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  #1  
Old 12-16-2011, 03:15 PM
rolco rolco is offline
 
Join Date: May 2011
State: Illinois
Professional Status: Certified General Appraiser
Posts: 15
Default How long do you give your clients to pay?

Or should I ask, what is acceptable? I generally give clients 30 days to pay from the date of delivery. In my mind that is being more than fair considering a job that might take 3 weeks to complete actually means you're carrying the operating cost of 7 weeks.

Is 30 days the industry standard? I would think that would more than enough time for the client's accounting department to process and disperse a check. I know now days most banks like to wait until closing (which I disagree with), but that is normally discussed prior to accepting the appraisal.

I just recently completed multiple commercial assignments for a bank in which the total fee was $4,000. The loan officer in charge changed jobs shortly after he engaged me, however prior to leaving he indicated the appraisals would be for internal use and that the bank would be paying for the appraisal fees upon delivery. There would be no hold-ups due to closings, etc.

Fast forward. A new LO from another branch has taken over the loans. He was actually the boss of the former LO. We spoke shortly after he took over the loans at which point I asked if he would like me to turn each report in as it was finished, or should I wait until they were all complete and send them as a package. He asked that I send them as one package.

I delivered the reports over nearly a month ago. Keep in mind most had been completed nearly 2 months ago. To date I had not receive payment or any notice of payment since. I contacted the LO yesterday and inquired about payment. He said the reports haven't even been reviewed by the loan department and not to expect payment for some time. I asked if his bank had a policy on paying venders within a specific time and he said no. I informed him of the agreement I had with the prior LO of NLT than 30 days. He said he didn't care about the agreement and I'd just have to wait.

I let him know that I was just a one man shop and operate on a low margin. It most cases I can carry a 1k fee for a month or more, but 4k I can't. Especially given that my summer was extremely slow. Now its caused a shortage of operating income that may cause me to close the doors until I get paid. Not to mention late fees I'll incur from delinquent bills. I'm embarrassed to admit that but I've been hit hard over the past 2 years.

I'm not sure what the best course of action is. I'm not so much worried about losing him as a client, but I know causing a big scene would only drag out the payment longer.

How can I make this LO/bank understand that I can't afford to carry their debt, and what can I reasonably do about it?

With this particular assignment there was not hard copy engagement letter by either side. The prior LO and I had an understanding of terms and there was never a problem. I know, I know, big mistake on my part. However, the new LO just flat doesn't care and expressed no desire to see that I get paid on a timely manner)

Thanks for any advice. Sorry for the rant

Last edited by rolco : 12-16-2011 at 03:25 PM.
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  #2  
Old 12-16-2011, 03:20 PM
residentialguy's Avatar
residentialguy residentialguy is offline
 
Join Date: Mar 2009
State: Minnesota
Professional Status: Certified Residential Appraiser
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You've got clients that pay?
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  #3  
Old 12-16-2011, 03:26 PM
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gregb gregb is offline
 
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Not so good there is not a written engagment letter. Have you considered going around the LO, directly to the accounts payable department? They should be able to tell you their written policy for paying vendors, as in "30 days net." If so, send the invoices directly to the accounts payable department, especially since you are not concerned about retaining this client.

Last edited by gregb : 12-16-2011 at 08:11 PM.
  #4  
Old 12-16-2011, 03:30 PM
rolco rolco is offline
 
Join Date: May 2011
State: Illinois
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Posts: 15
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Yes, otherwise we don't do business together. I would hope all appraisers feel the same way.

I don't generally have to deal with these problems because I'm selective with my clients. Ones who I do not know or trust, pay in advance.

The instance in my original post is rare.
  #5  
Old 12-16-2011, 03:34 PM
rolco rolco is offline
 
Join Date: May 2011
State: Illinois
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Quote:
Originally Posted by gregb View Post
Not so good there is not a written engagement letter. Have you considered going around the LO, directly to the accounts payable department? They should be able to tell you their written policy for paying vendors, as in "30 days net." If so, send the invoices directly to the accounts payable department, especially since you are not concerned about retaining this client.

Thanks! I thought about that but I don't think accounting will disburse funds until they get authorization from the LO. The LO will not authorize until the loan review committee has reviewed the reports.

I hadn't had problems with this bank before, however, they recently merged with another bank and inherited their policies. This all happened after I was engaged to do the appraisals.
  #6  
Old 12-16-2011, 03:45 PM
Michael S Michael S is offline
 
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Location: Albuquerque
State: New Mexico
Professional Status: Certified General Appraiser
Posts: 927
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I don't have to deal with that side of the business yet. However there was a thread a few days ago discussing factoring. It might be worth looking into. 90-95% in a few days might be better than 100% in a month or two, at least in this once case.
  #7  
Old 12-16-2011, 04:28 PM
tvfactors tvfactors is offline
 
