When you’re considering a jump into a career in real property appraisal, you may ask yourself: How much does it cost to become an appraiser?
While there’s no "one size fits all” answer, understanding the factors that affect your startup costs will give you a better idea of your investment to become a licensed appraiser in your state. Let’s dive in.
Summary
Startup costs will run anywhere between $4,000 and $7,500 to become a Licensed Residential Appraiser in any state.
Here’s a general idea of how your money will be spent.
| Estimated Start-Up Costs for a Licensed Residential Appraiser | |
|---|---|
| Trainee Appraiser Qualifying Education Courses | $800 to $1,500 |
| Licensed Residential Appraiser Qualifying Education Courses | $500 to $1,000 |
| Licensed Residential Appraiser State Exam Fee *May vary by state |
$200 to $300 |
| State License Application Fee *May vary by state |
$350 |
|
Appraiser Report Writing Software |
$400 to $800 |
| Other Technology Fees: Computer and/or Tablet, Phone, Internet, Camera, Cloud Storage | $1,000 to $1,500 |
|
State-specific Multiple Listing Service (MLS) for property research |
$300 to $600 |
| Annual Cost of Errors and Omissions (E&O) Insurance *Usually paid in monthly increments |
$500 to $1,000 |
| Appraiser Tools of the Trade: Measuring device, apps for sketching and creating floor plans, general office supplies | $300 |
| Total | $4,150 to $7,350 |
As you consider this chart, it’s important to keep in mind that the Licensed Residential Appraiser credential is the second of four potential appraiser licenses you could earn in your career. Learn more about the different types of appraiser licenses.
What Are Some of the Costs of Becoming a Licensed Residential Appraiser?
There are many different costs to consider when becoming a Licensed Residential Appraiser. Let's take a closer look at the major ones.
Completing Your Appraiser Qualifying Education
A large chunk of your startup costs will go toward your appraiser qualifying education. This education is designed to teach you the foundations of real estate appraisal, valuation methods, and report writing.
Your Trainee Appraiser Courses (75 Hours)
| Course | Hours |
|---|---|
| National USPAP (Uniform Standards of Professional Appraisal Practice) Course | 15 Hours |
| Basic Appraisal Principles Course
|
30 Hours |
| Basic Appraisal Procedures Course | 30 Hours |
Your Licensed Residential Appraiser Courses (75 Hours)
| Course | Hours |
|---|---|
| Residential Market Analysis and Highest and Best Use | 15 Hours |
| Residential Appraiser Site Valuation and Cost Approach | 15 Hours |
| Residential Sales Comparison and Income Approaches | 30 Hours |
| Residential Report Writing and Case Studies | 15 Hours |
Source: Appraisal Qualifications Board Real Property Appraiser Qualification Criteria
Generally, the cost of your Trainee Appraiser qualifying education runs between $800 and $1,500, depending on the format of your courses (online or in-person).
Once you’ve completed your coursework at the Trainee level, you’ll move into coursework for the Licensed Residential Appraiser level. These more advanced courses cost between $500 and $1,000 altogether.
Along with your national qualifying education, there may be state-specific courses you’ll have to take. Be sure to check with your state’s appraisal regulatory board for specific Trainee and Licensed Residential Appraiser coursework requirements in your state.
Earning Your Required Experience Hours
All Trainee Appraisers looking to move up to the Licensed Residential Appraiser level must also log 1,000 hours of experience in the field. These hours are completed while working under a supervisory appraiser.
Often, you can complete these hours by finding a paid position assisting a Certified Residential or General Appraiser at an appraisal firm. You can also find an independent Certified Appraiser to work with. Though earning your appraiser experience hours doesn’t involve a monetary cost, it does involve a time commitment of at least six months.
Appraiser Exam, Licensing, and Insurance Fees
Along the path to becoming a Licensed Appraiser, you’ll also have exam fees, state license application fees, and insurance policy fees.
