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NAR & The Appraisal Institute: `The Dating Game`

Bottomline Real Estate

The passing of Frank Sinatra recently brought to mind several of his most famous recordings. My personal favorite – and I wasn`t a Sinatra fan – was his recording of “September Song,” the classic sentimental tune from the old tear-jerker movie “Knickerbocker Holiday.” It was my mother`s favorite and the old Sinatra song to which she`d “swoon.”

Another of his greats, at least to me, was the light-hearted “Love and Marriage.” It`s this second tune that reflects to some degree the current “dating game” going on between the nation`s premiere appraisal group, the Appraisal Institute, and the nation`s largest and most influential real estate organization, the National Association of Realtors (NAR). These two groups were “formerly married.”

About 10 years ago, the Appraisal Institute and NAR, at that time the “mother organization,” got involved in a bit of a tiff. It started fairly small but became quite big – so big, in fact, that the Appraisal Institute withdrew its association with NAR. To us Southerners, we could say they “seceded.”

There`s been much debate then and even now as to whether the Institute`s leaving NAR was the right thing to do. I didn`t think so then, and I still don`t think so. Obviously then, I am a supporter of the “re-marriage” of these two groups. Let`s get that out of the way up front!

The rocky details

A natural question to ask would be, “What was the break-up all about anyway?” The answer depends upon whom you ask.

As a national director of NAR, as well as a member of the NAR Executive Committee, at the time, I had a unique “cat seat” on the deteriorating relationship between NAR and the Appraisal Institute. From my view, the main issue had to do with legislative advocacy. NAR had adopted a slogan, as well as an attitude, that NAR was “the voice for all real estate.” It was a catchy phrase but there was a catch – the Appraisal Institute wanted to be their own voice on some legislative issues. This point was vital to the Appraisal Institute. Rightly so, I feel. There are some real estate issues where a real estate broker or agent and a real estate appraiser might well have differing viewpoints. For the Appraisal Institute to have to knuckle under to the the umbrella organization`s legislative agenda was untenable for many appraisers. Added to the fray were some strong personalities on both sides, each side adopting somewhat of a “turf” mentality.

The result of it all, which had festered for several years before the eruption, was the withdrawal of the Appraisal Institute from the NAR. About that same time the Institute voted to withdraw from NAR, the Institute voted to merge with the Society of Real Estate Appraisers, another well-recognized and viable real estate (non-Realtor) organization. All of this happened in the span of about two years.

Naturally in a separation-and-merger sequence, problems will pop up during the transition period. This situation was no exception but, frankly, the problems were multiplied by additional things that transpired in the appraisal industry, namely, licensing and certification.

As a result of the separation from NAR, the Appraisal Institute had to move from the NAR-owned building at 430 North Michigan Avenue in Chicago to its own quarters. Space (much too much space, in retrospect) was leased on a relatively long-term lease in the Prudential Tower several blocks north on North Michigan. This is some of the most expensive office space in the country! Over these intervening 10 or so years, the Appraisal Institute has had its problems, though nonetheless it has done a good job of maintaining the integrity of its well-recognized professional designations, the SRA (residential) and the MAI (commercial/ industrial). Even so, the number of designation candidates, as well as dues-paying members (the dues are over $500 annually), has decreased at an alarming rate. Part of the reason, perhaps most of the reason, is that certification has become, rightly or wrongly, more of the criteria many leaders are looking for rather than holding a particular designation, such as MAI. In fact, it is now illegal for a lender to hire or not hire solely on the basis of one having or not having a particular designation. The Appraisal Institute`s staff, as a result of the lost revenue from less members and lower course/seminar attendance, has been significantly cut in the last three or four years. One result, unfortunately, is that the Institute is leasing vacant, high-priced office space in Chicago. Attempts are being made now, with some success, to sub-lease part of this expensive area, to alleviate the negative cash flow situation. Last year, an “assessment” was charged to the members of about $200 (I paid it but can`t recall the exact amount). When any organization begins to assess its members that much money, it is generally a sign that things are not okay back in the home office!

As a result of all these issues, some of which the Institute could not control, “second-guessers” are beginning to wonder if a re-affiliation with NAR might be a smart move. Keep in mind that NAR, in the interim since the “divorce,” has formed its own appraisal section, which has now over 5,500 members and awards its own two designations – the GAA (general certified appraisers) and the RAA (residential certified appraisers). While these designations have a long way to go before they will be equal in the public`s mind to the SRA and MAI, they are credible designations and they have the awesome power of one of the free world`s largest trade organizations behind them – NAR. The NAR backing means a presence on the world`s top real estate Web site, realtor.com, as well as promotion in NAR periodicals and, more importantly, a seat at the “family table” of NAR. Perhaps most importantly, NAR gives a strong legislative voice to its affiliates. Having learned from the Appraisal Institute debacle to “cut some slack” on legislative issues, NAR will in November likely vote to change Article XX to allow such groups to have diverse opinions on legislative issues impacting their particular specialty group. This will be done partly to pave the way for the Institute`s possible re-entry into the organization, but was also to meet the needs of other existing NAR affiliates, societies, councils and sections, including the appraisal section. Had this posture been the policy of NAR at the time of the separation, I doubt the Appraisal Institute would have voted to withdraw. Even then the vote was relatively close within the Institute. You have to remember that many of the SRAs and MAIs, as well as the candidates, were, and still are, also Realtors

About Chris Elkins

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