Join Date: Dec 2011
Location: Fruitland
State: Idaho
Professional Status: Banking/Mortgage Industry
Posts: 107
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Quote:
Originally Posted by Michael S View Post
I don't have to deal with that side of the business yet. However there was a thread a few days ago discussing factoring. It might be worth looking into. 90-95% in a few days might be better than 100% in a month or two, at least in this once case.
Michael,

So you saw that thread about factoring. With the company I represent the factor fee is 5%. And yes, getting your fees paid within a day or two is better than 30, 60, or even 90 days!
  #8  
Old 12-16-2011, 04:29 PM
tvfactors tvfactors is offline
 
Join Date: Dec 2011
Location: Fruitland
State: Idaho
Professional Status: Banking/Mortgage Industry
Posts: 107
Default

Quote:
Originally Posted by rolco View Post
Or should I ask, what is acceptable? I generally give clients 30 days to pay from the date of delivery. In my mind that is being more than fair considering a job that might take 3 weeks to complete actually means you're carrying the operating cost of 7 weeks.

Is 30 days the industry standard? I would think that would more than enough time for the client's accounting department to process and disperse a check. I know now days most banks like to wait until closing (which I disagree with), but that is normally discussed prior to accepting the appraisal.

I just recently completed multiple commercial assignments for a bank in which the total fee was $4,000. The loan officer in charge changed jobs shortly after he engaged me, however prior to leaving he indicated the appraisals would be for internal use and that the bank would be paying for the appraisal fees upon delivery. There would be no hold-ups due to closings, etc.

Fast forward. A new LO from another branch has taken over the loans. He was actually the boss of the former LO. We spoke shortly after he took over the loans at which point I asked if he would like me to turn each report in as it was finished, or should I wait until they were all complete and send them as a package. He asked that I send them as one package.

I delivered the reports over nearly a month ago. Keep in mind most had been completed nearly 2 months ago. To date I had not receive payment or any notice of payment since. I contacted the LO yesterday and inquired about payment. He said the reports haven't even been reviewed by the loan department and not to expect payment for some time. I asked if his bank had a policy on paying venders within a specific time and he said no. I informed him of the agreement I had with the prior LO of NLT than 30 days. He said he didn't care about the agreement and I'd just have to wait.

I let him know that I was just a one man shop and operate on a low margin. It most cases I can carry a 1k fee for a month or more, but 4k I can't. Especially given that my summer was extremely slow. Now its caused a shortage of operating income that may cause me to close the doors until I get paid. Not to mention late fees I'll incur from delinquent bills. I'm embarrassed to admit that but I've been hit hard over the past 2 years.

I'm not sure what the best course of action is. I'm not so much worried about losing him as a client, but I know causing a big scene would only drag out the payment longer.

How can I make this LO/bank understand that I can't afford to carry their debt, and what can I reasonably do about it?

With this particular assignment there was not hard copy engagement letter by either side. The prior LO and I had an understanding of terms and there was never a problem. I know, I know, big mistake on my part. However, the new LO just flat doesn't care and expressed no desire to see that I get paid on a timely manner)

Thanks for any advice. Sorry for the rant
Let me know if I can answer any questions about factoring.
  #9  
Old 12-16-2011, 05:23 PM
Stone's Avatar
Stone Stone is offline
 
Join Date: Feb 2002
State: Wisconsin
Professional Status: Certified General Appraiser
Posts: 9,054
Default

TV - Maybe you should buy some advertising here if you want to do that.

To the OP, is there someone up the food chain you can go to? Most all of my clients pay within 30 days, but from time to time someone goes long. For continuing customers I don't even remind them unless it hits 60 days because I know they will pay and I don't like to make a fuss with good customers just because something gets shuffled to the side. That said, for new customers or customers with new representatives like you describe, I'd be pushing harder if it went over 30 days. Particularly if it was causing a problem and the LO just didn't seem to care. I'd describe the issue to someone with a higher pay grade than the LO and see what happens.

Good luck.
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  #10  
Old 12-16-2011, 05:54 PM
PL1957 PL1957 is offline
 
Join Date: Jul 2004
State: Illinois
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Posts: 2,408
Default

OP, first of all, I'm glad you recognize that you should have had an engagement letter. It takes two minutes to put together and protects you in situations just like this.

As a practice, I insist on retainers for all new clients, all LLC clients, and anyone else who sounds screwy. If they don't want to pay the retainer, let them go elsewhere. Once they have the report, you have minimal leverage, even if you do take them to court. It's time consuming and expensive.

With established clients, if we don't see payment by 30 days, they'll get a tickler. At 60, they'll get another tickler and a phone call. At 90, a letter and a phone call. At 120 days, I usually hold my breath until I'm blue in the face. If they haven't paid by then, they probably won't pay, unless there's extenuating circumstances.

As to your specific situation, I'd call the LO and ask him for the name of the bank's compliance officer. When he asks why, tell him that the OCC tracks appraisers not being paid as a means of lenders applying undue pressure. Once you write a letter to the compliance officer, he HAS to report it to his regulator. I assure you he would rather get a root canal without Novocain. Remember, you can only do this once, because you will lose the client, but you will get paid.
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