Licensed Residential Appraiser Exam Fee
Once you’ve earned the required education and experience hours to become licensed, you’ll need to take the national appraiser exam for Licensed Residential Appraisers. The National Uniform Licensing and Certification Examination is the standard national appraiser exam established by the Appraiser Qualifications Board of The Appraisal Foundation. It is administered by an exam provider in your state.
This exam fee varies slightly from state to state, but generally falls between $200 and $300.
Appraiser License Application Fee
Once you’ve passed your Licensed Residential Appraiser exam, it’s time to apply for your appraiser license through your state. The fee to apply for your license also varies from state to state, but in general, you can expect to pay around $300 for licensing.
Appraiser Errors and Omissions Insurance.
Errors and Omissions (E&O) insurance, also known as liability insurance, is a must-have for real estate appraisers. In fact, your state might require proof of it in order to get licensed. This type of insurance protects you and your business in cases where claims are made against you and your appraisal work. You can expect to pay between $500 and $1,000 annually for an E&O policy.
Appraisal Technology and Tools
When you start working as a Licensed Residential Appraiser, you'll need to invest in a few tools of the trade that will help you find success in the field.
- Appraisal Report Writing Software – This software helps you quickly create and populate appraisal reports while you’re in the field.
- Tablet – Many home appraisers use tablets with sketching apps to easily create floor plans and draw property lines while viewing a property.
- Measuring Device – A reliable measuring device, such as a laser measure or wheel, helps you accurately document the square footage of a home.
- Quality Camera – Many home appraisers invest in a quality digital camera—separate from their phone or tablet—to take photos of exteriors and interiors for report documentation.
- Access to the MLS – Access to your local Multiple Listing Service (MLS) is a must-have for researching comparable properties, home purchase prices, and historical real estate trends.
- Cloud Storage – Extra cloud storage enables you to safely store your documents, research, and reports—as is required by law in many states.
The combined cost of these tools and technologies varies widely. Many appraisers spend just enough to get the basic tools they need to get established in the business and then upgrade their tools as they become more seasoned.
Starting Your Appraisal Business
Whether you work as an independent real estate appraiser or join a company, there are business administrative costs to consider as well. These costs can also vary across the board.
Working as an Independent Appraiser
Working independently is ideal if you’re looking to have more control over your income and build a business from the ground up.
Various states often have fees to register a new business for tax purposes and establish your business structure. If you plan to open an office, you’ll have rental fees to consider plus the costs of phone, internet, and any other essentials you need for a functioning office space. You’ll also need to figure in the cost of transportation, gas, and auto insurance, as you’ll be driving from property to property.
Working For an Appraisal Firm
As a new appraiser, you might instead choose to join an appraisal firm.
Established firms frequently offer a little more support while you get started in the field, since you’d be working alongside, and learning from, mentors on a daily basis. Appraisal firms also often cover much of the overhead technology and tool costs you’d otherwise have to pay up front.
Working at a firm, you might make an annual salary, or you might be paid per appraisal. The latter means you’ll split each appraisal commission you bring in with the firm, similar to how real estate agents split their commissions with their brokers. Usually, you’ll retain 75% of the appraisal fee while 25% goes to the firm, but it can vary.
Earning Required College Credits for Certified Appraiser Licenses
After becoming a Licensed Residential Appraiser, you may decide to go even further in your career and begin working toward a Certified Residential or Certified General Appraiser license. These upper-tier license levels require either some college coursework or a bachelor's degree — alongside additional appraisal coursework and experience hours.
Learn more about the college degree requirement for different appraiser licenses.
Licensed Appraiser Startup Costs are Relatively Low
Real estate appraisal, by nature, is a microbusiness. It’s different than traditional small businesses, which may have multiple employees on payroll, products to sell, and physical locations to maintain.
Licensed Residential Appraisers have startup costs that are significantly lower than those of traditional small businesses. In fact, a recent Shopify survey found that new small business owners might spend as much as $40,000 in their first year.
With average startup costs of a few thousand dollars and lucrative salary potential, it’s easy to see why real estate appraisal is a rewarding and worthwhile career choice.
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