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Posts Tagged ‘AI National’

Appraisal Institute Membership Falls Sharply As ASC Registry Levels Off

August 24, 2017 | 6:56 pm | Investigative |

In the latest mid year numbers for Appraisal Institute membership, 15,000 members have paid their dues as of May 31, 2017. That’s 3,000 less than this year’s projected 18,000 total on their web site. AI National forecasted a 700 member drop in membership for 2017.

In all fairness, AI National could see additional sign-ups but this will be tempered by the now spirited debates surrounding their governance proposal. The key issue in front of the organization now is the “taking” policy where they announced their plans to take chapter funds last fall. This was largely done without advanced warning or membership input and their recent governance committee came up with a similar recommendation.

I assume the faster decline in membership occurred because of all the unknowns with AI National’s future or actual survival in the short term.

In the following chart, I matched up the current ASC registry totals with AI membership through the middle of the year (May for AI National and July for ASC).

Since the financial crisis, AI membership dropped by one-third while the appraisal industry fell 20.8%. The latter makes sense given the housing bubble peaked a decade ago. In what reality does a trade group’s leadership get a pass when their membership falls faster than the industry they claim to be leading?

An URGENT request to my readers: I have only been able to verify AI membership totals back to 2007 and a 25,000 total for 1995. If you have any annual membership totals by year prior to 2007, it would be greatly appreciated. I would keep the source anonymous. I am interested in comparing the AI membership trend since 1992 when the ASC registry data begins.

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Voice of Appraisal Podcast: E136 A Deep Dive into A.I. with Jonathan Miller!!!

January 19, 2017 | 7:12 am | Radio |

I had another great conversation on Voice of Appraisal with Phil Crawford. The conversation centered around AI National’s “taking” policy debacle, my repository for all the documents on this matter (realestateindustrialcomplex), the viral outrage that has overtaken the appraisal industry, released from my first of several Matrix posts on the topic: Sadly, The Appraisal Institute is now working against its local chapters.

We also spoke about RAC, an appraisal organization I’ve been a member of for two decades and recently became the president. RAC works for its members.

Aside from Phil’s dreamy radio voice, he shares a lot of great content each week for appraisers. Well worth a regular listen.

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Unbelievably, The Appraisal Institute Intimidates A Chapter

December 28, 2016 | 5:17 pm | Investigative |

appraisalinstitutelogo

On December 20, 2016 AI President Scott Robinson and AI’s legal counsel called a chapter executive director’s superiors about two posts placed on my REIC website (realestateindustrialcomplex.com) – under the guise of being brand damaging to AI National.  This was interpreted as an intimidation tactic.  For the record, the posted documents were already widely shared across the industry and there was no personal commentary provided with the posts. In fact, this person was merely posting them on behalf of someone else.

One of the posted documents, the North Texas Chapter’s position paper on the “taking” was already on REIC…if they had taken the time to scroll through it. The second document was the Chicago Chapter’s response to the “taking.” When I heard about this AI National action from multiple sources, I called the chapter executive director and left a voicemail, inviting them to take down the documents if they wanted to because of the threat. After the posts were removed, I re-posted the Chicago chapter letter since the North Texas Chapter letter was already on the site (it was the first document I ever posted on REIC).

My thoughts

  • This call was a sign that AI National is panicking after creating a massive membership-wide backlash relating to what I call the “taking” policy.  This already implemented policy has been discussed in previous blog posts.
  • The two documents posted by the chapter executive director were already in the public domain after being widely circulated by an outraged AI membership across the country.
  • The heavy-handedness to make such a phone call shows the bully pulpit culture taken against those who speak out.
  • Most members I know are afraid to speak out against AI National for fear of retaliation. This recent call substantiates that fear and that is very sad even though their actions are based on nothing (sorry AI legal counsel) and brand damaging seems to be something that AI National has been good at. AI National has largely ignored their SRA designation to the point where it carries little weight with clients anymore. They have not successfully addressed declining membership, plus explain their singular emphasis on commercial, the international membership spending boondoggle and much more. Perhaps membership should be the one intimidating AI National leadership instead of the other way around?
  • There isn’t any reasonable basis for a lawsuit with what I understand.  Here is some rationale.
    — The two documents are not AI National’s documents.
    — The two documents are being circulated everywhere by AI members and non-members alike.
    — One document was the first document I had ever posted on my REIC website before it was posted by the executive director.
    — This aggressive action by AI National can only be interpreted as an attempt to perpetuate a culture that intimidates members and chapter administrations to allow them to continue on their current path.

