Appraiser Trainee Running Their Own Business?

[bnmappraisal]

I’ve read nothing that prohibits a non-appraiser from owning an appraisal firm and hiring appraisers, trainees, and non-appraisal staff to do appraisal work.

Heck - I know of medical facilities that are owned by non-medical folks. Banks that are owned by private entities. Accounting tax firms that have primary stock holders who have never prepared a single tax form.

If a non-appraiser can be an owner, then certainly one with a trainee’s certificate can too. I think we confuse company ownership with being the supervisor, by definition.

Firm
Supervisor; 1099 contractor of the firm
Trainee; employee of the firm

Not a tough setup to make.

Again, each state is probably different, but this is what FL says:
"
475.6221 Employment of and by registered trainee real estate appraisers.—
(1) A registered trainee real estate appraiser must perform appraisal services under the direct supervision of a certified appraiser who is designated as the primary supervisory appraiser. The primary supervisory appraiser may also designate additional certified appraisers as secondary supervisory appraisers. A secondary supervisory appraiser must be affiliated with the same firm or business as the primary supervisory appraiser and the primary or secondary supervisory appraiser must have the same business address as the registered trainee real estate appraiser. The primary supervisory appraiser must notify the Division of Real Estate of the name and address of any primary and secondary supervisory appraiser for whom the registered trainee will perform appraisal services, and must also notify the division within 10 days after terminating such relationship. Termination of the relationship with a primary supervisory appraiser automatically terminates the relationship with the secondary supervisory appraiser.
(2) A registered trainee real estate appraiser may only receive compensation through or from the primary supervisory appraiser.
(3) A supervisory appraiser may not be employed by a trainee or by a corporation, partnership, firm, or group in which the trainee has a controlling interest.
History.—s. 3, ch. 2001-274; s. 14, ch. 2003-164; s. 81, ch. 2004-5; s. 7, ch. 2006-198; s. 5, ch. 2013-144."
(my bold in #3)
http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0400-0499/0475/0475.html

 

[bnmappraisal]

I have not read anywhere that a trainee has to be an "employee" of the supervisor. Can you point me to the resource that says otherwise?

Again, this is in the Florida law, but I'm sure is similar in many/most other states ...

"(2) A registered trainee real estate appraiser may only receive compensation through or from the primary supervisory appraiser."
http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0400-0499/0475/0475.html

Hence, you are an employee because your compensation is solely through your supervisor/employer

 

[Cooper8]

Again, each state is probably different, but this is what FL says:
"
475.6221 Employment of and by registered trainee real estate appraisers.—
(1) A registered trainee real estate appraiser must perform appraisal services under the direct supervision of a certified appraiser who is designated as the primary supervisory appraiser. The primary supervisory appraiser may also designate additional certified appraisers as secondary supervisory appraisers. A secondary supervisory appraiser must be affiliated with the same firm or business as the primary supervisory appraiser and the primary or secondary supervisory appraiser must have the same business address as the registered trainee real estate appraiser. The primary supervisory appraiser must notify the Division of Real Estate of the name and address of any primary and secondary supervisory appraiser for whom the registered trainee will perform appraisal services, and must also notify the division within 10 days after terminating such relationship. Termination of the relationship with a primary supervisory appraiser automatically terminates the relationship with the secondary supervisory appraiser.
(2) A registered trainee real estate appraiser may only receive compensation through or from the primary supervisory appraiser.
(3) A supervisory appraiser may not be employed by a trainee or by a corporation, partnership, firm, or group in which the trainee has a controlling interest.
History.—s. 3, ch. 2001-274; s. 14, ch. 2003-164; s. 81, ch. 2004-5; s. 7, ch. 2006-198; s. 5, ch. 2013-144."
(my bold in #3)
http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0400-0499/0475/0475.html

Interesting. I've looked into PA State law but can't find any regulations pertaining to this. Even reading these Florida guidelines my initial thought is, he is not my "employee" but rather an independent contractor. This regulation only seems to address an employee/employer relationship.

 

[Cooper8]

Again, this is in the Florida law, but I'm sure is similar in many/most other states ...

"(2) A registered trainee real estate appraiser may only receive compensation through or from the primary supervisory appraiser."
http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0400-0499/0475/0475.html

Hence, you are an employee because your compensation is solely through your supervisor/employer

But just because you receive compensation from someone, doesn't automatically make you an employee (i.e. realtors). I am not employed by my current supervisor. Rather I receive a flat % of each appraisal I complete under his supervision. The person who cuts my check is actually the owner of the appraisal firm (not my supervisor).

