$250 Appraisals?

[Michigan CG]

Does McDonalds have an oversupply of burgers and a decreasing demand for them? If McDonalds was about to go out of business do you think they would do something to increase demand for their food? Maybe lower their prices? I guess that would make McDonalds the scumbags of the fast food industry, right? Its simple supply and demand my friend.

I bought McDonald's stock a few years back at around $13/share. I sold, for what I thought was good at about $18/share. Last I looked it was around $35/share. m2:

 

[rescom]

Interesting analogy, I did stop at a McDonalds recently to use the restroom, while I was there I decided to get a quick bite for the road. The staff was very unpleasent, and what I received looked nothing like the picture they had posted on the menu, but I got in 2 minutes.

Thats a nice story and all, but what does that have to do with my post? Maybe I'm missing the point.

 

[rescom]

I bought McDonald's stock a few years back at around $13/share. I sold, for what I thought was good at about $18/share. Last I looked it was around $35/share. m2:

Probably because their is a high demand for their products and not an oversupply.

Bad example Ray. Try again.

I didn't mean for this to turn into a "Please tell a McDonalds story" thread.

 

[Mr Rex]

Seems to be a common analogy. No wonder the lenders want to cut our fees. I would like an appraisal from the dollar menu please.

 

[Ray Miller]

Does McDonalds have an oversupply of burgers and a decreasing demand for them? If McDonalds was about to go out of business do you think they would do something to increase demand for their food? Maybe lower their prices? I guess that would make McDonalds the scumbags of the fast food industry, right? Its simple supply and demand my friend.

This lower price bit is about had it? Do you really think any business would stay in business if they were not making money? I just see a CEO standing up or a Chairman of the Board standing up in front of the stockholders telling them they got to lower prices and sell at below cost to stay in business. No they would close the doors and shut down. Don't think so just ask the auto workers that have been let go, better yet United Airlines just announce that they were going to layoff some 2500 people. I would have thought they would have lowered their air fairs. My goodness they must be stupid and not as smart as appraiser who continues to lower their fees.

 

[rescom]

This lower price bit is about had it? Do you really think any business would stay in business if they were not making money? I just see a CEO standing up or a Chairman of the Board standing up in front of the stockholders telling them they got to lower prices and sell at below cost to stay in business. No they would close the doors and shut down. Don't think so just ask the auto workers that have been let go, better yet United Airlines just announce that they were going to layoff some 2500 people. I would have thought they would have lowered their air fairs. My goodness they must be stupid and not as smart as appraiser who continues to lower their fees.

Thats because there is a demand for air travel and there are a limited number of airlines. They can raise their fees and people won't have a choice but to use them. Lenders have 1000's of appraisers to chose from.

I can promise you that no appraiser is losing money by reducing there fees. They simply cut corners that allow them to do it faster and cheaper. I have an auto dealer here that is offering a "buy an SUV and get an econo-car FREE." How do they do this? By cutting their profit significantly. Why are they doing this? To increase demand. Move to an urban or suburban area Ray and I guarantee you'll be singing a different tune. When you are the only appraiser in town in your area, you are in demand and can pretty much name your price. Try competing for business against 100's of other appraisers that can offer the same thing you can for much cheaper.

 

[Pam Wyant]

I can promise you that no appraiser is losing money by reducing there fees. They simply cut corners that allow them to do it faster and cheaper.

Please clue us in on how to cut corners for faster cheaper appraisals while still meeting USPAP and appropriate appraisal guidelines. That way I can actually increase my profits instead of helping an AMC's bottom line.

If appraisers would just stand firm on their fees, the AMC's would have no choice but to pay full fee. I do some AMC work, and it is all at full fee or I don't do it.

Also, when estimating costs, a home office should have some consideration given to expense, based on housing costs for the amount of SF you are devoting to the office and file storage (including mortage, taxes, energy, water use, etc.). If you are working from home, you are using space that you otherwise would not need to pay for. If you really want to get a true picture of the associated cost, figure in things that you take from your home supply like light bulbs, trash bags, cleaning supplies, paper towels, wear and tear on the home vacuum cleaner, etc. Even if you aren't paying it directly out of your business account, it is definitely added expense. And if you were working elsewhere, you would be using water, toilet paper, etc. there so those are also expenses that are associated with having a home office versus working for a corporation.