Action

I have seen high volume on my REIC site since launch as well as on this Matrix blog and my Housing Notes. However, I have had fewer register on REIC than anticipated based on the traffic. After learning about the phone call and my intention to be transparent on the website with “who said what,” I realized I had not considered how badly damaged the current culture was at AI National and the animosity they show towards its chapters and members.  If that’s not an accurate interpretation, I invite Scott to call me and clarify what was said so we can get both sides of this situation and I can share it with our readers. I am only interested in getting the story right.

Therefore I have asked my web developer to remove all registration requirements on REIC to allow anonymous posts (soon – he’s on vacation) – look for the announcement.

In the meantime, you can email me directly and I will post your content myself on REIC.

Although I am no longer associated with AI specifically because of similar AI National behavior during the exit of TAF, their actions and (mainly) inactions have continued to hurt the appraisal industry.  Let’s stop an insulated AI National leadership from causing any further damage to the AI brand as well as the appraisal industry.

Two more thoughts.

  • It’s a free country and appraisers have the right to provide opinions and share widely circulated letters already in the public domain to whomever they wish.
  • There have been thousands of readers of my analysis of their stealth policy “taking” debacle and additional related content is making the email rounds in a frenzy – so I want to know this: Does AI National plan to threaten their entire membership?

 

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Real Estate Industrial Complex versus The Appraisal Institute’s Stealth Culture

December 18, 2016 | 8:48 pm | Favorites |

appraisalinstitutelogo

Over the past couple of weeks there has been extreme outrage expressed by the chapters and membership of the Appraisal Institute towards “National” leadership and their stealth policy culture. The last straw was “The Taking” policy of nearly all chapter funds and then charging the chapters to manage them. This major AI policy initiative was passed without vetting of the chapters or the membership. I have written about this in two recent blog posts that went viral.

Sadly, The Appraisal Institute is now working against its local chapters

Incredibly, The Appraisal Institute is taking chapter “excess cash” and charging them for the privilege

Emails, letters and documents are flying everywhere.

On Thursday it was suggested I set up a central repository for all this information since not everyone in the chapters and membership are seeing all the same information.

So we set one up and it is ready to go. This new web site is a forum that allows users to either lurk or register. If you register you can add content and comments. If you’d rather lurk, that’s ok too since the goal here is to create transparency. I preloaded REIC with some of the information I have. I’m happy to upload information for those of you that are less tech savvy…just use my email address below.

But for now, the best thing you can do is SEND THIS URL TO EVERYONE YOU KNOW and start UPLOADING AND SHARING INFORMATION RIGHT NOW!!!

https://realestateindustrialcomplex.com

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Incredibly, The Appraisal Institute is taking chapter “excess cash” and charging them for the privilege

December 14, 2016 | 4:56 pm | Investigative |

After last week’s post went viral: “Sadly, The Appraisal Institute is now working against its local chapters“, I thought I’d follow up with additional thoughts on AI National’s chapter money debacle.

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On November 18, 2016 the Appraisal Institute Board of Directors adopted their Chapter Financial Management and Administration Policy. I assume most chapter officers are not aware of the details of this major AI financial chapter restructure plan whose policy is officially in place.

How the sausage is made

Here is a relevant excerpt from the new AI November policy on chapter finances:

Make the phrase “excess cash” part of the professional vernacular going forward. Here is a key detail from the policy:

6. Reserve Fund

a. Cash and Investments Held by Chapters
Excess cash held by Chapters shall be consolidated with the Appraisal Institute’s Reserve Fund Portfolio (“Portfolio”).
In determining the initial deposit into the Reserve Fund Portfolio, cash and investment balances greater than three months of the average monthly Chapter operating expenses will be considered excess cash. The average monthly operating expense will be based on the last three fully closed years.
b. Portfolio Structure
Deposits from Chapters to the Reserve Fund shall be comingled with Portfolio assets, however will be accounted for and tracked separately.

So here’s a hypothetical scenario based on the way the policy reads to me:

Lets say a chapter has $200,000 in the bank. This money was collected from chapter members with their hard earned appraisal fees. The money enables a local chapter to function, bring in guest speakers, cover operating deficits, pay for an executive secretary and other operational items. I already know there are chapters with as much as $100,000 to more than $300,000 in their chapter bank accounts.

