• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

Fee splits - Has your market changed?

Status
Not open for further replies.
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
A year ago my firm raised the split for certifieds to 60% for house business and 70% for appraiser generated business. This seemed a rasonable change in view of the the fact that technology has shifted much of the process away from the clerical staff.

This week a good appraiser left to join the firm of another good appraiser who left a year ago. The sole reason for the exit was that the split offered is 85%. I hate to see her go, but can't really blame her. She works form home, is low maintenance, and consumes minimal office resources. Much of the work she does is for her own clients. All work is full fee.

Please share any observations you have about changes in splits in your market.
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Hmmmm,

85% of a $300 fee = $45

Does $45 really cover the billing, accounting, collecting, etc??????? On the basis that she is covering all other expenses on her own, very well might make it worth while. If she is using your research programs and/or any other additional supplies or programs.... that's another story.

BTW, protect and change your MLS and other programs passwords often.
 

Randy Beigh

Senior Member
Joined
Jan 16, 2002
Pamela forgot taxes and Social Security. Sounds like a pretty good deal for the appraiser, but the employer is going to be out of business within 2 years. The 15% couldn't even begin to cover all the expenses of running a business, plus making a profit. I strive to make a 17% profit after all expenses. That's a dead issue with the company that you are taking about.

I would also add that the expenses have probably gone up, not down as you have surmised. Things have, indeed, changed, but while some expenses have gone down, many are new expenses. I think you can prove that by looking at your expenses from 5 years ago and comparing them to your today expenses, then figuring the percentages.

There is, also, another possibility and that is the appraiser told you a lie. Nah, that couldn't happen. :)
 

xmrdfghap

Senior Member
Joined
Jan 15, 2002
Professional Status
General Public
State
Florida
<span style='color:brown'>There is a lot of differences in markets and between offices.

What services is the competitor offering for the 15%? If the appraiser is doing 5 appraisals a month, you cannot offer her 15%. If on the other hand she is doing 20, then 15% is not that unreasonable.

Examples of what I am talking about: MLS is a monthly and annual fee....you are paying that anyway, it is a "sunk cost." You do not pay per search or per comp. So is your bookkeeping costs. And while you are increasing your bookkeeping cost with an increase in volume, it is not that significant of an increase.

Are you paying when you get paid or are you paying when the job is done? Are you assuming that risk? Are you paying the cost of E&O for the entire firm or are you charging each appraiser their share of it? Is she an employee or is she a contractor? Do you provide benefits such as vacation pay? Do you provide a pension plan or health insurance?

If she provides her own equipment, her own E&O, gets paid a 1099 income, pays her share of data services, pays all her own expenses right down the line, and all you do is provide her with basic bookkeeping (actually, the only accounting you do for her is track her income so you can get your percentage......she has to do her own accounting for tax purposes) and billing services, why should she be paying 35%?

On the other hand, if you provide the equipment, the E&O, pay her with W-2 income, pay for all data services, pay her milage for the use of her vehicle, do all the accounting so she only has to file a 1040A, provide 401K, provide profit sharing, provide health and life insurance, provide an employer matching retirement plan, then 35% may not be enough.

This is one of the biggest mistakes a small office can make, and I hear it all the time. "I train the guy so he is good, then he moves out on his own and goes into competition with me" when 6 years down the road the guy is still treated (and paid) like he is a trainee. If you want a long term employee who is loyal, you are going to have to treat them as such. Provide benefits. Provide equipment. Provide job stability. A 65/35 fee split is not that good when all you do is provide billing services and you "let" them pick up your overload. He can hire a bookkeeping service for less than $200.00 a month to do all the accounting and billing for him, and for the $105.00 difference per appraisal a little less work means a little more time with the kids and a little less stress to meet deadlines and a little more time spent with each assignment. </span>
 

Austin

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified General Appraiser
State
Virginia
Every once in a while I wonder if I am making a mistake by working by myself and actually think about taking someone in and growing the firm. Then I read something like Greg just posted and I remember why I am working by myself. When you start talking about 1099 income, 401K, health insurance, FICA, withholding, and all of the other government crap Greg just listed I realize what a wise person I really am. If I could just hire somebody and pay them at the end of the week I could live with it, but damn, to hire somebody these days is like adopting them. When you hire somebody you are nothing but an agent for the government with no pay.
 

Eric Boggs

Sophomore Member
Joined
Feb 23, 2002
Professional Status
Certified Residential Appraiser
State
Florida
Lysander,

That sounds like a good split to me. I work here in Charlotte and my split is substantially less than that. And, I have 20 years experience. Does the 60% include the employer paying FICA? I work mostly from home and pay my own MLS, have my own software, etc and I produce a USPAP compliant report where my boss doesn't even know what USPAP means. Let me know where I can apply for the opening-LOL.

Regards, Eric
 
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
Eric, Nice to hear from a fellow Charlottean. The 60 or 70% split is as an independent contractor. No FICA paid on your behalf. No benefits. Pay your own MLS. E&O provided for you. Hardware is furnished if you use at the office. If you want to set-up at home provide your own hardware, software provided. Now that you know the nuts and bolts of our split arrangement, how does it compare to yours?

[email protected]
 

Austin

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified General Appraiser
State
Virginia
I don't understand this fee split mentality so would somebody please explain to me why a certified appraiser furnishing his own computer and software working from home generating his own contacts would want to be employed by somebody? What's in it for you and what's in it for the person that employs you?
I had an appraiser come to me about 10 year ago wanting a job. He had graduated from college with a degree in real estate, was a certified general appraiser in VA & NC, said he had 4-years experience working for an MAI in NC and said he was damn good, asking me what kind of deal I would make him. I told him: "Look man, I am not the one looking for a job so why should I make you a deal? If you are as good as you say you are then what do you need me for?" He looked like somebody shot him. I said: "Here is my deal. You show me how you can make me some money and I will consider you but I ain't wet nursing anybody." That in my mind is the catch 22 of the appraising business; if you can't stand on your own two feet then I don't need you, and if you can stand on your own two feet why do you need me? It seems to me there has to be some mutual benefit to the arrangement and from some of those fee splits described above I don't see it especially the one where the appraiser stated that his employer doesn't know what USPAP is. Why isn't that employer working for you?
 

xmrdfghap

Senior Member
Joined
Jan 15, 2002
Professional Status
General Public
State
Florida
Austin, I hope you are sitting down.











































WE are both in agreement on this.
 

Austin

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified General Appraiser
State
Virginia
O'h well! I guess I had to get it wrong sooner or later. :lol: I guess I am human after all. To error is human, to forgive is devine. Forgive me Lord.
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks