Any Help Would Be Great!

[JasonLight]

I am new to this profession and this site so please bear with me.

I will start taking my pre-license courses in Jan. A partner and I already have several sources of steady business we can draw upon, but neither of us are licensed. We are thinking of opening the business, funding all the start up cost and providing the work. Still the obvious problem with all of this is we do not have any licensed appraisers on our payroll. Do you think it will be a hard sell to a licensed appraiser if we were to offer a 80/20 (appraiser) / (company) split in return for the training they can provide to us. We seem to think this is a fair deal since we are generating the business. Another approach was to make an offer of a partnership in the company to a seasoned appraiser. Make them a partner from the beginning and let them then take 100% of the appraisal fee for themselves and have say in how we set up the company...ie...what software package to use, marketing, processes and best practices. We would not require any monies from this person to be put into the company. Almost risk free. Except for their time, they would have nothing to lose in our eyes.

If this is completely rediculous or may be an insult to someone please let me know. Like I said I am in the infancy stages of learning about this industry.

 

[Dee Dee]

Welcome Jason!

It's typical for someone who is just getting their feet wet in the business to seriously underestimate the amount of time that it takes for a mentor to train a newbie. You have to understand that what you learn by taking the initial start up classes is just the tip of the iceberg compared to the amount of training it takes to be a good appraiser. We all learn this the hard way, and you will be shocked. 8O

An 80/20 split will probably get a good laugh from any 'seasoned' appraiser. Think about it, if they're any good they already have a full work load, no fee splitting, and no having to teach and be fully responsible for a rookie. You'll be lucky if you can find someone to do a 50/50 split, even if the client is one that you bring in.

Do yourself a HUGE favor, and read through the posts in the Newbies/Appraiser Wannabe's section of the forum. It's a bit tedious, but you'll get a good overview of what it's really like when you're just getting started.

Best of luck.

 

[JasonLight]

Thank you for your comments. My main question back would have be if someone is already getting no split fee and a big workload why not open your own business? This opportunity would give them the same benefits AND profit from the company. Plus setting up the processes the way they want to. I know very little about this industry, but business is business and it would make sense to me to get a bigger cut of the action if I could.

I do understand the time involved with learning can and will be a long road. Mostly I just want to find out all the pitfalls in the beginning so I am not surprised later on. I will continue to read more!

 

[Dee Dee]

My main question back would have be if someone is already getting no split fee and a big workload why not open your own business? This opportunity would give them the same benefits AND profit from the company. Plus setting up the processes the way they want to. I know very little about this industry, but business is business and it would make sense to me to get a bigger cut of the action if I could.

Jason,

Your first mistake is that you believe that breaking into the appraisal business compares to starting any other type of business. It's an entirely different animal. Better to compare it to being an apprentice learning a trade....one that is overseen and relied upon by investors who will use your work as an important tool in the decision-making process to loan HUGE amounts of money.

You do not now, nor will you ever have a 'big workload' or any split at all unless you have a mentor who is willing to take 100% responsibility for everything that you do. Every single move that you make until you are fully licensed must be monitored and approved by a qualified mentor. Their signature is required to be on the reports that you work on or no investor will accept it, and the lender will write the checks out to the supervisory appraiser, not you.

Bottom line is this, the lenders will hold the supervisory appraiser fully accountable for every one of your reports, so when the chips are down it is your mentor who 'your' clients will either approve or not. Until you are fully licensed, you are legally nothing more than an assistant in the process.

I didn't make these rules, that's just the facts and they are in place for very good reasons.

I'm not sure where you are expecting to get this big work load from. Presumably you are already in the loan business or have buddies or family members who are.
If this is the case, sooner or later you will be put into a position where you will have to make the decision to risk your license (or that of your mentor) to hit values in order to make a deal work for the lender. Happens all the time. Nearly every mortgage broker out there likes to have a 'puppet' appraiser in their back pocket, and if it's a friend or family member the pressure to conform to their numbers will be increased. You'd better think carefully about what you will do when faced with having to break the news to someone you know that they won't be getting the big payoff that they were expecting. An ethical mentor may just decide that they don't want anything to do with your client, if that's the type of lenders they turn out to be.