Lets say the three year average of my example chapter’s monthly expenses is $5,000. By the AI policy formula, all cash in the chapter’s account above $15,000 (3 x monthly average) will be sent to National. AI has said they will keep records of where the money came from. So in my example, $185,000 ($200,000 less the $15,000 calculated amount) immediately goes to National where it is commingled with other chapter’s funds.

There is a complex (to me) protocol for getting the money back to use at the chapter level. It makes me wonder what happens when a chapter needs money to keep the doors open but doesn’t have it or has a short term financial emergency. For most chapter members who already have full time jobs or a part time executive secretary, the process of getting access to cash at last minute to solve an unforeseen problem seems like an unfair burden. Contrary to the sales pitch given by the president in the previous post, I believe this policy will create additional clerical burdens and reduce the flexibility of the chapters.

As time passes, combined with National’s inability to keep chapters and membership informed in recent years, the details of this “taking” will get hazy as time passes. Over the long term it is unclear what will happen with each chapter’s money. This and other AI policies are being written in such an open ended way, clearly banking that membership or the chapters won’t read it and won’t have a way to stop it once they do. Once National takes most of the money from the chapter bank accounts, the chapters are forever at their mercy. Do chapters really want to be placed in this position?

I recently spoke to an AI member, with a reputation among local peers for cheerleading AI mandates for his own political gain. This person told me that the so-called chapter money was really “National’s money.” I can only believe that such an orientation came from National. I immediately corrected the member, saying that “no, it was the chapter/members’ money.” This position spoke volumes about how National sees the chapters as working for National rather than as National working for the members.

But gets better…

Chapters are literally paying National to manage the chapter fees National has decided to take from the chapters without advanced warning.

Here is a relevant excerpt from the new AI November policy on chapter finances:

Incremental costs (“Incremental Costs”) incurred by the Appraisal Institute Finance Department to execute the responsibilities delineated to it within the Policy shall be funded by a fee payable by Chapters. Incremental Costs represent expenses incurred that otherwise would not have been payable by Appraisal Institute without this Policy and may include, but are not limited to, personnel, technology, banking, audit and tax services. The amount payable shall be calculated for each Chapter as a Base Fee plus a Variable Fee Percent of such Chapter’s average annual expenses. The Base Fee and Variable Fee Percent shall be established by the national Finance Committee, subject to the national Board of Director’s approval, so that total amounts paid by Chapters under this section of the Policy shall reimburse the necessary Incremental Costs incurred by Appraisal Institute to execute its obligations under the Policy. The combined Base and Variable Fee shall be paid in four equal installments on a quarterly basis.

Please get familiar with this policy document and remember that the AI board has already adopted it without vetting it with the chapters. I repeat: this is now an active policy of the AI.

After National takes the “excess” chapter funds (my example of $185,000), it charges the chapter to manage it including costs for additional staff. And even more of a concern, the amount of the fixed plus variable cost structure the chapter will pay has not been determined yet. All AI chapters are effectively losing control of their “excess funds” but don’t know how much National will charge them to manage those funds.

Being penalized for success

Based on the fixed plus variable format, a large chapter will probably pay more than a small chapter for National to manage the chapter’s money. I would argue that the larger chapters are being financially punished by National for being larger. The irony here is that larger chapters reflect a certain level of success by attracting and keeping more members or being able to generate funds for a rainy day. Plus the AI money management process is the same for a chapter with $10,000 in excess funds and one with $200,000 in excess funds. Since the chapter funds are tracked on a spreadsheet or accounting software, the number $10,000 is not easier to enter into a spreadsheet cell than the number $200,000 so the size of the chapter is immaterial. If National maintains that chapter size is material, then the unannounced variable plus fixed management fee should be much larger than if size didn’t matter. I would argue that smaller chapters will require more management than larger chapters, no?

I find the commingling of funds unnerving since membership generally does not trust National leadership and this massive shift in policy was done without communication to the chapters, let alone the membership. The scope of this change is not a simple matter. It should have been vetted on a chapter level if National truly respected their chapters.

Can there be a solution?

Two suggestions for AI National:

  1. I’d like to naively suggest that the National board adopt a chapter level opt in policy so chapters can decide individually whether to allow AI to run their chapter finances. I can see how a few very small chapters that don’t have executive secretaries could be inclined to ask National to manage their funds. However all chapters will be making quarterly management fee payments to National and be subjected to a myriad of rules in this controversial policy. The very idea of an outside party managing chapter funds seems to add more operating burden to understaffed chapters and their executives who already have full time jobs (usually).