 

[Blueprint]

I can promise you that no appraiser is losing money by reducing there fees.

You are simply making a fool of yourself by making statements like that. Cutting prices is one thing, cutting corners is another. Cutting corners is what you seem to perceive as normal. What you perceive as normal is not beneficial long term. You are living and acting short minded, survival style. It will kill you down the road. The culling of the herd is in process.

 

[Chelley Bahner]

Something tells me that most of the appraisers who refuse to lower their fees to compete are either 1) near retirement 2) married with the help of a spouse income 3) no kids 4) in denial that change is inevitable. Or a combination of any of the above.

Or close to closing up shop because they're not getting any work... One more closer to balancing out... Then we can start raising our fees again.

 

[Chelley Bahner]

Not picking on you but just using your data. It shows that you at least keep some data and have an idea of what some of your business expenses are. You had the to post.

I have no trouble at all figuring my costs, here they are if you care:
Here is a list of my expenses for my appraisal business:

office rent: $0 (I have a home office) I must there for assume that you do not take a deduction on your income tax for a home office.

Fax Line: $26.78 per month

Cell Phone (which functions as my business line): $120.75 per month Some of us are in areas that do not have cell phone services, like my self I must depend on hard lines for each computer motem, incoming and outgoing voice, fax. In addition to business cell service. Which with Altel is $99.00 per month base with all the taxes and related ad on’s is around $200 per month. Hard line is around $500 per month now with out the yellow page advertising (which is covered later)

Auto Insurance: $1,152/year = $96/month is this commercial or is it associated with you personal auto. If so you may want to really read you policy about your coverage. A lawyer will if you are in some kind of accident and my cost you everything if you auto policy does not cover you on the job.

E&O Insurance: $641 year = $53.41/month I see not general libility, health, accident, workers comp.

Gas Expense: (figure base upon average round trip per appraisal inspection of 72 miles -from last year's records @20 mpg and gas at $4.00 per gallon: $14.40 per appraisal) assuming 20 appraisals per month: $288/month My rural appraisal run can run that in two days. (So why should I be held to the same standard for expense for my rural appraisals as others in urban sitting?)

Misc Vehicle Expense (vehicle paid off): for oil changes, wear and tear, ties, etc: figured at an additional 10 cents per mile = $144.00 per month. I don't see anything for major repair/tune ups. You have not figured any replacement cost for when it dies on you. Looking at a lot of published data the cost you have listed are now at around .34 per mile without the cost of replacement. (my truck needs to have the 5 speed replaced and a tune up. Just this is going to cost $2300.


Office Paper and Toner, supplies ,etc (i refill my own cartidges): $75/month. My HP and Epson cartridges can cost that for just one refill.

Internet Access: $42.15/month

Database Fees: $258 per quarter = $86 per month

Various Profiessional Dues, Licenses, Etc.- avg $500 year = $41.66 Professional dues in any of the Appraisal Association run three times that about.

I see no replacement cost for hardware or software.

I see no vacation pay, sick leave, holiday pay.

I see no health insurance, retirement.

I see no marketing and advertising cost.

I see nothing for the expense of CE.

I see nothing for on going education.

I see nothing for professional publications to keep current of the profession.

I see nothing on regulatory publications for the industry.

I see nothing for the cost of educational books to keep you update and informed.

I see no cost for accounting and and filing of taxes.

I don’t see any thing for overtime worked.

I see nothing for heat and lights in your office.

I see nothing for current up grades in soft ware, M/S or similar or NADA or similar or any thing for monthly software support for any software.

I don’t see a return of investment.

I don’t see a return on investment.

I don’t see wages for additional help, be it a family member or someone else.


Total Monthly Business Expenses (avg based upon 20 appraisals/month) = $973.75
Per Appraisal Estimate of Business Expenses = $48.69per appraisal

What I am assuming here is that I am seeing cost associated with what has now become a cottage industry/profession. Not a real stand alone Professional Business with all expenses cover and a fair profit or income.


Obviously, I run a pretty lean office and there is no way that someone who does a lot of rural appraisals which require much more driving or who keeps an office in a commerical space could keep his or her expenses this low. How ever the lenders had come to expect that all can run an appraisal office, business for the same fee across the board. Fast and cheap. The $250 fees just don't even cut it any more.

It sounds to me like you're just DIGGING for extra stuff to add to the overall expenses.