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Earning income from appraisal without doing all the work.

Doug in NC

Thread Starter
Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
It may sound simple, but if you want to avoid people leaving, you have to give them incentive to stay. Most trainees leave because they have been treated like indentured servants rather than as employees one is investing in. I had staff that stayed with me for over 20 years. Why? They were employees. Had benefits (insurance, 401(k), vacation, etc.). They could make more as an employee for me than they could off by themselves, because of our support staff. The trade off is that net profits are reduced in the short term for long term sustainability. There is also effort required to build the supporting infrastrucure required to have a firm rather than a "shop."
That's the reason I want to form some sort of partnership, my help would be working for themselves instead of just making someone else rich with their efforts.
 

Doug in NC

Thread Starter
Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
Good luck finding "deals" in the Triangle. The market is super saturated with investors chasing an ever diminishing number of "deals". An Investor friend called me today and said he was one of 16 bids submitted at the courthouse sale, all folks he had never seen before...
And the appraisal business isn't competitive? :giggle:
 

DWiley

Elite Member
Gold Supporting Member
Joined
Apr 4, 2007
Professional Status
Certified Residential Appraiser
State
Tennessee
That's the reason I want to form some sort of partnership, my help would be working for themselves instead of just making someone else rich with their efforts.
Yes, that makes sense. But I would say that 25% of the gross also sounds high. Just being totally honest :)

The key is to build gross so that a smaller % is still good revenue. I used to participate with a group of firm owners from around the country who would meet up and talk business strategy. Back then (10+ years ago) we looked at all the books and saw that it took $750,000 gross to make a firm worth pursuing as a business, and the more the better. :)

It takes work, but if you can build a true firm, the payoff is worth it.
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
Any plan will work when times are good. It's when times are tough and the volumes slow down that we find out whose plan will go the distance.
 

DTB

Elite Member
Joined
Jun 11, 2004
Professional Status
Certified Residential Appraiser
State
Illinois
Good luck finding "deals" in the Triangle. The market is super saturated with investors chasing an ever diminishing number of "deals". An Investor friend called me today and said he was one of 16 bids submitted at the courthouse sale, all folks he had never seen before...
Your friend needs to up his game some. As we used to say, the money's made on the sofa! He needs to get with these owners well before the courtyard steps.

If he becomes proficient at doing that, those 16 bidders become HIS customers.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Investing can be renting property, not just flipping it. Long term smaller but steady income streams vs flips...or a combo of both.
Bringing someone in to share the appraisal work is a very simple, doable idea. Building a firm much more ambitious and sounds like you don't want to do that . But to prevent the new person from stealing the clients or the clients drifting away you will still have to do some of the assignments, just less of them.
 

Andrei Fin

Sophomore Member
Joined
Aug 30, 2017
Professional Status
Certified Residential Appraiser
State
California

Bert Craytor

Member
Gold Supporting Member
Joined
Jun 27, 2017
Professional Status
Certified General Appraiser
State
California
I'm considering ways to slowly ease out of my appraisal business but still retain clients and income. I've been working days, nights, and weekends for at least the past 2 months and it is really getting old. I'm also considering moving into real estate investing and at least semi-retirement as far as the appraisal business goes. One appraiser from this forum described how he set up a partnership with another appraiser to boost his income while lightening his own workload, and the relationship has apparently worked out well for him. I'm thinking about doing something similar, such as a partnership agreement that pays me 25% from gross sales (I fear basing income on profit would be a mistake because the partner could potentially eat up all the profit with expenses, leaving nothing to return as profit income). I've also kicked around the idea of starting a franchise, but that is an expensive prospect and has its own set of complicating issues.

I've ruled out the ideas of having an assistant or just hiring other appraisers to do the work because I consider those to be temporary solutions. I've even considered selling out but selling a customer base and projected income could be quite challenging. It is infuriating to me that we can hire appraisers as contractors, train them how to comply with our clients' standards, then have to fear our hired help as competition at any time. Non-compete contracts are worthless in this industry according to what I have been told. These are the reasons I'm thinking some type of partnership rather than just hiring more help for the current business.

If I had been offered a partnership agreement where the other partner provided the work for an agreed on %sales, I would have taken that opportunity many many years ago. I think a competent but struggling appraiser (lacking a good client base) would jump at the opportunity to increase his/her income by partnering with a well-established appraisal company. Great lender clients are really hard to come by in my opinion; it took me over 20 years to find my best two clients!
I'm very much convinced that different skills are needed for real estate brokerage/investing than appraisal. Good appraisers tend to be too conservative, too paranoid, and simply lack a sense of where buying trends are headed. The latter mostly. I've run up against the wall, where a broker has really outdone me in pricing. I can set back pondering for years on what it was they saw that I didn't. But truthfully, even if I had seen the trend and the rationale, even if I could convince myself the price for a certain kind of property was headed drastically up or down - I would still want to be able to prove that to a third party and not have to rely on my intuition, i.e. have to say "based on my experience" - or even worse give them a list of my observations of client behavior, along with a "subjective" analysis. Some appraisers will stick their neck out and go with the flow. But, the price for that is that sometimes they get it very wrong. Maybe it doesn't affect their sleep. - But for some it does.
 
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DTB

Elite Member
Joined
Jun 11, 2004
Professional Status
Certified Residential Appraiser
State
Illinois
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