  2. The “taking” of chapter funds should be cost neutral. The proposal by National should not cost the chapters a penny. If chapters save operating costs that equals the management fee, then perhaps this can be explored. Otherwise our industry has endured a long term period of fee compression, and this policy simply becomes a money grab by National.

What happens next?

At this point, it looks like the majority of the membership and the chapters are against the AI Board decision to take most of each chapter’s cash.

If chapters resist giving their “excess cash” to National, would it not be too far to suggest that National will nullify the designations of chapter members in a rebellious chapter? Otherwise, what other action could National take to enforce this “taking”? This recent policy and the unrest it stirred has already tarnished the AI brand and will likely accelerate the exodus of existing members. When leadership of an organization is unable to deliver value to their members, the next step seems to be to take something of value from their members. In this case…cash.

The president and board members of the Appraisal Institute demonstrated how little they understand and respect their membership. I believe this is why they enacted a policy to take each chapter’s cash without telling them in advance. As I said in my prior post, AI National is officially obsolete.

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Sadly, The Appraisal Institute is now working against its local chapters

December 6, 2016 | 6:38 pm | Investigative |

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I have a lot of good friends and colleagues who frequently give at least a passing thought to quitting the Appraisal Institute, the largest real estate appraisal industry trade group. At the national level, the association has lost the ability to work for its members and has instead, shifted into a political failure spiral by enacting policies that are against their chapters’ and members’ best interests.

I get these types of comments from members at get togethers who say things like…

“I am only paying my dues to retain my designation.”

“The chapters are the only relevant thing AI provides to help me.”

“The self-dealing politics at National sickens me.”

Their announcement of the new administrative policy on November 30, 2016 continues the trend:

As you might have heard by now, the Appraisal Institute Board of Directors recently took a significant step to enhance your chapter’s ability to focus its attention on providing member services by reducing your current administrative burden. This is great news for chapters.

Here’s the letter that was sent to chapter leaders:

ai11-30-16

It reminds me of an old IRS joke: The IRS agent walks into your office with arms extended for a handshake and says:

“I’m from the IRS and I’m here to help you.”

It has been discouraging to watch the Appraisal Institute (National) erode into irrelevance while the appraisal industry is crying out for leadership at a seminal moment in our history. Dodd-Frank is about to be gutted and appraisal management companies have run out of appraisers willing to work for half pay. Instead they have morphed into a trade group that is unable to help its members. I challenge my readers to provide any evidence of such leadership since the financial crisis.

One of the only remaining redeeming features of the Appraisal Institute aside from their SRA and MAI designations has been the strength of local chapters. It’s where the rubber hits the road, where appraisers press the flesh at local meetings, take classes and listen and interact with guest speakers. The real value of AI membership remains at the chapter level.

At the Appraisal Institute headquarters in Chicago (National), they clearly recognize the power of the local chapters. For an organization that has been encumbered by procedural minutae, they developed the ability to enact policy without input or oversight. Here’s the current controversy over a non-vetted decree from National that involves money.

National has enacted a new policy that requires all money at the chapter level be administered by National. It’s a political power grab that will further alienate dues paying members. This is part of the growing pattern of AI’s lack of communication to their members.

The response

The very large New York Metro chapter responded in a letter from their board 2 days later – about being blind sided by the new policy. It’s an incredible read – a full-on indictment of the thinking of National. So many great appraisers in that chapter but how long will they put up with this? You can see how hard the local chapter is holding back it’s anger for such a policy. See link for pdf or the full text below. Bold emphasis provided by me.

AI Metropolitan New York Chapter Board Letter to AI National Board


December 2, 2016

Dear Members of the Appraisal Institute Board of Directors:

This letter is being submitted on behalf of the Board of the Metropolitan New York Chapter of the Appraisal Institute as a response to the National Board’s recent decision to implement a new Appraisal Institute Chapter Financial Management and Administration Policy. The Metro New York Board met this week and unanimously agreed to communicate our disapproval of the new policy and our astonishment that such a major change could be effectuated without any sort of prior notification or consultation with the Chapters and the Membership. Furthermore, to announce this decision as a fait accompli late on a Friday before a holiday week is alarming to our Chapter’s Directors.

