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Being threatened with lawsuits.

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Funnyflyer

Thread Starter
Freshman Member
Joined
Nov 29, 2007
Professional Status
Certified Residential Appraiser
State
Washington
Hey guys, I need some good advice. I am sorry that this is so long but I wanted to make sure that you guy had all the info to work with...

Here is a little background info;

I am a certified appraiser, I have been in the biz for about 6 1/2 years. The majority of that was spent with a company owned by some of my extended family. For the last year and a half or so I more or less ran the daily operations, helping to mangage between 6 and 8 appraisers so I am an experienced in my job. I have recently decided to strt my own company and wanted toget a couple trainee's working with me. I have inly been in business for myself for about two months now and it has been hectic with the holidays so I am still trying to get things organized. In the beginning of December I met with a potential new trainee. I thought that he would make a great addition to my new company and so I took him along on an inspection and showed him the process of writing a report. He indicated that he enjoyed it and would be interested in a job. I told him that with the market the way it is I could not afford to give him any of my business but if he could get his own clients that I would work with him. I told him that I would start him at between 30% and 35% commission and eventually, once he had his own clients and could type reports with minimal input from me that I would pay him up to 50%. I also indicated that as long as he is a trainee that I would not pay more than 50% commission. I was very up front with him about this and wehad the discussion more than once. He proceeded to get a client that wanted an appraisal and was willing to pay $2800 for it. It was a file that I told him the client I would research it a little and see if I could even do it (it was very complicated and he had already been turned down by two other appraisers). That was on a friday and I told him that I would contact him the following wed. as I was going out of town. When I returned home, i discovered that my potential new employee had gone out and inspected it on his own (it was only vacant land so not a huge deal) and also attempted to write his own report. He has no appraisal experience. Since he had already started doing leg work on it (he met with his new client and picked up a bunch of documents), I decided that I would go ahead and do the appraisal. I did drive out and look at the property and then did the appraisal. $2800 was collected from the client and the appraisal was delivered.

It needs to be noted that at this point, no contracts of emploement or commission splits or anything have been signed between me or the trainee. I went ahead and paid him 35% ($980) which I considered a finders fee since he is not yet officially an employee. He has not yet gotten himself any software, insurance or filled out a W9. I felt that 35% was generous as a finders fee since I told him that I would pay him between 30% and 35% and he hadn't even typed the appraisal. He did come over and watch me finish typing it to see what went into it and why it was such a difficult assignment.

This is an email I recieved from him after paying him almost $1000. The only things I have edited were the names.

________________________

XXXXXX,

I have four new Clients that I was going to bring over to you. I would like to trust you with them, but so far I am very disappointed. I hope you will do the right thing.

I spent over 22 hours on the appraisal in question, where you may have spent about 5 hours filling out the appraisal form when I was over at your house.

Our arrangement was that if you supplied the Client and I did the leg work, including measurements and acquired all the documents I could locate related to the subject property, that my commission would be 35% of the total received from the client.

On the other hand; if I did the advertising and I supplied my own Client and still did all the leg work including all measurements and Documents when required, that my commission would be 50%.

When I told you that I negotiated a $2800 fee from my new client, you agreed to split the fee, $1400 to you, and $1400 to me. That was our contract, and you know it. When you were in Albuquerque, I told you that I have two checks from the client, each for $1400. I told you that your check for $1400 I would deposit into your account. which I did. You said you would pay me the other half, $1400, when you got back. I trusted you.

I will wait until noon tomorrow, January 8th, 2008 for you to deposit the balance of my commission into my account. After that I have no choice. I don't want to file a Federal and a Washington State Superior Court law suit claiming fraud and depriving an employee of his lawful wages. Which carries punitive damages.

I like working for you, but you have to learn to be very honest, or I have no choice but to take all the legal actions at my disposal, including Intention of filing a Federal law suit, Washington State Superior court law suit, complaint to the Appraisal Sub-Committee and the Washington State Real Estate Appraisers Ethics Committee. That could cost you $20,000 in attorneys fees and the possibility of losing your Appraisers license.

Please lets put this behind us. Pay me what you owe me, the balance of my commission. You don't want to fight me in court.

Remember, Honesty is the best policy.

XXXXXXXXXXXXXXXX, Student of Law

PS: I think you spent my money. That's embezzlement of an employees wages.

