Fee charges for commercial appraisal review?

[Harts]

$300 to $1,500

$400 to $700 for normal run of the mill big box etc. High end of that for residential subdivisions, maybe higher. The $700-$1,500 would be for malls, congregate care, CBD multi-tenant office, etc. but this sounds like a small bank if they're only using a handful of generals so it's not likely you are going to be getting anything exciting like that. I'd guess you'll probably see small strip centers at most, probably more main street retail (ugh). Should only take you about 2-3 hours to get it from start to finish, day or so for the big complicated stuff with Argus. Take into consideration, if you don't already have Argus, that you may need to purchase it if some of their reports require it. Also take into consideration if you are going to be reviewing institutional grade stuff, you are going to need to be able to access published rate surveys and they don't come cheap either.

When it's all said and done, if you don't want to do it, send them my way please

 

[Scott Lanz]

Dear KLJennings,

I will share my experience and add some some advice, if I may be so bold, as I did this job for three years.

There are few positives to this scenario outside of the additional money and access to your competitors product that may include additional market data to enhance your own database. An additional item may be the insight to the market fees of your competitors.

Now, for the negatives.

It is unlikely that the bank is looking for a compliant review, and much more likely they are looking for a second opinion of value. This will create additional work and liability under Standard 3 moving you into Standards 1 and 2. From a business standpoint, this is where you could potentially lose money when based on a flat fee per assignment.

As soon as you start this process of ordering appraisals your time will be dictated by your competition. Let me explain how this is going to work. You will put out bids and select the appraiser for the job and have a deadline date. While you wait for the appraisal you are going to be working on your own assignments. You are going to be hustling to meet your deadline and the appraiser you hired is taking it to the 11th hour to submit. Now the bank is waiting on pins and needles to close the deal and the report is going to come in and overlap your own outside work.

So, you get the review and the work is substandard. You request changes be made extending the deadline. Now, the bank and the appraiser are unhappy with you and potentially the owner in your local market.

If this scenario continues, the appraisers are likely to stop bidding on your assignments and your approved list is going to shrink to the lowest hanging fruit creating more and more reviews, changes, etc.

It's going to very difficult to resist the temptation to take your competitors to task on the reviews.

One issue you would have to noodle is in the certification for fee assignments you complete for the same bank is in regards to having a business relationship with the parties involved.

Finally, if this bank represents 50% of your work, I see it odd to reject a higher paying salaried job with better hours. If you wanted to be a real tiger, you could take this job for say three years and have your competition build your templates and database when you re-enter the private sector. I am not saying steal their work, that would be wrong, but you can learn and create better templates and have all the leads on the local comps.

To answer your question on fees, I did a flat fee that was below market for other reasons. I would do an hourly fee rate. Some assignments were really quick and others were awful.

 

[KLJennings]

Harts - The bank is trying to find someone local. Someone from another state has no clue what is going on in the local market.

Scott - I turned down the first job because, while it was for more money that I made last year; last year was the height of the recession, here. All indications point to this year being better than last year, so I should make more money than last year. That job would have been at the bank, so I wouldn't be able to do appraisals while in that job.