The Metro New York Board finds it surprising and unacceptable that such a significant policy change in the governance of Chapter finances could be constructed without any transparency, input or dialogue with the Chapters and Membership. Simply being informed that national will take over our Chapter funds, albeit with assurances of our continued control of our finances, is outrageous paired with the admission that “Adjustments may have to be made to the policy as implementation progresses.” By creating this plan, effectively behind closed doors, you have not instilled any sort of confidence that the policy you are demanding we accept is acceptable to the Chapter. Given that the Appraisal Institute has a model for gaining feedback from the Membership – with the 45-day notice model provided for other significant actions impacting Members and Chapters – the Metro New York Board feels it is not at all appropriate for the national Board of Directors to unilaterally create this new policy in such an opaque manner. Given the potentially serious impacts of this new policy on the individual Chapters, we believe a more extended, perhaps 90-day notice would be minimally appropriate particularly given that this change was basically “sprung on” the Chapters on the advent of the holiday season that creates extra demands on all of us.

Beyond our uneasiness with the lack of transparency and how this new policy was implemented, the Metro New York Board finds the policy itself to be unacceptable. We believe that turning over our funds to national would limit and impact the autonomy of our Chapter and potentially diminish our stature in the local real estate community. The Metro New York Chapter is one of the most active Chapters and has been diligent in providing necessary education opportunities for our members and candidates, organizing enriching events for our members and the broader New York City real estate community, and fostering a supportive framework to help candidates work towards their designations. Importantly, this last goal contributes to the health of the organization nationally. Many of these programs are supported by our members through a historically successful Chapter sponsorship program. We believe our success in these endeavors illustrates that we are proficient in managing our own funds, maintaining reserves, and knowing how to do what needs to be done on a local basis. Certainly stripping the Chapter of its funds, particularly under terms that may be subject to change, will undermine the Chapter membership’s confidence that our efforts to maintain the economic health of the Chapter constitute time well spent. Furthermore, several Chapter sponsors who have consistently supported Chapter endeavors have expressed concern about this change in policy and that it may impact their willingness to continue such sponsorships in the future considering the substantial loss of Chapter autonomy as a result of the new policy changes.

While we look forward to hearing more details regarding the new policy from National on Tuesday’s call, the Metropolitan New York Chapter Board strongly urges the National Board to reconsider implementing this new policy.

Appraisal Institute, New York Metro Chapter
John A. Katinos, MAI, President
On behalf of the Metro New York Chapter Board of Directors


I heard a rumor that AI wants to do away with chapters and I’ve also been told that is not true – but with the opaqueness of National, I don’t know what to believe. And I keep hearing rumors about AI spending millions to expand their footprint across the globe but haven’t seen any measurable success let alone share the status of this effort with members. Is esoteric global expansion worth raising dues in a compensation compressed environment? Is the membership even aware of this effort and the millions supposedly lost?

Most of my peers nationwide have expressed frustration with an organization mired in self-serving politics. And it only seems to be getting worse.

My moment of zen was their self inflicted and childish exit of the Appraisal Foundation a few years ago. I eventually left AI and moved on to two other organizations that provide what appraisers are looking for. Remember that most of us are “lone wolves” and belong to organizations to get other perspectives. I can’t tell you how many SRAs and MAIs I know are talking about leaving the organization.

And did you ever wonder why there are so many statewide appraisal coalitions popping up? It’s largely because of inaction by National or their opposition to issues important to appraisers.

Incidentally, this new policy parallels the changes made by the Chinese government a while back. They moved the majority of the tax income stream from the provinces to the national government. This forced the provinces to go hat in hand to the national government to beg for an allotment of income each year. Sound familiar?

Lots of graft ensued for the provinces to get their “share” of revenue. In fact one of the reasons there are as many as 40 ghost cities in China right now is because the provinces were incentivized to generate GDP. What better way to do that then to build cities for several hundred thousand residents that would never come.

The moral of the story: central planning is never efficient. Through the loophole that National installed allowing them to modify this policy at anytime in the future is a recipe for disastrous self-dealing.

This is the appraisal industry’s moment to have some impact on our future. There are many challenges in front of us. The Appraisal Institute on a national level is now officially obsolete.

Enough with the self-dealing. We don’t make enough money collectively to fund their boondoggle. We need leadership, not politics.

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#Housing analyst, #realestate, #appraiser, podcaster/blogger, non-economist, Miller Samuel CEO, family man, maker of snow and lobster fisherman (order varies)
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