Are Staff Appraisers paid customary and reasonable fees?

[JeffSH]

Back when I was hacking out 1004s I had one fee shop (of the three I was working for) paying me 70% splits. But that was on a 1099 basis, which you basically can't do anymore with a trainee. The principal for that operation ran it out of his garage and his wife handled the admin, so his overhead was as low as can be. He still never got ahead. All his fee operation did for him was to service enough clients to ensure that when the volumes dropped they would still be feeding him enough assignments to keep him (only) working.

The other two shops I worked for at that same time paid 50% but they also had offices and paid admin support. No "trainee supervision" or training involved, but they still handled the client end of the business.

The most successful appraiser I know, who knows all of the banks in his community, doesn't have a front-line staff. He's the face of the company. You talk to him. He always has trains people. He makes good money from it.

Yes, he has an office, but it's a dingy basement unit that none of the employees visit. Only he goes there.

Edit: And office rents in his small city are like $600 a month for a large space. I would definitely do it at that rate

 

[George Hatch]

Investing in your business and putting money aside for a rainy day is a great approach. I'm sure the employees would genuinely support what you are thinking and would want to do it, even if it meant a reduction in their current pay. As long as they knew exactly where the money was going and it made sense, the employees would be all for it.

It's not an option if they want to make it through think-n-thin, and TBH it doesn't make any difference if the employer holds their hands or not. It's not a partnership. The employer is buying the labor and the workers are selling the labor, just the same as if they were selling oranges to a wholesaler. The prices for that transaction are a function of mutual agreement, not forced servitude. There's no monopoly or the like. I heard somewhere that none of the AMCs have a market share of more than about 5%, so that means these workers all have options even if those alternatives are locked in a hotly contested competition with each other for who can deliver the most for less.

As far as these lenders are concerned we sell oranges. And there's nothing special about oranges that makes the orange business different from any other.

 

[Long Walk]

If their total overhead was 15% and the employer was a non-profit they STILL wouldn't be economically viable if they paid you 85% because there would be zero margin for contingencies. It can't happen.

One of those contingencies is uneven order flow....which is Mr. Hillborn's stated concern for this stage of the real estate market.

 

[George Hatch]

The most successful appraiser I know, who knows all of the banks in his community, doesn't have a front-line staff. He's the face of the company. You talk to him. He always has trains people. He makes good money from it.

Yes, he has an office, but it's a dingy basement unit that none of the employees visit. Only he goes there.

You're just demonstrating the point I made earlier; he has to actively work the business in order to get paid. There is no passive "profit" margin to speak of, there's only his pay; and even that is only the residual between his billing-expenses.

Now you will inevitably complain that it just isn't fair that he can make more money doing what he's doing than you can make doing what you're doing, but in no case is he obliged to peg his income to your's because the two of you are not partners. You are not his peer. You have never done some of the things he's done and (as a staff or subcontractor) you aren't doing what he's doing.

 

[Joe Flacco]

As far as these lenders are concerned we sell oranges. And there's nothing special about oranges that makes the orange business different from any other.

That is not really true. It is only like that for GSE lending.

 

[Joe Flacco]

It is possible to build a reputable firm with properly compensated staff that is viable over the long term. Long term viability of the business has to be prioritized over short term profits. Have build the business with the right clients. The type of clients is everything. Not going to do it with AMC's as clients who's business is GSE oriented.

 

[George Hatch]

One reason I never expanded my practice or engaged in trafficking desperate trainees was because I had seen from multiple examples that it wasn't economically viable for the duration. I watched every single fee shop I ever worked for, and the bank's in-house appraisal department I worked for - fail for lack of volume. I've seen MANY in-house appraisal depts get axed because the lenders couldn't/wouldn't carry the overhead at a loss. We have several regulars who have been laid off from staff appraisal jobs for that very reason (I'm one of them).

None of these failures happened during the boom years; they happened during the bust. One shop I worked for had 75 appraisers and were working out of a Class A office building; all that did for them was ensure that they were the first to go down, which of course also meant they stiffed their appraisers for the fees they owed them. (Which didn't include me at the time because I had already moved on.)

I do not consider staff appraisal jobs at the lenders to be even as secure as a fee appraiser gig. The other thing about this is that I didn't get into the appraisal business to be a suit; I got into appraising because I like the work.

 

[ucbruin]

"One reason I never expanded my practice or engaged in trafficking desperate trainees was because I had seen from multiple examples that it wasn't economically viable for the duration. I watched every single fee shop I ever worked for, and the bank's in-house appraisal department I worked for - fail for lack of volume."

Good grief....
How many appraisal companies have you been responsible for killing....
You are the common denominator....

JK....

 

[JeffSH]

It's not an option if they want to make it through think-n-thin, and TBH it doesn't make any difference if the employer holds their hands or not. It's not a partnership. The employer is buying the labor and the workers are selling the labor, just the same as if they were selling oranges to a wholesaler. The prices for that transaction are a function of mutual agreement, not forced servitude. There's no monopoly or the like. I heard somewhere that none of the AMCs have a market share of more than about 5%, so that means these workers all have options even if those alternatives are locked in a hotly contested competition with each other for who can deliver the most for less.

As far as these lenders are concerned we sell oranges. And there's nothing special about oranges that makes the orange business different from any other.

People aren't oranges. The wholesaler's business doesn't function without labor. Yes, society runs in such a way where you either work or starve. But it doesn't have to. We have accumulated unfathomable wealth. The USA throws away 206 billion pounds of good food every year, but we also spend $111 billion on food stamps. Our system sucks because people like you treat human beings as commodities to be bought and sold. We don't even promise full time workers a single week of holiday!

 

[JeffSH]

You're just demonstrating the point I made earlier; he has to actively work the business in order to get paid. There is no passive "profit" margin to speak of, there's only his pay; and even that is only the residual between his billing-expenses.

Now you will inevitably complain that it just isn't fair that he can make more money doing what he's doing than you can make doing what you're doing, but in no case is he obliged to peg his income to your's because the two of you are not partners. You are not his peer. You have never done some of the things he's done and (as a staff or subcontractor) you aren't doing what he's doing.

I have no idea what you're talking about. Getting work is as easy as signing up for AMC panels online. Approaching people who work at banks. You make it sound like we run a fruit stand.