___________________

:Eyecrazy: :Eyecrazy: :Eyecrazy:

I know that this was extremely long winded and I thank you so much for reading through it all. Any helpful advice would be extremely appreciated.
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
I suggest you get your own very competent attorney ASAP.
I have a recommendation for you if want to contact me privately.
My email: pec514 @ yahoo. com (remove the spaces).
 

Kevin Mc

Elite Member
Joined
Jun 7, 2004
Professional Status
Certified Residential Appraiser
State
New York
Hmm.

Advice?.....

1) get spell check
2) pay this person the difference of $465 (or whatever it is)
3) cut them loose
4) establish your own business and forget trainees for now

Seriously, what type of business you you truly believe a trainee is going to bring to you that isn't problematic? Shy of them having a spouse who is a partner is a large law firm, I think you are heading down a dark road with this business plan. Just my 2 cents. Good luck.
 

Chris Colston

Elite Member
Joined
Jul 24, 2003
Professional Status
Certified Residential Appraiser
State
Florida
I'm always amazed by the notion that inexperienced TRAINEES are put in a position of having to gather their own clients. Why would any client place their trust in a TRAINEE?

That being said, and Karl and several others will be jumping on board here, any minute...TRAINEES are EMPLOYEES!! Not independent contractors. Your first mistake was not HIRING as an employee with a WRITTEN agreement and employee manual. This would include how the trainee would be trained and supervised and how the trainee would get paid. So much per job is fine, with increases as they learn and can be depended on more. If they happen to "fall over" a new client, that client is YOURS until the trainee becomes certified and then you can negotiate. A finders fee is fine.

At this point I would suggest you sever the relationship with the trainee. Anyone can threaten a law suit. Learn from your mistakes and for at least a year or better yet two years, on your own, DO NOT HIRE ANYONE!! You can't afford the tax filings that go with being an employer!

BTW...did you withhold taxes from any money you paid the trainee? Ask the trainee if any taxes were put aside? Why do I think NO is the answer to both questions? KNOCK..KNOCK..who's there..the IRS!
 
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David Wimpelberg

Moderator
Staff member
Moderator
Joined
Mar 30, 2005
Professional Status
Certified General Appraiser
State
New York
My advice...do not communicate with this person other than to tell him who your attorney is, then cut off all contact. The chest beating on his part may sound impressive, but the fact is a lawsuit based on hearsay over $520 isn't going anywhere. Do you really think this person is going to spend $20K to collect $520? The retainer alone for his attorney will be several times that fee "owed."
 

Rick Johnson

Freshman Member
Joined
Jan 12, 2007
Professional Status
Licensed Appraiser
State
California
WOW - this is why many appraisers never get into the trainer mode. I have trained several newbes and find that communication and understanding of expectations on both sides is the largest problem. I have also tried to work out problems with contractors, (my trainees are not employees) that took alot of effort and time with no positive results. I noted problems in the begining that I wished I had terminated immediately. Life is short.

In your case I would pay them what they think they should have received, include a letter that explains your position, restates his and conclude with an assesment that not all people are destined to work together. "The lack of good communications/understanding indicates that the it would be better for both of us to terminate the relationship and for you to find a better suited trainer". Life is short, limit your exposure for litigation and stress level, pay them the $$ and move on.
 

Tudor

Member
Joined
Aug 15, 2006
Professional Status
Certified Residential Appraiser
State
Arizona
This post sure got the moderators attention didn't it?

I wish more people would look at Appraising as a profession first instead of as a business first.

Trainees should not be inspecting on their own and should not be generating new clients, they are trainees ie: they need to be trained first.
 
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Lloyd Bonafide

Senior Member
Joined
Jan 15, 2006
Professional Status
Certified Residential Appraiser
State
California
Advice?.....

1) get spell check
2) pay this person the difference of $465 (or whatever it is)
3) cut them loose
4) establish your own business and forget trainees for now

Seriously, what type of business you you truly believe a trainee is going to bring to you that isn't problematic? Shy of them having a spouse who is a partner is a large law firm, I think you are heading down a dark road with this business plan. Just my 2 cents. Good luck.

Excellent advice from Kevin - do whatever you have to to get this loose cannon away from you and your business. You've got to just love these trainees that start with complex properties. :laugh:
 

Tony V

Elite Member
Joined
Mar 29, 2005
Professional Status
Certified Residential Appraiser
State
New York
The trainee is calling himself an EMPLOYEE ...seems like a hint to me....

and how the heck does a new trainee get 4 new clients that quick....something going on there??
 
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