Sorry if this post seems a bit callous, but this is the reality of the business.
Nearly every single appraiser that I know (myself included) finds out quickly that the big bucks they had predicted they would make when they first broke into the business was a joke. You'll have to pay your dues for awhile, and there are no short cuts.

 

[JasonLight]

No, no no! I fully appreciate your honesty. I didn't mean to make it sound like this was an easy business to start. A friend of mine and I were talking about this and our quick assumption for why the goverment makes it so hard to get into this business is to avoid some of the issues you spoke about like corruption. I have thought about your comments of being a "puppet" and I guess there is no real answer to that statement other than you have to be ethical all the time or your clients will really see no reason to go to you vs. the competition unless they think you will provide the BS report they need. Complete opposite of my intentions here.

Once again I appreciate your honesty and look forward to sponging as much info I can from experienced people like yourself.

Thanks for the info!

 

[George Hatch]

Jason,

I second what Dee Dee said in her posts. If you'll check out the other threads under this category, you'll see that a lot of veterans have a similar or even more conservative point of view. Of the last 14 threads, only a couple of them (the calculator and math questions) don't include some variation of this POV. A person facing the challenges of just trying to break into the business might think of this as self-serving competition control, but it isn't. It's just that when one appraiser screws up, we all suffer a little for it.

At least you are smart enough to ask the questions before committing yourself to a dubious course of action. The ability to ask the tough questions and use the answers to your best advantage will serve you well in this business. Try and keep in mind that as appraisers, we aren't supposed to tell our clients what they want to hear, we're supposed to tell our clients what they need to hear.

George Hatch

 

[JasonLight]

George,
Thank you for your post. I am just trying to figure out if this is something worth the time and effort. It appears that if you pay your dues and put in the time, this can be a very fulfulling business. I see finding a good group of licensed appraisers to work with may be the biggest hurdle. If I can find trustworthy people to learn from than it may be worth the time.

Jason

 

[Mike Garrett RAA]

Sounds like you have it backwards....should be 20% to the appraiser and 80% to the mentor. LOL.

If I have a trainee who provides all their own equipment and office space AND gets the clients on their own, I will review and sign off on the work on a 60/40 for the first 6 months, then 70/30 until they are licensed.

One thing for you to remember...when the supervisory appraiser signs off on the report, he or she has bought it...it becomes their report and falls under their errors and omissions insurance. It's a lot of liability! The other part of it is...."you are training your competition at some point in the future".

 

[JasonLight]

Mike,
I was hoping you would reply. I read many of your posts on here. Your comment on training your competition... I am hoping to avoid that and build a good business relationship with our mentor. I would like to have this person as a partner in the business for the long haul. I am also hoping this is a good value prop for a leary mentor to take the chance on us. My partner and I are both very business savvy and extremely hard workers in our current professions, but NOT in this industry.

The 60/40 split in the beginning would not be a bad deal at all for the experience we would get. It seems like finding a mentor will be our most challenging hurdle. Do you recommend offering anything else to entice a mentor?

Also, as an appraiser other than writing off your business tools, can you write off items like your car payment if it is solely used for work?

I appreciate all the responses here. This is helping us out far beyond what I thought.

Thanks Again,

Jason

 

[Mike Garrett RAA]

Jason, I would appeal to that person who has grown tired of fighting the busy streets, the wind and the rain, the tough clients, the seven days a week work load. Say something like...."wouldn't you really like working four or five hours Monday thru Friday? Would work for me...I really want to slow down before I fall over dead from all the work.

So much depends on the trainees. You sound like you and your partner have a lot to bring to the table. Some I have seen are not smart enough to come in out of the rain. My main concern would be finding someone who was interested in making a career...not a fast buck.