: the completion of least 28 hours of appraiser continuing education (ACE) courses from approved providers. These 28 hours must include a seven-hour course covering updates to the Uniform Standards of Professional Appraisal Practice (USPAP).
Certifications, like licenses, offer proof of a professional’s qualifications. Unlike licenses, certifications are issued by non-governmental organizations (NGOs) and institutions. Consequently, they are voluntary and not required for practice.
If licenses and certifications attest to a professional’s core competencies, designations denote that a professional has chosen to deepen their expertise or hone a particular job skill to a fine point.
Designations are typically available only to dues-paying members of professional associations who agree to meet a set of requirements. These requirements almost always include a robust educational component. As Mark Arvé, Managing Director of LPA Dallas, observes, “Designations are the outcome of a sustained intellectual curiosity blended with peer-reviewed professional experience that yields a demonstrated professional proficiency. In a sea of potential appraisal vendors, it’s reassuring to know that a designated professional will invest in each project to ensure the most credible assignment results.”
For this reason, designations tend to convey more authority — and carry more weight — than certifications. In the commercial real estate appraiser profession, the two most prominent of those designations are the MAI and AI-GRS. Being a licensed Certified General Appraiser is one of the first qualifications for applying for either. As Chellie Hoover, Managing Director of LPA El Paso, puts it: “If you want a job, get your state license. If you want a career, get your MAI designation.”
The Appraisal Institute is the largest association of real estate appraisers in the world. Its MAI designation is considered the “gold standard” within the profession by many banks, lenders, investors, and developers. As LPA President and CEO Mark Lowery explains, “The MAI is like the CPA of commercial appraisal. It’s not required, but it’s hugely impactful. For me, it’s been imperative to success. LPA would not be where it is today had I not obtained the MAI designation prior to launching the firm.”
The MAI is held in such high esteem for several reasons.
- The MAI’s education requirements, which include comprehensive exams and an (optional) thesis or dissertation, are nearly as rigorous as those in any Ph.D. program.
- The MAI is reserved for valuation professionals who can demonstrate a wide range of expertise. That range of expertise includes commercial, industrial, agricultural, and residential properties, plus professional services beyond standard appraisal reports.
- All MAI-designated appraisers must be of strong moral character and pledge to uphold the Appraisal Institute Code of Professional Ethics and Standards of Professional Practice. In fact, “MAI” stands for “Member, Appraisal Institute.”
- To retain their MAI designation, appraisers must stay up to date on industry trends and best practices.
Given the thousands of hours of education credits and specialized experience appraisers must accrue to earn the MAI designation, it takes the majority of candidates years to do so. The MAI is therefore more than a credential. It is a commitment only those with a rare passion for inspecting properties, providing opinions of value, writing reports, and advising clients on their CRE investments are likely to keep.
Clients seeking appraisals for projects that involve complex financing or interstate commerce must often secure the services of an MAI-designated valuation professional out of necessity. However, whether the project requires the oversight of an MAI-designated appraiser or not, their opinions are always highly regarded. According to Chellie, “The MAI designation helped me to level the playing field, especially working in a male-dominated profession.”
The AI-GRS designation is also offered by The Appraisal Institute. It is reserved for valuation professionals who provide real estate appraisal reviews. (The “GRS” stands for “General Review Specialist.”)
USPAP defines an appraisal review as “the act or process of developing and communicating an opinion about the quality of another appraiser’s work that was performed as part of an appraisal or appraisal review assignment.” In some instances, an appraisal reviewer will simply offer a “second opinion,” or assurances as to the credibility and accuracy of an existing opinion of value. Most appraisal reviews are requested by lenders, investors, or buyers looking to minimize their exposure to risk. Appraisal review is an important part of the due diligence process for such transactions. However, attorneys may solicit appraisal reviews to support litigation. Because right of way and eminent domain (ROW/ED) projects can lead to legal disputes, the AI-GRS designation is highly sought after, both by appraisers who specialize in these areas and condemning authorities.
Even attorneys who do not request a formal appraisal review may wish to call an appraiser with an AI-GRS designation as a witness. “Speaking from the standpoint of providing expert testimony, we as testifying appraisers are requested to provide our qualifications, credentials, and experience to the commissioner or jury panel to provide support that we are indeed qualified to provide testimony as an expert witness,” says Will Snider, Director, LPA Fort Worth. “As part of that support, we will refer to designations and certifications (i.e., MAI, SR/WA, R/W-AC, etc.) achieved and provide a short statement about the steps involved in obtaining them. Taking these extra steps to become more of an expert in your field will assist in qualifying yourself before a jury.”
Candidates for the AI-GRS designation must meet many of the same requirements as candidates for the MAI designation. However, they do not have to satisfy a “Demonstration of Knowledge Requirement,” which can take the form of a research project, a peer-reviewed publication, or a dissertation (among other options). Instead, AI-GRS candidates must accrue at least 1,000 hours of appraisal review experience and 4,500 hours of professional experience overall.
Designations Not Specific to the Appraisal Practice
To further enhance their professional standing, some appraisers may also choose to earn designations that testify to the comprehensiveness of their commercial real estate expertise. Some of the more notable of these include the CCIM, the MRICS, and several designations administered by the International Right of WayIRWA).
Professionals who have earned the CCIM are recognized thought leaders in commercial real estate investing. CCIM-level expertise in market and financial analysis can be extremely valuable for clients seeking appraisals of complex properties.
The MRICS designation is administered by the Royal Institution of Chartered Surveyors (RICS), a professional organization founded in the United Kingdom over 150 years ago. In the commercial real estate field, the MRICS is understood to be equivalent to the MAI. Appraisers working internationally, or on large-scale, multinational infrastructure projects such as ports, may benefit the most from being able to present an MRICS designation.
IRWA offers both a certification specific to right-of-way appraisal — the R/W-AC — and a tiered program for generalists in the field. The RWA (Right of Way Agent) is the first level of achievement in this program, followed by the RWP (Right of Way Professional) and the SR/WA (Senior Right of Way Professional). Only professionals who hold a Bachelor’s degree in an approved discipline, have at least five years of relevant experience, and can prepare appraisals for ROW/ED purposes qualify for this prestigious designation.
Eleven of LPA’s valuation experts have earned an MAI or AI-GRS designation, and four of them hold both. Our practice leaders in ROW/ED have earned designations from IRWA, including the SR/WA. You can learn more about these accomplished appraisers, their areas of specialization, and their commitment to upholding their profession’s best practices and highest ethical standards by visiting the “Meet the Team” section of our website.