 

[DTB]

Again, this is in the Florida law, but I'm sure is similar in many/most other states ...

"(2) A registered trainee real estate appraiser may only receive compensation through or from the primary supervisory appraiser."
http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0400-0499/0475/0475.html

Hence, you are an employee because your compensation is solely through your supervisor/employer

Are you sure?

Hypothetical example, appraisal firm with 10 Certifieds and 5 Trainees. Each Trainee has a designated Supervisory Appraiser and a Secondary Supervisory Appraiser.

In your interpretation, all 10 Certifieds are writing a check to the trainee when they have supervised on an assignment.

Helluva way to run a business.

 

[DTB]

(3) A supervisory appraiser may not be employed by a trainee or by a corporation, partnership, firm, or group in which the trainee has a controlling interest.
History.—s. 3, ch. 2001-274; s. 14, ch. 2003-164; s. 81, ch. 2004-5; s. 7, ch. 2006-198; s. 5, ch. 2013-144."
(my bold in #3)
http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0400-0499/0475/0475.html

I guess Mrs. Cooper8 would need to own 51% of the biz.

 

[bnmappraisal]

Are you sure?

Hypothetical example, appraisal firm with 10 Certifieds and 5 Trainees. Each Trainee has a designated Supervisory Appraiser and a Secondary Supervisory Appraiser.

In your interpretation, all 10 Certifieds are writing a check to the trainee when they have supervised on an assignment.

Helluva way to run a business.

Well in my personal experience back when I was a trainee, my primary supervisor (and the one that paid me for my appraisals) was the firm owner. He is an MAI. I was an employee under his firm. Received a W-2 at the end of the year.

My secondary supervisor was the one I really trained under. He was a CR (he's since passed away, therefore "was") My secondary also paid me, but not for appraisal work. He paid me as an independent contractor (1099) for driving him around to inspections

So in your hypothetical example, DTB, I'd say there'd probably be the firm owner who would have be the primary for 3 of the trainees (that's the max # of trainees allowed at this time in FL per Cert appraiser) with the Certified's being a secondary. Then maybe one of the other Certified's would be the primary for the other 2 trainees. I don't think the 5 trainees would have to be split up among 5 primary certified's

 

[Deleted member 152047]

I’ve read the law. Also reviewed the Florida law after your post. I think you are viewing things that are different as though one correlates with the other. Being a supervisor regarding matters of appraisal licensing has NOTHING to do with who owns a business. Separate animals. Paying commissions, leases, and rents have no correlation to being a supervisor of a trainee’s appraisal report from what I read. Just my opinion of course.

Let’s look at a real life scenario from a peer that I recall - Aged CG wants to retire, and his grandson wants to become an appraiser. You are saying Junior can’t start an appraisal firm with his granddaddy reviewing and signing his appraisals during the trainee period? I see no laws that would be broken personally.

I don't agree. This has come up in Florida law courses and supervisor/trainee courses. If a trainee owns the business, the supervisor works for the trainee. This is not permitted and creates a conflict of interest. Regardless, it isn't worth arguing over. I think cooper is putting the cart before the horse. What is it to wait two years and become certified?

 

[The Warrior Monk]

It is my understanding that I can own my own business as an appraiser and hire my supervisor as an independent contractor. I will continue to do appraisals as a licensed trainee (who also happens to own the company). I have not read anywhere that a trainee has to be an "employee" of the supervisor. Can you point me to the resource that says otherwise? I will not be an independent contractor, but rather self employed.

This issue pertains to control, an essential element of the determining independent contractor status. As a trainee, the supervisor has 100% control over your workproduct, because your credential (trainee status) does not allow to produce an appraisal independently by law. Additionally, this situation has been made even more clear with the adoption of requirements pertaining to the supervisor/trainee relationship.

I've seen summaries of cases over the years where the IRS and/or state regulatory agencies have become aware of such situations, and have yet to see a situation where it was determined that this can be declared an IC situation.

Don't take my word for it. Seek the professional advice of an accountant or attorney.

 

[George Hatch]

What the OP really needs is a more engaged supervisor. Someone who is operating at a more consistent level than what's happening at their current gig. Preferably with a more diverse range of client types and assignment types.